Third Point Investors Ltd - Annual Report & Audited Financial Statements for the Period Ended 31 December 2023
ANNUAL REPORT & AUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
Financial
-- The Company produced a 4.0% NAV total return, and a -5.8% result on a share price basis. This compares with a 24.4% return for theMSCI World Index and a 26.3% return for the S&P 500 Index over the same period. -- While this represents a disappointing result, the Investment Manager repositioned the portfolio more towards high conviction and concentrated investment exposures, which led to a material improvement in performance in the second half of the year, when the NAV return outperformed broad market indices. -- This improved performance has continued in 2024, with the Company generating an 8.7% NAV return in Q1 2024 and 17.6% over the prior six months to31 March 2024 .
Portfolio
-- While market strength broadened out as the year continued, 2023 was defined by relatively narrow leadership, with the so-called “Magnificent Seven” accounting for nearly half of the S&P 500’s full-year gains. -- Against this backdrop, Third Point underperformed the market for the full year, with its short equity positions weighing on performance, as well as more value-oriented long equity positions generally lagging the high-flying growth stocks that carried the market-cap weighted indices. -- However, performance in the equity portfolio was very much a “tale of two halves” for the Company. The Investment Manager retained conviction in some of the same holdings that underperformed the market in the first half, and several of these positions ended up rebounding in the second half, leading to better performance. -- Third Point also restructured its single name short equity portfolio to be far more diversified across industry, market cap, and factor profile, while tightly limiting risk in names with high short interest. This revised strategy yielded alpha in the second half, while also providing far less volatile returns during the major short squeezes, witnessed in both July andDecember 2023 . -- Meanwhile, both Corporate Credit and Structured Credit generated positive returns consistently throughout the year, adding valuable uplift to Third Point’s overall portfolio. -- Third Point sees a constructive backdrop in 2024, having addressed the issues that contributed to underperformance and also expects market forces to reward its approach to investing as the macroeconomic picture stabilises. -- The Investment Manager expects prospective returns to be driven by: a more stable interest rate environment, which should create more corporate activity, expanding opportunities for Third Point to engage with companies; Third Point’s long-term investment horizon, which it believes will continue to be a benefit in complex event-driven situations and mispriced high-quality companies; and active trading around idiosyncratic credit events and taking advantage of forced selling in the market in times of heightened stress.
Operational
Discount Management
-- During the year, the discount to NAV widened from 15.4% to 23.3%, reflecting the disappointing NAV total return and the challenging environment across the wider investment trust sector. The discount has since tightened to around 18% at the current time. -- The Board has made strenuous efforts to seek to narrow the discount both via a substantial share buyback programme, and by offering a 25% stock tender at a 2% discount to NAV (the “Redemption Offer”) in 2024 and 2027, the former of which has now been triggered. -- In 2023, the Company bought back approximately 2.6 million shares, equivalent to$51.2 million in value, which was accretive to the Company’s NAV by44 cents per share. Over the last five years, the Company has bought back 16.6 million shares for$311.1 million , which has been accretive by$2.13 per share. -- The Company will not repurchase shares for the duration of the 2024 Redemption Offer. However once the results of the Redemption Offer have been announced, the Company may repurchase up toUS$20 million of shares over the balance of 2024 if, in the Board’s view, it is in the best interests of the Company and shareholders to do so.
Redemption Offer
-- As the average discount to NAV at which the shares traded in the six month period to31 March 2024 was more than 10%, the Board is offering shareholders the opportunity to tender shares for redemption at a 2% discount to NAV inApril 2024 . The Redemption Offer is for up to 25% of the Company’s issue share capital. -- The full details of the 2024 Redemption Offer are set out in a circular which was sent to shareholders earlier this month. The deadline to submit a redemption notice is1pm UK time on8 May 2024 .
Master Fund Redemptions
-- As was detailed in the 2023 Interim Report, during the year there was a change to the Investment Manager’s policy regarding redemptions from theMaster Fund in respect of illiquid holdings in private investments. Under the new policy, redemptions will be settled approximately 93% in cash and 7% in participation notes, the latter reflecting the pro rata share of legacy private positions in theMaster Fund . -- This percentage in participation notes will increase as redemptions from theMaster Fund are affected via tenders and the use of the buyback programme. Assuming the Redemption Offer is fully subscribed, the holding in privates through these participation notes will increase from 7% to 9%, all other things being equal. -- Any realisation from the private portfolio will be reinvested in theMaster Fund and will reduce the Company’s overall exposure to participation notes.
Governance
-- All resolutions at theJune 2023 AGM were passed. -- The Board noted that Resolution 7 concerning the reappointment ofJosh Targoff was opposed by over 20% of eligible votes cast. As a result, pursuant toUK Corporate Governance Code, the Board was required to engage directly with shareholders who voted against his appointment and report back to the market. -- Following this engagement, the Board’sNomination & Remuneration Committee recommended to the Board thatMr. Targoff not be proposed for re-election to the Board at the next AGM in 2024, after which the Board will be comprised wholly of Independent Non-Executive Directors. However, the Board value highly Mr. Targoff’s contribution to the efficient management of the Company and he will continue to attend Board and relevant Committee meetings as an observer.
Future Strategy for the Company
-- In conjunction with the Board’s ongoing efforts to address the Company’s discount to NAV, the Board is pleased to announce the appointment ofDimitri Goulandris andLiad Meidar as directors, as soon as practicable. Their relevant experience is in markets, mergers and acquisitions, and asset management, and they will bring important new perspectives to the Board at this time. --Mr. Goulandris andMr. Meidar have been introduced by Third Point, but the Board has satisfied itself after due enquiries, including taking references usingCornforth Consulting , that they are independent of the Investment Manager. Both new directors will be put forward for re-election at the annual general meeting of the Company to be held inMay 2024 , and the Board will recommend that shareholders vote in favour of both their respective elections. -- The expanded Board will create a Strategy Committee (“Committee”) comprised of the two new directors and Richard Boléat, chaired by Mr. Goulandris. The Committee will be responsible for commencing a full review to consider how the Company may best deliver value to shareholders going forward. The review will be concluded within a six-month period (the “Strategy Review”). -- The Strategy Review will be charged with evaluating all possible options, including offensive M&A opportunities, investment strategy mixes, corporate continuation votes or further tenders, and potentially other innovative options. The Committee will seek shareholder consultation and input. -- At the conclusion of the Strategy Review, the Committee will present its finding to the Board. If approved by the Board, the outcome will then be reported by the Board to shareholders, and any recommended new proposals will be put to shareholders and voted on by them as appropriate. -- If at the conclusion of the Strategy Review there are no new proposals recommended by the Board to shareholders, the Board expects that, in due course, it will invite shareholders to vote on the continuation, or otherwise, of the Company. -- Under those circumstances, the Board will take into account the performance of the Company over the relevant period based on NAV per share and other metrics that it considers appropriate in determining whether to recommend voting in favour of the continuation resolution.
“The Board has been responsive to shifting market forces and structural issues that have been affecting TPIL and the investment trust sector. By authorising share buybacks, working with the Investment Manager to increase transparency in its reporting, and the implementation of exchange facility and tender offer programmes, we have made decisions that we believe are in the best interests of the Company and the shareholder base as a whole.
“The addition of two new Directors with different skills and experience and the Strategy Review should give shareholders further opportunities to profit from their investment in the Company.”
Media Enquiries
charles.ryland@buchanancomms.co.uk / Tel: Tel: +44 (0)20 7466 5107
henry.wilson@buchanancomms.co.uk / Tel: +44 (0)20 7466 5111
Notes to Editors
About
About
Why
Exposure to the flagship
Third Point Master Fund As a
Different pillars of investment strategy
The
Unconstrained and agile
The Investment Manager opportunistically pivots across asset classes, capital structure and geographic domicile according to where it sees good potential risk-adjusted returns. It is not a benchmark-driven fund and therefore it provides what it believes is a differentiated approach and outcome for global investors seeking diversification.
Constructivist engagement
Third Point aims to derive long-term value through various forms of constructivist engagement with companies in which it invests. It also pursues event-driven opportunities, identifying misunderstood catalysts such as M&A and special situations that we believe will unlock value.
Always striving to improve
The Investment Manager’s cultural philosophy values teamwork and improvement. It respects the Japanese business concept of Gemba Kaizen, which takes into consideration the skills of the entire organisation, with the understanding that even the smallest of adjustments will create value over time.
Governance
TPIL is a
Historical Performance
As at
Annualised Historical Performance (%) Since TPIL 1 Year 3 Year 5 Year 10 Year Inception Third Point Investors Limited (NAV) 4.0 -0.9 8.1 5.6 7.3 Third Point Investors Limited (Share -5.8 -2.7 6.9 3.6 6.1 Price) S&P 500 Index 26.3 10.0 15.7 12.0 9.4 MSCI World Index 24.4 7.8 13.4 9.2 6.9
Net Asset Value per Share
4.0%
2023:
2022:
Share Price
-5.8%
2023:
2022:
Chairman’s Statement
Dear Shareholder,
During 2023, TPIL returned 4.0% on a NAV basis and -5.8% on a share price basis. This compares with returns of 24.4% and 26.3% for the MSCI World Index and S&P 500 Index, respectively, over the same period. This clearly represents a disappointing result following on from 2022, after which the Investment Manager re-positioned the portfolio. This entailed a move towards more high conviction and concentrated investment exposures, focussed on core areas of competency such as deep value, event driven and activist strategies. These changes were allied to Third Point’s deep strength in both traditional and structured credit markets. The re-positioning led to a material improvement in performance in the second half of the year, when the NAV return outperformed both the MSCI World Index and the S&P 500 Index.
Credit has remained a steady and reliable low risk, low volatility performer. The more concentrated equity exposure combined with greater discipline in short equity and hedge positions resulted in a sharp turnaround in overall equity attribution. This moved from -3.9% on a gross basis in the first half of the year to +7.3% in the second half.
While adverse geopolitical and economic events during 2023 continued to plague market sentiment, the expectation that a mild US recession was imminent proved unfounded. US economic statistics continued to be strong.
The dramatic third quarter rout in the bond markets was propagated by a belief – which proved unfounded – that the Fed would need to cut rates to stave off recessionary risks.
Real interest rates moved sharply upwards in the third quarter, from around 1.5% to 2.5%, putting an end to the dovish monetary policy of previous years. The interest rate landscape is returning to comparative historical norms.
Portfolio Drivers
During 2023, credit was the largest source of returns delivering 4.1% gross at the portfolio level. Of this, 2.3% was from Corporate Credit and 1.8% from Structured Credit. In absolute terms, the Corporate Credit portfolio returns of 18% exceeded those of the ICE Bank of America High Yield Index by 4%, as a result of active trading and security selection. Returns on Bank and Telecom credits proved to be particularly rewarding, with attractive capital structure arbitrage opportunities being exploited successfully.
The Structured Credit portfolio generated a 7.5% return in the year and outperformed the Bloomberg US Aggregate Index by over 2%. This was attributable to the effective hedging of interest rate risk, as well as taking advantage of technical opportunities in reperforming residential mortgage loan securities, and in the shorter duration auto and student debt sectors.
Gross equity returns were 3.2% in 2023. Overall, event driven strategies contributed 5.9% to gross return, while activist and hedging strategies detracted -0.4% and -2.3% respectively. The majority of the equity returns were achieved in the second half. Significantly, a modification in single name short equity positions to a more diversified pan-industry strategy assisted in limiting risk in certain stocks, yielding more consistent alpha with lower overall volatility.
TPIL continues to have around half of its net equity exposure to AI themed equities such as Microsoft, Amazon and Meta, in addition to concentrated positions in a diversified portfolio of companies it considers undervalued such as Danaher, PCG and
Net equity exposure during the year varied between 40% and 70%, ending the year at the higher end of the range. Exposure to corporate and structured debt remained between 40-45% during the year.
The Privates portfolio, including the Participation notes, detracted -0.8% on a gross basis at the portfolio level. There have been a limited number of liquidity events to date.
Discount Management
During the year the discount to NAV widened from 15.4% to 23.3%. Most of the investment trust sector has been subject to widening discounts in 2023, averaging around 15% on a market capitalisation-weighted basis.
The Board has made strenuous efforts to seek to narrow the discount both via a substantial share buyback programme, and by offering a 25% stock tender at a 2% discount to NAV in 2024 and in 2027. The
During 2023, the Company bought back 2.6 million shares equivalent to
The Company will not repurchase any of its Shares for the duration of the Redemption Offer (see below). Once the results of the Redemption Offer have been announced, the Company may repurchase up to
Borrowing Facility
In
Redemption Offer
On
The Redemption Offer is for up to 25 per cent. of the Company’s issued share capital. Eligible Shareholders will be able to decide whether to tender some or all of their Shares within the overall limits of the Redemption Offer (but tenders in excess of a Shareholder’s Basic Entitlement will only be accepted to the extent that other Shareholders tender less than their Basic Entitlement).
The full details of the Redemption Offer are set out in a Circular which was sent to shareholders earlier this month.
Master Fund Redemptions
In the 2023 Interim Report, I detailed a change to the policy for redemptions from the
Governance
All resolutions at the
The Board engaged with, and sought feedback from, a wide variety of investors. This exercise indicated significant shareholder sentiment that the Board should be composed exclusively of independent directors, as is consistent with the vast majority of investment trusts listed on the
Following a review, the
Future Strategy for the Company
As a Board we believe that TPIL offers a valuable access point to a set of differentiated strategies in equities and credit in a
Investors have bought into the Company on the basis of
In response to this,
The Board is encouraged by the recent strong performance of the Investment Manager, with the Company generating an 8.7% NAV return in Q1 2023 and 17.6% over the prior six months to
Notwithstanding the recent strong performance, a meaningful discount to NAV persists. Discounts to NAV – and investor concern about them – is an issue throughout the listed fund sector and, with the intention to be proactive and creative in facing this, the Board has been working with the Investment Manager to explore further options for the Company.
In conjunction with these efforts, the Board is pleased to announce the appointment of
The expanded Board will create a Strategy Committee (“Committee”) comprised of the two new directors and Richard Boléat, chaired by
At the conclusion of the Strategy Review, the Committee will present its findings to the Board. If approved by the Board, the outcome will then be reported by the Board to Shareholders, and any recommended new proposals will be put to Shareholders, and voted on by them as appropriate. If at the conclusion of the Strategy Review there are no new proposals recommended by the Board to Shareholders, the Board expects that, in due course, it will invite shareholders to vote on the continuation, or otherwise, of the Company. Under those circumstances, the Board will take into account the performance of the Company over the relevant period based on the NAV per Share and other metrics that it considers appropriate in determining whether to recommend voting in favour of the continuation resolution.
Summary
The Board has been responsive to shifting market forces and structural issues that have been affecting TPIL and the investment trust sector. By authorising share buybacks, working with the Investment Manager to increase transparency in its reporting, and the implementation of exchange facility and Redemption Offer programmes, we have made decisions that we believe are in the best interests of the Company and the shareholder base as a whole.
The addition of two new Directors with different skills and experience and the conduct of the Strategy Review should give shareholders further opportunities to profit from their investment in the Company. In the meanwhile, my colleagues and I would like to thank shareholders for their continuing support.
Chairman
PORTFOLIO
Investment Manager’s Review
Strategy Performance
As stated in the Chairman’s Statement, for the 12 months ended
After a bruising 2022, in which inflation took hold and tight monetary policy reigned, it was difficult to predict the force with which markets snapped back in 2023. While not without moments of uncertainty – including the regional bank crisis in March and lingering concerns about the economy tipping into a recession – 2023 turned out to be a strong year for headline equity performance. This had roots in moderating inflation and surprisingly strong job growth, making it more likely that the
Against this backdrop, Third Point underperformed the broader market for the full year, with its short equity positions (-8.0% gross contribution to return for the
2023 Performance Review
Equities
Performance in the equity portion of the portfolio was very much a “tale of two halves”. Short equity positions were generally challenged during the market’s strength in 1H, especially in
In assessing the lessons learned from this period, Third Point’s efforts in 2023 to improve performance involved significant analysis and scrutiny of not just what it invests in, but how it invests. When the firm thinks about its competitive advantages in today’s investing landscape, duration, concentration, and an event-driven focus are top of its list.
On the long side of the equity portfolio, Third Point’s best outcomes have been in deeply researched names that represent a large portion of firm capital. Some of these investments have involved significant engagement with the company to improve performance and enhance returns. Having deep fundamental conviction has afforded Third Point with the patience to see these investments through, even when markets or factors cause temporary underperformance. Realising this was the case with several of its underperforming long positions in the first half of the year, the firm retained conviction in these names, which set the stage for the long equity portfolio’s outperformance in the second half of the year. First half laggards such as Danaher and Bath & Body Works delivered far better performances in the second half of the year.
Third Point applied a similar analytical framework to single name short-selling – focusing more on the how rather than the what. Analysis of historical results revealed some telling data on shorts: namely, the track record of identifying alpha-generating shorts has been excellent, but the monetisation of those ideas has been suboptimal, in part due to the extreme volatility in heavily shorted stocks that caused the firm to shorten duration. Third Point addressed this by restructuring its single name short portfolio to be far more diversified across industry, market cap, and factor profile, while tightly limiting risk in names with high short interest. This revised strategy not only yielded alpha since being implemented mid-year, but returns have also come with far less volatility, even during the major short squeezes witnessed in July and December of 2023.
Corporate Credit and Structured Credit
Both Corporate Credit and Structured Credit portfolios generated consistent, positive returns throughout the year, adding valuable ballast to Third Point’s overall portfolio.
Corporate credit generated approximately 18% gross return on assets in 2023, driven by active trading and security selection. First half performance was driven by successful investments in cruise lines and taking advantage of the March market selloff by buying regional banks and Credit Suisse/
The telecom sector is one of the largest in the credit markets and lately one of the most dynamic. During 2023, Third Point initiated sizeable positions in several names, with total exposure exceeding 5% of total fund NAV. The firm believes the sector is interesting because of a significant valuation derating due to concerns about competition with fixed wireless products (offered by wireless phone providers) and fibre upgrades by legacy and other carriers. This will likely impact credits differently depending on their technology, geography, and pre-existing competitive picture, creating a wealth of opportunities. These telecom positions were also important drivers of performance in 2023. For example, Frontier second lien bonds were up 24% on a price basis from the summer lows in addition to generating a 10% current yield in 2023.
Meanwhile, Third Point’s Structured Credit portfolio also outperformed the market in 2023, generating approximately 8% gross return versus the Bloomberg US Aggregate index’s 5.5% return. Each of the individual strategies within the portfolio were positive except marketplace loans, which were only 1.5% of the Master Fund NAV and experienced some mark-to-market losses based on perceived recessionary concerns. Reperforming securities in the residential mortgage space, comprising about 14% of NAV, delivered the largest contribution to return for the year. Firmness in the residential mortgage sector was led by strong continued credit performance and resilient home prices, which counteracted the negative effect of interest rate volatility on longer duration assets. Interest rate hedges were also a positive contributor, and Third Point actively traded the portfolio throughout the year.
Outlook
In Equities, Third Point sees a constructive backdrop in 2024, having addressed some of the issues that contributed to underperformance in 2023 and expects market forces to reward its approach to investing as the macroeconomic picture stabilises. While assets have certainly priced in some of the good news on inflation and rates, Third Point still believes headline equity market multiples exaggerate the valuation most companies are trading for and continues to find what it believes are high-quality companies trading at reasonable valuations. The firm expects prospective returns to be driven by: 1) a more stable interest rate environment, which should create more corporate activity, expanding opportunities for Third Point to invest in “self-help” situations or those that require more active engagement, and 2) Third Point’s duration as a holder, which it believes will continue to be a benefit in both complex event-driven situations, and mispriced, high quality companies. On the long side, going forward, Third Point expects to further concentrate the portfolio in its highest conviction names. On the short side, Third Point is encouraged by the results of imposing tighter risk parameters, and expects to increase the size of its single name short equity portfolio.
In Corporate Credit, the high yield market has been supported over the last few years by favourable supply and demand drivers that we believe are fading. The post-COVID recovery generated a significant volume of upgrades to credits that had been downgraded to high-yield during the pandemic, resulting in a net negative supply. Nearly all these names have been upgraded and returned to investment grade, so this impact is behind us. Second, new issue volumes have slowed to a relative trickle in the face of interest rate volatility as issuers were hesitant to look foolish locking in high rates or were holding out in the hope that rates would decline. Interest rates are stabilising and private equity is adjusting to the new environment, which should lead to higher new issuance. Third, larger private credit firms are competing very aggressively with public markets for new deals, making loans that would be very challenging to complete in the public markets and even offering issuers the ability to pay interest in kind. Third Point expects this source of capital to begin to dry up, as the vast sums of money raised in the last two years are spent and these investors begin to face widespread credit issues in their existing portfolios which were largely created during a period of trough interest rates and peak economic activity. Much like private equity, the expectation is that a vintage year will be an important driver of private credit performance.
On a fundamental basis, the impact of higher rates has the potential to create widespread credit stress in high yield. According to a recent Bank of America study, 40% of all B/CCC issuers (roughly half the market) will be free cash flow negative as they refinance maturing debt with more expensive debt due to higher interest rates. It is also worth noting that this analysis, done at the beginning of 2024, assumed that the
In Structured Credit, Third Point remains constructive on the residential mortgage sector, and it comprises 65% of the firm’s exposure in this asset class. The
Looking ahead to 2024, the banking crisis last March caused banks to try to optimise their portfolios and sell the easiest, shortest duration assets that are capital intensive. Third Point estimates there are
Portfolio Analysis
As at
Exposure
Portfolio Detail 1 Long Short Net
Equity
Activism/Constructivism 8.2% -2.3% 5.9%
Fundamental & Event 82.3% -17.5% 64.7%
Portfolio Hedges 2 0.0% -0.2% -0.2%
Total Equity 90.4% -20.0% 70.4%
Credit
Corporate & Sovereign 17.4% -0.3% 17.2%
Structured 25.0% -0.1% 24.9%
Total Credit 42.4% -0.3% 42.1%
Privates 7.8% 0.0% 7.8%
Other 3 0.0% 0.0% 0.0%
Total Portfolio 140.6% -20.3% 120.3%
Exposure
Equity Portfolio Detail 1 Long Short Net
Equity Sectors
Consumer Discretionary 16.1% -3.0% 13.1%
Consumer Staples 0.2% -0.7% -0.5%
Utilities 14.1% -2.8% 11.2%
Energy 0.9% -0.1% 0.8%
Financials 17.7% -3.8% 13.8%
Healthcare 6.5% -2.1% 4.4%
Industrials & Materials 17.5% -4.6% 12.8%
Enterprise Technology 10.0% -2.0% 8.0%
Media & Internet 7.6% -0.7% 6.9%
Portfolio Hedges 2 0.0% -0.2% -0.2%
Total 90.4% -20.0% 70.4%
1
Unless otherwise stated, information relates to the
2 Primarily broad-based market and equity-based hedges.
3 Includes currency hedges and macro investments. Rates and FX related investments are excluded from the exposure figures.
The sum of long and short exposure percentages may not visually add to the corresponding net figure due to rounding.
Net equity exposure is defined as the long exposure minus the short exposure of all equity positions (including long/short, arbitrage, and other strategies), and can serve as a rough measure of the exposure to fluctuations in overall market levels. The Investment Manager continues to closely monitor the liquidity of the portfolio and is comfortable that the current composition is aligned with the redemption terms available to the Company by virtue of its holding of Class YSP shares.
Investment Team
Daniel S. Loeb
CEO & CIO
Daniel S. Loeb is CEO of
Partner & Head of Credit
Managing Director & Head of Structured Credit
Managing Partner,
Since
GOVERNANCE
Directors
Rupert is a
Directorships in other public listed companies:
NB Global Monthly Income Fund Limited (
Richard Boléat
Richard Boléat is a Jersey resident and is a Fellow of the
Directorships in other public listed companies:
CVC Credit Partners European Opportunities Limited, M&G Credit Income Investment Trust plc (both
Directorships in other public listed companies:
VinaCapital Vietnam Opportunity Fund Limited (
Directorships in other public listed companies:
The Lindsell Train Investment Trust PLC, Barings Emerging EMEA Opportunities PLC, Schroder AsiaPacific Fund plc, (all
Claire is a
Directorships in other public listed companies:
Riverstone Energy Limited (
A number of the directors are also Non-Executive Directors of other listed funds. The Board notes that none of these funds are trading companies and confirms that all Non-Executive Directors of the Company have sufficient time and commitment, as evidenced by their attendance and participation at meetings, to devote to this Company.
Strategic Report
The Directors submit their Annual Report, together with the Statement of Assets and Liabilities, Statement of Operations, Statement of Changes in Net Assets, Statement of Cash Flows and the related notes of
The Annual Report and Audited Financial Statements have been properly prepared, in accordance with applicable
The Company
The Company was incorporated in
The Ordinary Shares of the Company are quoted on the LSE in two currencies, US Dollars and Pounds Sterling.
The Company is a member of the
At the time of its listing, the Company adopted a share structure which was common at that time, to mitigate the risk of the Company losing its status as a “foreign private issuer” under US securities laws.
The Company has two classes of shares in issue: (i) Ordinary Shares which have economic and voting rights and (ii) Class
The Class
VoteCo is specifically excluded from voting from any of the twelve Listing Rules Specified Matters, being those matters in relation to which the Listing Rules require a resolution to be passed only by holders of listed shares, the most notable of which are:
-- any proposal to make a material change to the investment policy -- any proposal to approve the entry into a related party transaction -- the annual re-election of any non-independent director
At the time of the Company’s listing, it entered into a Support and Custody Agreement with VoteCo under which VoteCo agreed to hold the Class
Investment Objective and Policy
The Company’s investment objective is to provide its Shareholders with consistent long-term capital appreciation utilising the investment skills of
The Investment Manager identifies opportunities by combining a fundamental approach to single security analysis with a reasoned view on global, political and economic events that shapes portfolio construction and drives risk management.
The Investment Manager seeks to take advantage of market and economic dislocations and supplements its analysis with considerations of managing overall exposures across specific asset classes, sectors, and geographies by evaluating sizing, concentration, risk, and beta, among other factors. The resulting portfolio expresses the Investment Manager’s best ideas for generating alpha and its tolerance for risk given global market conditions. The Investment Manager is opportunistic and often seeks a catalyst that will unlock value or alter the lens through which the broad market values a particular investment. The Investment Manager applies aspects of this framework to its decision-making process, and this approach informs the timing of each investment and its associated risk.
The Company has substantially all of its holding in the
Any Ordinary Shares bought for the Company’s account (e.g. as part of the buyback programme) traded mid-month will be purchased and held by the
Results and Share Buybacks
The results for the year are set out in the Statement of Operations.
In
The Company will not repurchase any of its Shares for the duration of the Redemption Offer. Once the results of the Redemption Offer have been announced, the Company may repurchase up to
In the year from
Key performance indicators (“KPIs”)
At each Board meeting, the Board considers a number of performance measures to assess the Company’s success in achieving its objectives. The KPIs which have been identified by the
-- Net Asset Value (NAV); -- Discount to the NAV; -- Share price; and -- Ongoing charges.
Viability Statement
In accordance with principle 31 of the
The Company’s performance and operations depend upon the performance of the
The Directors acknowledge the two year notice period to the Investment Manager serving notice under the Management Agreement. To mitigate against this risk, the Directors meet regularly with the Investment Manager to review the Company’s performance, and closely monitor the relationship with the Investment Manager.
In its assessment of the viability of the Company, the Directors have carried out a robust assessment of the principal risks facing the Company as set out in the Directors’ Report.
The Board has announced that it will carry out a Strategy Review over the next six months. At the conclusion of the Strategy Review, the Strategy Committee will present its findings to the Board. If approved by the Board, the outcome will then be reported by the Board to Shareholders, and any recommended new proposals will be put to Shareholders, and voted on by them as appropriate. On the assumption that the Committee is able to identify a positive direction for the Company, which is approved by Shareholders, the Company will continue into the future.
On that basis, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to
Going Concern
The
In addition, the Redemption Offer for 25% of NAV, at a discount of 2% to NAV, will also be funded through redemption of shares in the
The Board has announced that it will carry out a Strategy Review over the next six months. At the conclusion of the Strategy Review, the Strategy Committee will present its findings to the Board. If approved by the Board, the outcome will then be reported by the Board to Shareholders, and any recommended new proposals will be put to Shareholders, and voted on by them as appropriate. On the assumption that the Committee is able to identify a positive direction for the Company, which is approved by Shareholders, the Company will continue into the future.
On that basis, after due consideration, and having made due enquiry of Third Point, the Directors are satisfied that it is appropriate to continue to adopt the going concern basis in preparing these Audited Financial Statements for the period through
There were no other events during the financial year outside the ordinary course of business which, in the opinion of the Directors, may have had an impact on the Annual Financial Statements for the year ended
Section 172 Report
Section 172 of the Companies Act 2006 (“UK Companies Act”) applies directly to
Section 172 states that: A director of a company must act in the way he or she considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the following:
______________________________________________________________________________ | |In managing the Company, the aim of the| | |Board and the Investment Manager is | | |always to ensure the long-term | | |sustainable success of the Company and,| | |therefore, the likely long-term | | |consequences of any decision are a key | | |consideration. In managing the Company | | |during the year under review, the Board| |The likely consequences of any |acted in the way which it considered, | |decision in the long term. |in good faith, would be most likely to | | |promote the Company’s long-term | | |sustainable success and to achieve its | | |wider objectives for the benefit of | | |Shareholders as a whole, having had | | |regard to the Company’s wider | | |stakeholders and the other matters set | | |out in section 172 of the UK Companies | | |Act. | |______________________________________|_______________________________________| |The interests of the Company’s |The Company does not have any | |employees. |employees. | |______________________________________|_______________________________________| |The need to foster the Company’s |The Board’s approach is described under| |business relationships with suppliers,|“Stakeholders”. | |customers and others. | | |______________________________________|_______________________________________| |The impact of the Company’s operations|The Board’s approach is described under| |on the community and the environment. |Environmental, Social and Governance | | |(ESG) Policies. | |______________________________________|_______________________________________| |The desirability of the Company |The Board’s approach is described under| |maintaining a reputation for high |“Culture and Values”. | |standards of business conduct. | | |______________________________________|_______________________________________| |The need to act fairly as between |The Board’s approach is described under| |members of the Company. |“Stakeholders”. | |______________________________________|_______________________________________|
Culture and Values
The Directors’ overarching duty is to promote the success of the Company for the benefit of investors, with due consideration of other stakeholders’ interests. The Company’s approach to investment is explained in the Investment Manager’s Report. The Board applies various policies and practices to ensure that the Board’s culture is in line with the Company’s purpose and strategy. The Directors aim to achieve a supportive business culture combined with constructive challenge.
The Company has a number of policies and procedures in place to assist with maintaining a culture of good governance including those relating to diversity, anti-bribery (including the acceptance of gifts and hospitality), tax evasion, conflicts of interest, and dealings in the Company’s shares. The Board assesses and monitors compliance with these policies regularly through Board meetings and the annual evaluation process. The Board seeks to appoint the most appropriate service providers for the Company’s needs and evaluates the services on a regular basis. The Board considers the culture of the Investment Manager and other service providers through regular reporting and by receiving regular presentations as well as through ad hoc interaction.
The Board also seeks to control the Company’s costs, thereby enhancing performance and returns for the Company’s Shareholders. The Directors consider the impact on the community and environment. The Board and Investment Manager work closely together in developing and monitoring the Company’s approach to Environmental, Social and Governance matters.
Stakeholders
The Company is an externally managed investment company whose activities are all outsourced. It does not have any employees. The Board has identified its key stakeholders, and how the Company engages with them, in the table below:
______________________________________________________________________________ |Stakeholder |Key Considerations |Engagement | |_______________________|__________________________|___________________________| | | |A detailed explanation of | | | |the Company’s approach is | | | |set out in the Director’s | | | |Report under Relations with| | | |Shareholders. | | | | | | |As an investment company, |The Board receives regular | | |Third Point Investors |reports from the Investment| | |Limited’s Shareholders |Manager and also | | |are, in effect, both its |independent reports from | | |owners and its customers, |Numis Securities Limited | | |seeking investment returns|(the “Corporate Broker”) on| | |from the Company. A |relations with, and any | | |well-informed and |views expressed by, | | |supportive Shareholder |Shareholders. | | |base is crucial to the | | | |long-term sustainability |At the AGM in June 2023, a | | |of the Company. |significant minority of | | |Understanding the views |shareholders voted against | | |and priorities of |the reappointment of Josh | | |Shareholders is, |Targoff to the Board. The | | |therefore, fundamental to |Chairman engaged with | |Shareholders |retaining their continued |shareholders and, following| | |support. |these discussions, it has | | | |been agreed that Mr. | | |In considering |Targoff will not stand for | | |Shareholders, the Board’s |re-election to the Board at| | |key considerations are: |the AGM in May 2024. | | | | | | |- Overall investment |The Board has been under | | |returns; |pressure for some time from| | | |a minority group of the | | |- Controlling the |Company’s shareholders to | | |discount at which shares |take action to reduce the | | |trade to net asset value; |discount at which the | | |and |Company’s shares are | | | |trading and, more recently,| | |- Control of costs. |to return capital at or | | | |close to NAV. This has | | | |culminated in the holding | | | |of a Redemption Offer for | | | |up to 25% of the issued | | | |shares at a discount of 2% | | | |of NAV expected to be | | | |completed in June 2024. | |_______________________|__________________________|___________________________| | | |The Board engages in | | | |regular, open and close | | | |communication with the | | | |Investment Manager. It | | | |reviews in detail the | | | |overall performance of the | | | |Company and its underlying | | | |investment. The | | | |relationship with and | | | |performance of the | | | |Investment Manager is | | | |monitored and reviewed by | | | |the Management Engagement | | | |Committee. | | | | | | |Management of the |In agreeing the Redemption | | |Company’s investment is |Offer arrangements – both | | |delegated to the |the Redemption Offer | |Investment Manager |Investment Manager. |expected to be completed in| | |Investment performance is |June 2024 and any future | | |crucial to the long-term |Redemption Offers – the | | |success of the Company. |Board engage with the | | | |Investment Manager in order| | | |to ensure a fair balance | | | |between the interests of | | | |shareholders and those of | | | |the Investment Manager. | | | | | | | |In setting investment | | | |management fees, the Board | | | |seeks to achieve an | | | |appropriate balance between| | | |value for money and an | | | |incentive to retain a | | | |strong and capable | | | |portfolio management team | | | |along with supporting staff| | | |and infrastructure. | |_______________________|__________________________|___________________________| | | |The Administrator and | | | |Corporate Secretary attend | | | |all Board meetings. | | | | | | | |The Management Engagement | | | |Committee undertakes an | | | |annual review of the key | | |The Administrator and |service providers, | | |Corporate Secretary are |encompassing performance, | | |key to the effective |level of service and cost. | | |running of the Company. |Each provider is an | |Administrator and | |established business and | |Corporate Secretary and|The Company has a number |each is required to have in| |other key service |of other key service |place suitable policies to | |providers |providers, each of which |ensure they maintain high | | |provides an important |standards of business | | |service to the Company and|conduct, treat customers | | |ultimately to its |fairly, and employ | | |Shareholders. |corporate governance best | | | |practices. | | | | | | | |All bills and expense | | | |claims from suppliers are | | | |paid in full, on time and | | | |in compliance with the | | | |relevant contracts. | |_______________________|__________________________|___________________________|
Environmental, Social and Governance (“ESG”) Policies
The Board regards proper and effective governance a high priority for the Company.
As an investment company, the Company has a limited direct impact on the environment or on society. The Board has concluded specifically that climate change, including physical and transition risks, does not have a material impact on the recognition and separate measurement considerations of the assets and liabilities of the Company in the financial statements as at
The ESG policies of the Investment Manager are made up of the environmental, social, and governance factors considered in the investment process and the ESG initiatives undertaken within the business itself.
The Investment Manager is a signatory to the United Nations Principles for
Investment Process
In 2020, Third Point started to incorporate ESG evaluation into certain of its investment strategies. The Investment
Manager’s process is designed to broadly identify ESG issues – both those that may create value and those likely to destroy it – and, when appropriate, to consider whether to engage company management in discussion about these topics. These standards are maintained through a four-step process – from pre-investment checklist to post-investment tracking – overseen by the Head of ESG Engagement, who stays abreast of developments in the portfolio and in the ESG community and engages with the investment team on ESG issues.
Assessing Sustainability Risks
Sustainability risk refers to an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of an investment. The Investment Manager therefore approaches sustainability risk analysis as a process of identifying potential events that could cause a material negative impact on the value of its clients’ investments.
The Investment Manager considers environmental, social, and governance events or conditions as part of the investment process in areas where data availability allows for analysis, with a focus on risks relating to governance events or conditions. These are most relevant to the
Identification : The Investment Manager has reviewed the sustainability risks relating to governance events or conditions which may cause a material negative impact on the value of its clients’ investments, should those risks occur.
Management : While the Investment Manager’s portfolio managers and analysts are provided with information on certain sustainability risks relating to governance events or conditions, and are encouraged to take such sustainability risks into account when making an investment decision, sustainability risk would not by itself prevent the Investment Manager from making any investment. Instead, sustainability risk relating to governance events or conditions forms part of the overall risk management process, and is one of many risks which may, depending on the specific investment opportunity, be relevant to a determination of risk. However, the Investment Manager does not apply any absolute risk limits or risk appetite thresholds which relate exclusively to sustainability risk relating to governance events or conditions as a separate category of risk.
Monitoring : As part of ongoing monitoring, the Investment Manager’s portfolio managers may at times engage in Active Ownership. Active Ownership is the process of communicating with issuers on governance issues, with a view to monitor or influence governance outcomes within the issuer.
Governance risks are associated with the quality, effectiveness and process for the oversight of day-to-day management of companies in which the
-- Lack of diversity at board or governing body level: the absence of a diverse and relevant skillset within a board or governing body may result in less well informed decisions being made. The absence of an independent chairperson of the board, particularly where such role is combined with the role of chief executive officer, may hamper the board’s ability to exercise its oversight responsibilities, challenge and discuss strategic planning and performance, input on issues such as succession planning and executive remuneration and otherwise set the board’s agenda. -- Inadequate external or internal audit: ineffective or otherwise inadequate internal and external audit functions may increase the likelihood that fraud and other issues within a company are not detected and/or that material information used as part of a company’s valuation and/or the Investment Manager’s investment decision making is inaccurate. -- Bribery and corruption: the effectiveness of a company’s controls to detect and prevent bribery and corruption both within the company and its governing body and also its suppliers, contractors and sub-contractors may have an impact on the extent to which a company is operated in furtherance of its business objectives. -- Lack of scrutiny of executive pay: failure to align levels of executive pay with performance and long-term corporate strategy in order to protect and create value may result in executives failing to act in the long-term interest of the company. -- Poor safeguards on personal data/IT security (of employees and/or customers): the effectiveness of measures taken to protect personal data of employees and customers, and, more broadly, IT and cybersecurity, will affect a company’s susceptibility to inadvertent data breaches and its resilience to “hacking.”
ESG within Third Point
The Investment Manager also endeavours to continuously improve and expand upon its commitment to be a responsible, sustainable, and healthy workplace. Since its founding in 1995, it has promoted employee wellness, training, and environmental sustainability, and in 2019 codified these values into its formal ESG policies. These policies encompass an ongoing commitment to developing best-in-class standards for environmental, social, and governance practices. Below are some of the highlights of the internal ESG activities and initiatives that have been undertaken by the Investment Manager.
Environmental initiatives
Third Point’s reuse and recycling practices focus on recycling plastics and paper; reducing container waste; and promoting food sustainability.
Third Point’s offices are located at 55 Hudson Yards, which is part of the first neighbourhood in
Hudson Yards is a model for stormwater reuse with rainfall collected from rooftops and public spaces and stored in a 60,000-gallon tank in the platform that forms the base of the neighbourhood. Stormwater is used to irrigate the more than 200 mature trees and 28,000 plants in the public park as well as in mechanical systems to conserve drinking water, reducing stress on New York’s sewer system.
Social Initiatives
The Investment Manager believes engaged human capital management is essential for an asset manager, as trained employees increasingly drive value in the data driven economy. The Investment Manager takes a long term view of employee evolution and invests in its people. It is also committed to innovating and evolving to meet future employee needs, particularly in areas where talent is scarce, such as in data science and AI. Third Point is an Equal Opportunity Employer and has adopted fair chance hiring practices. The Investment Manager is committed to the benefits of a diverse workforce in perspective and background. Third Point offers internships to candidates through SEO, an organisation that introduces historically underrepresented students to financial services. It also participates in industry initiatives to bring more women into asset management via involvement with Girls Who Invest. The organisation’s goal is to have 30% of the world’s investable capital managed by women by 2030.
Philanthropy
Through the “Third Point Gives” programme, the Investment Manager offers its employees multiple opportunities to come together for service learning and contribute financially to the community. Consistent with Third Point values, Third Point Gives comprises three core elements:
-- The Matching Gifts Programme seeks to encourage charitable giving by Third Point employees with matching eligible contributions up to$15,000 per employee per calendar year. -- The Individual Philanthropy Programme seeks to empower Third Point employees to maximise their impact on the issues they care about most by providing opportunities to learn valuable techniques, strategies and approaches to effective philanthropy. -- The Team Philanthropy Programme seeks to unlock the power of teamwork and collaboration among Third Point employees to improve the world around them through joint effort on a shared philanthropic endeavour.
In 2020, Third Point launched an innovative Team Philanthropy project in partnership with a non-profit organisation, the Ladies of Hope Ministries (“LOHM”), an organisation dedicated to helping previously incarcerated women and their families re-integrate into society. Third Point is not only donating personal philanthropic capital from the CEO and many employees, but is also offering intellectual expertise in areas such as marketing, accounting, investing and legal services to help the organisation scale more effectively.
Donor Advised Funds
In 2017, Third Point began to offer its employees a
Governance Initiatives
The Investment Manager strongly encourages good governance practice at all its investee businesses through formal and informal engagement. Each of Third Point’s fund structures has an independent Board or Unaffiliated Consultation Committee. Five of the six members of the Board of the Company are independent of the Investment Manager.
Signed on behalf of the Board by:
Chairman
Director
Directors’ Report
Directors
The Directors of the Company during the year and to the date of this Report are as listed on this Annual Report.
Directors’ Interests
Pursuant to an instrument of indemnity entered into between the Company and each Director, the Company has undertaken, subject to certain limitations, to indemnify each Director out of the assets and profits of the Company against all costs, charges, losses, damages, expenses and liabilities arising out of any claims made against them in connection with the performance of their duties as a Director of the Company.
Corporate Governance
The Board is guided by the principles and recommendations of the
The Board has determined that reporting against the principles and recommendations of the AIC Code will provide appropriate information to Shareholders. The Company has complied with all the recommendations of the AIC Code and the relevant provisions of the
The
-- the role of the chief executive; -- executive Directors’ remuneration; and -- the need for an internal audit function.
The Board considers these provisions are not relevant to the position of the Company, being an externally advised investment company with no executive directors or employees. The Company has therefore not reported further in respect of these provisions.
The Company does not have employees, hence no whistle-blowing policy is necessary. However, the Board, through the Management Engagement Committee (“MEC”), has satisfied itself that the Company’s service providers have appropriate whistleblowing policies and procedures and confirmation has been sought from the service providers that nothing has arisen under those policies and procedures which should be brought to the attention of the Board. Furthermore, the MEC, on an annual basis, ensures that service providers have appropriate anti money laundering, disaster recovery and risk monitoring policies in place.
The Code of Corporate Governance (the “Guernsey Code”) provides a framework that applies to all entities licensed by the
The Board confirms that, throughout the year covered in the Audited Financial Statements, the Company complied with the Guernsey Code, to the extent it was applicable based upon its legal and operating structure and its nature, scale and complexity.
The
Board Structure
The Directors who served during the year are listed below.
Richard Boléat
Non-Executive Director
Yes
Joshua L Targoff
Non-Executive Director
No
Since the year end, the Board has announced the appointment of
In addition to founding businesses,
In 2005,
In 2015,
In 2021,
The Board meets at least four times a year and in addition there is regular contact between the Board, the
The Company has no executive Directors or employees. All matters, including strategy, investment and dividend policies, gearing and corporate governance procedures are reserved for approval by the Board of Directors. The Board receives full information on the Company’s investment performance, assets, liabilities and other relevant information in advance of Board meetings.
Board Tenure and Succession Planning
As required by the AIC Code, every Director is subject to annual re-election by the Shareholders. Any directors appointed to the Board since the previous AGM also retire and stand for election. The Independent Directors take the lead in any discussions relating to the appointment or re-appointment of directors, initially through the
Meeting Attendance Records
The table below lists Directors’ attendance at meetings during the year.
Richard Boléat 4 of 4 4 of 4
Joshua L Targoff 1 4 of 4 n/a
1
A number of other ad hoc meetings of the Board were held during the year which were attended by those Directors who were available at the time.
Committees of the Board
The AIC Code requires the Company to appoint Nomination, Remuneration and Management Engagement Committees and the independent directors of the Board act as these committees.
Before the commencement of any recruitment process, the
The Company annually reviews its policy on the structure, size and composition of the Board. The Board is cognisant of the recommendations of the Parker Review in relation to targets for ethnic diversity, the FTSE Women Leaders Review in relation to targets for women on boards and the new FCA Listing Rules requirements on board diversity targets, which require companies to report against the following:
-- At least 40% of individuals on the Board are women; -- At least one senior Board position is held by a woman; and -- At least one individual on the Board is from a minority ethnic background
As an externally managed investment trust, with no Chief Executive Officer or Chief Financial Officer, the Board considers that the Chair of the Company, the Senior Independent Director and the Chair of the Audit Committee to be senior positions. The role of Senior Independent Director is held by a woman,
As at
Number of Percentage of Number of senior
Gender identity Board Members the Board positions on the Board
Men 4 66.6% 2
Women 2 33.3% 1
Number of Percentage of Number of senior
Ethnic background Board Members the Board positions on the Board
White British or other 6 100% 3
other White (including
minority white Groups)
The function of the Management Engagement Committee is to ensure that the Company’s management agreement is competitive and reasonable for the Shareholders, along with the Company’s agreements with all other third party service providers (other than the external auditors). The Committee also reviews annually the performance of the Investment Manager with a view to determining whether to recommend to the Board that the Investment Manager’s mandate be renewed, subject to the specific notice period requirement of the agreement. The other third party service providers are also reviewed on an annual basis. Richard Boléat is Chairman of the Management Engagement Committee.
Audit Committee
The Company’s Audit Committee conducts formal meetings at least three times a year. Its functions include monitoring the Company’s internal control and risk management systems, oversight of the relationship with the External Auditor, including consideration of the appointment, independence, effectiveness of the audit, and remuneration of the auditors, and to review and recommend the Annual Report and audited financial statements, and the Interim Report and unaudited condensed interim financial statements to the Board of Directors.
Senior Independent Director
Directors’ Duties and Responsibilities
The Directors have adopted a set of Reserved Powers, which establish the key purpose of the Board and detail its major duties. These duties cover the following areas of responsibility:
-- Statutory obligations and public disclosure; -- Strategic matters and financial reporting; -- Board composition and accountability to Shareholders; -- Risk assessment and management, including reporting, compliance, monitoring, governance and control; and -- Other matters having material effects on the Company.
These Reserved Powers of the Board allow the Directors to discharge their fiduciary responsibilities and provide a set of parameters for measuring and monitoring the effectiveness of their actions.
The Directors are responsible for the overall management and direction of the affairs of the Company. The Company has no Executive Directors or employees. The Company invests all of its assets in shares of the
The Directors have access to the advice and services of the Company Secretary who is responsible to the
The Board is also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Internal Control and Financial Reporting
The Directors acknowledge that they are responsible for establishing and maintaining the Company’s system of internal control and reviewing its effectiveness. Internal control systems are designed to manage rather than eliminate the failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatements or loss.
The Directors review all controls including operations, compliance and risk management. The key procedures which have been established to provide internal control are:
-- Investment advisory services are provided by the Investment Manager. The Board is responsible for setting the overall investment policy, ensuring compliance with the Company’s Investment Strategy and monitoring the action of theInvestment Manager and Master Fund at regular Board meetings. The Board has also delegated administration and company secretarial services toNorthern Trust International Fund Administration Services (Guernsey) Limited (“NT”); however, it retains accountability for all functions it has delegated; -- The Board considers the process for identifying, evaluating and managing any significant risks faced by the Company on an on-going basis. It seeks to ensure that effective controls are in place to mitigate these risks and that a satisfactory compliance regime exists to ensure all local and international laws and regulations are upheld; -- The Board clearly defines the duties and responsibilities of its agents and advisors and appointments are made by the Board after due and careful consideration. The Board monitors the ongoing performance of such agents and advisors; -- The Investment Manager and NT maintain their own systems of internal control, on which they report to the Board. The Company, in common with other investment companies, does not have an internal audit function. The Audit Committee has considered the need for an internal audit function, but because of the internal control systems in place at the Investment Manager and NT, has decided it appropriate to place reliance on their systems and internal control procedures; and -- The systems are designed to ensure effectiveness and efficient operation, internal control and compliance with laws and regulations. In establishing the systems of internal control, regard is paid to the materiality of relevant risks.
Board Performance
The Board and Committees evaluation process was undertaken during the year, using Lintstock, an independent third-party agency, and the evaluation concluded in
For the year ending
Management of Principal Risks and Uncertainties
In considering the risks and uncertainties facing the Company, the Audit Committee reviews regularly a matrix which documents the principal and emerging risks and reports its findings to the Board.
This discipline is in accordance with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, published by the FRC and has been in place for the year under review and up to the date of approval of the Audited Financial Statements.
The risk matrix document considers the following information:
-- Reviewing the risks faced by the Company and the controls in place to address those risks; -- Identifying and reporting changes in the risk environment; -- Identifying and reporting changes in the operational controls; and -- Identifying and reporting on the effectiveness of controls and remediation of errors arising.
The Directors have acknowledged they are responsible for establishing and maintaining the Company’s system of internal control and reviewing its effectiveness by focusing on four key areas:
-- Consideration of the investment advisory services provided by the Investment Manager; -- Consideration of the process for identifying, evaluating and managing any significant current and emerging risks faced by the Company on an ongoing basis; -- Clarity around the duties and responsibilities of the agents and advisors engaged by the Directors; and -- Reliance on the Investment Manager and Administrator maintaining their own systems of internal controls.
Further discussion on Internal Control is documented under “Internal Control and Financial Reporting” set out above.
The risk matrix considers all the significant risks to which the Company has been exposed during the financial year and, from these, the Directors paid particular attention to the following principal risks and uncertainties:
-- Discount to the NAV. The Board monitors the discount to NAV and maintains regular contact with the Investment Manager and Corporate Broker to assess the market for the Company’s shares. In addition, the Investment Manager, Corporate Broker and the Directors maintain regular contact with significant Shareholders in the Company. The Board has adopted a substantial buyback programme under which the Company has bought back approximately$250 million worth of its stock in the four year period toSeptember 2023 . Despite this, the discount has remained stubbornly high and the Company is now offering shareholders the opportunity to tender 25% of their stock at a discount of 2% to NAV. This Redemption Offer is expected to be completed inJune 2024 . The Company will not repurchase any of its Shares for the duration of the Redemption Offer. Once the results of the Redemption Offer have been announced, the Company may repurchase up toUS$20m of Shares over the balance of 2024 if, in the Board’s view, it is in the best interests of the Company and Shareholders to do so; -- Concentration of the Investor Base. The Directors receive quarterly reports on the shareholder base from the Corporate Broker and there is regular communication between the Directors and the Corporate Broker to identify any significant changes in the share register; -- Shareholder relations. The Board monitors key shareholder reports provided by the Corporate Broker at each Board Meeting. The Investment Manager prepares monthly updates on behalf of theMaster Fund and maintains the Company website. The Board receives quarterly reports from the Corporate Broker and the Investment Manager on the major shareholdings. The Board and the Investment Manager’s investor relations personnel have continued its policy of active engagement with shareholders over the year; -- Underlying investment performance of theMaster Fund . The Directors receive monthly updates from the Investment Manager on the performance of theMaster Fund and review the detailed performance at quarterly Board Meetings. The Board has been concerned over the year under review that the Investment Manager has found it difficult to produce competitive performance although improved performance at the end of 2023 and into 2024 has been encouraging; -- Performance of the Investment Manager. Through the Management Engagement Committee, the Directors review the performance of the Investment Manager on an annual basis.Daniel Loeb is CEO and CIO of the Investment Manager and his continuing involvement is a critical element of its success. The Board representatives conduct annual visits to the Investment Manager inNew York , the most recent being inApril 2023 ; -- Geopolitical and economic risk. The Investment Manager monitors local and international risks and adjusts the portfolio of investments in theMaster Fund accordingly; -- Valuation of investments. The valuation of the Company’s investment in theMaster Fund is confirmed by the Administrator of theMaster Fund , is checked by the Investment Manager and is reviewed as part of the Company’s annual audit. The Board makes enquiries of the Investment Manager to satisfy itself that there are satisfactory controls in place over the valuation processes within theMaster Fund and theMaster Partnership . The accounts of theMaster Fund and theMaster Partnership are both subject to annual audit; and -- Liquidity of shares in theMaster Fund . The Company relies on the redemption of shares in theMaster Fund in order to meet its monthly expenses and share buybacks. The Directors receive reports from the Administrator each month as this takes place.
It is expected that the principal risks and uncertainties listed above will apply to the Company for a minimum of the next six months. However, the Board will be carrying out a Strategy Review over the balance of 2024 and, depending on the outcome of this exercise, it is possible that the principal risks and uncertainties may change.
Significant Events
In
On
On
On
On
There were no other events outside the ordinary course of business which, in the opinion of the Directors, may have had an impact on the Audited Financial Statements for the year ended
Relations with Shareholders
The Board welcomes Shareholders’ views and places great importance on communication with its Shareholders. The Board receives regular reports on the views of Shareholders and the Chairman and other Directors are available to meet Shareholders. Shareholders who wish to communicate with the Board should, in the first instance contact the Administrator, whose contact details can be found on the Company’s website (www.thirdpointlimited.com). The Annual General Meeting of the Company provides a forum for Shareholders to meet and discuss issues with the Directors of the Company. The sixteenth Annual General Meeting was held on
International Tax Reporting
For the purposes of the US Foreign Account Tax Compliance Act (“FATCA”), the Company is registered with the US Internal Revenue Services (“IRS”) as a
The Common Reporting Standard (“CRS”) is a global standard for the automatic exchange of financial account information developed by the
The Board has taken the necessary action to ensure that the Company is compliant with
Criminal Finances Act 2017
In respect of the
The Board also keeps under review developments involving other social, environmental and regulatory matters and will report on those to the extent they are considered relevant to the Company’s operations.
Significant Shareholdings
As at
Signed on behalf of the Board by:
Chairman
Director
Statement of Directors’ Responsibilities in Respect of the Audited Financial Statements
The Directors are responsible for preparing the Audited Financial Statements in accordance with applicable Guernsey Law and accounting principles generally accepted in
In preparing these Audited Financial Statements the Directors should:
-- select suitable accounting policies and then apply them consistently; -- make judgements and estimates that are reasonable and prudent; -- state whether the applicable accounting standards have been followed subject to any material departures disclosed and explained in the Audited Financial Statements; and -- prepare the Audited Financial Statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the Audited Financial Statements comply with The Companies (
The Directors have responsibility to confirm that:
-- there is no relevant audit information of which the Company’s Auditor is unaware and each Director has taken all the steps he/she ought to have taken as a Director to make himself aware of any relevant information and to establish that the Company’s Auditor is aware of that information; -- this Annual Report and Audited Financial Statements have been prepared in accordance with accounting principles generally accepted inthe United States of America and give a true and fair view of the financial position of the Company; -- this Annual Report and Audited Financial Statements, taken as a whole, are fair, balanced and understandable and provide information necessary for the Shareholders to assess the Company’s performance, business model and strategy; and -- this Annual Report and Audited Financial Statements include information detailed in the Directors’ Report, the Investment Manager’s Review and Notes to the Audited Financial Statements, which provide a fair review of the information required by:
a) DTR 4.1.8 of the Disclosure Guidance and Transparency Rules (“DTR”), being a fair review of the Company business and a description of the principal risks and uncertainties facing the Company; and
b) DTR
Chairman
Director
Directors’ Remuneration Report
The Board has prepared this report as part of its framework for corporate governance which, as described in the Directors’ Report, enables the Company to comply with the main requirements of the
An ordinary resolution for the approval of this Report will be put to the Shareholders at the forthcoming AGM.
Remuneration Committee
The Board has appointed a
Remuneration Policy
The Company’s policy is that the fees payable to the Directors should reflect the time spent by the Directors on the Company’s affairs and the responsibilities borne by the Directors be sufficient to attract, retain and motivate directors of quality required to run the Company successfully. Fees for the Directors are determined by the Board within the limits approved by shareholders. The maximum limit currently is £500,000 in aggregate per annum. Directors’ fees are reviewed annually, although such a review will not necessarily result in any changes to the rates, and account is taken of fees paid to directors of comparable companies.
Directors are entitled to be reimbursed for any reasonable expenses properly incurred by them in connection with the performance of their duties and attendance at board and general meetings and committee meetings.
There are no long-term incentive schemes provided by the Company and no performance fees are paid to Directors.
Directors do not have service contracts with the Company. Each Director is appointed by a letter of appointment which sets out the main terms of their appointment. Director appointments can also be terminated in accordance with the Company’s Articles of Association. Should Shareholders vote against a Director standing for re-election, the Director affected will not be entitled to any compensation.
Component Parts of the Directors’ Remuneration
Year ended
Year ended
£ £
Chairman’s base fee 76,000 76,000
Non-Executive Director base fee 48,000 48,000
Additional fee for the Senior Independent Director 3,000 3,000
Additional fee for the Chairman of the Audit Committee 9,000 9,000
Additional fee for the Chairman of the Management
Engagement Committee 3,000 3,000
Additional fee for the Chairman of the Nomination
and Remuneration Committee 3,000 3,000
It is the Company’s policy that the Chairman, Senior Independent Director and Chairman of the Committees be paid higher fees to reflect their additional responsibilities.
Prior to the year end, the
Directors’ fees
The fees payable by the Company in respect of each of the Directors who served during 2023 and 2022, were as follows:
2023 2022
£ £
Richard Boléat (Management Engagement Committee Chairman) 51,000 42,500
Joshua L Targoff 2 – –
Total 286,000 269,000
USD equivalent
1
2
As a non-independent Director and as a Partner of the Investment Manager
Performance
The financial highlights detail the share price returns over the year.
Signed on behalf of the Board by:
Chairman
Director
Report of the Audit Committee
We present the Audit Committee (the “Audit Committee”) Report for the year ended
As in previous years, the Audit Committee has reviewed the Company’s financial reporting, the independence and effectiveness of the independent auditor, and the internal control and risk management systems of service providers. The Board is satisfied that for the year under review and thereafter the Audit Committee has recent and relevant commercial and financial knowledge.
Structure and Composition
The Audit Committee is chaired by
The Audit Committee Terms of Reference provide that appointments to the Audit Committee shall be for a period of up to three years, which may be extended for two further three year periods, and thereafter annually, provided that the Director whose appointment is being considered remains an Independent Director for the period of extension.
The tenure of the current members of the Committee is set out below.
Date of Appointment Next Date
Richard Boléat
The Audit Committee conducts formal meetings at least three times a year. The Directors’ Report sets out the number of Audit Committee meetings held during the year ended
Principal Duties
The role of the Audit Committee includes:
-- monitoring the integrity of the published financial statements of the Company; -- keeping under review the consistency and appropriateness of accounting policies on a year to year basis. Satisfying itself that the annual accounts, the interim statement of financial results and any other major financial statements issued by the Company follow generally accepted accounting principles inthe United States of America and, in respect of the annual accounts, give a true and fair view of the Company and any associated undertakings’ affairs; matters raised by the external auditors about any aspect of the accounts or of the Company’s control and audit procedures are appropriately considered and, if necessary, brought to the attention of theBoard for resolution; -- monitoring and reviewing the quality and effectiveness of the independent auditors and their independence; -- considering and making recommendations to the Board on the appointment, reappointment, replacement and remuneration of the Company’s independent auditor; -- monitoring and reviewing the internal control and risk management systems of the Company and its service providers; and -- considering at least once a year whether there is a need for an internal audit function.
The complete details of the Audit Committee’s formal duties and responsibilities are set out in the Audit Committee’s terms of reference, which can be obtained from the Company’s website.
Independent Auditor
The Audit Committee is also the forum through which the independent auditor (the “auditor”) reports to the Board of Directors. The objectivity of the auditor is reviewed by the Audit Committee which also reviews the terms under which the auditor is appointed to perform non-audit services. The Audit Committee reviews the scope and results of the audit, its cost effectiveness and the independence and objectivity of the auditor, with particular regard to non-audit fees. The Audit Committee has established pre-approval policies and procedures for the engagement of
The audit fees proposed by the auditors each year are reviewed by the Audit Committee taking into account the Company’s structure, operations and other requirements during the year and the Audit Committee makes recommendations to the Board.
Non-audit fees were paid to
Evaluations or Assessments Made During the Year
The following sections discuss the assessments made by the Audit Committee during the year:
Significant Areas of Focus for the Financial Statements
The Audit Committee’s review of the interim and annual financial statements focused on the valuation of the Company’s investment in the
Effectiveness of the Audit
The Audit Committee had formal meetings with
The Board considered the effectiveness and independence of
-- the audit plan presented to them before the start of the audit; -- the audit results report including where appropriate, explanation for any variations from the original plan; -- changes to audit personnel; -- the auditor’s own internal procedures to identify threats to independence; -- feedback from both the Investment Manager and the Administrator; and -- confirmation fromErnst & Young LLP on their independence as additional comfort for the Audit Committee.
Further to the above, at the point of substantial conclusion of the 2023 audit, the Audit Committee performed a specific evaluation of the performance of the independent auditor. This is supported by the results of questionnaires completed by the Audit Committee covering areas such as quality of audit team, business understanding, audit approach and management.
There were no adverse findings from this evaluation.
Under the Crown Dependency rules, ethical standards require the Board to consider the outsourcing of any non-audit services such as interim review, tax compliance, tax structuring, private letter rulings, accounting advice, quarterly reviews and disclosure on an annual basis. Although the review of the Interim Report and Unaudited Condensed Interim Financial Statements is deemed to be a non-audit service, the Board considers it most appropriate for the external auditors to carry out this review. The budget for the annual audit, the interim review and
Audit fees and Safeguards on Non-Audit Services
The table below summarises the remuneration payable by the Company to
2023 2022 £ £ Total Total Audit Services 95,000 85,000 Non-audit Services – interim review andUK reporting fund status 62,316 57,316 services*
* Non-audit services in 2023 includes a £7,316
Audit Tender
It is best practice, as well as a legal requirement for public companies in the
Internal Control
The Audit Committee has examined the need for an internal audit function. The Audit Committee considered that the systems and procedures employed by the Investment Manager and the Administrator, including their internal audit functions, provided sufficient assurance that a sound system of internal control, which safeguards the Company’s assets, has been maintained. An internal audit function specific to the Company is therefore considered unnecessary.
The Audit Committee has requested and received SOC1 or equivalent reports such as service provider assessment reports from the Company’s Administrator and Master Fund’s Administrators to enable it to fulfil its duties under its terms of reference. Representatives of the auditors, Investment Manager and the Administrator attend the Audit Committee meetings as a matter of practice and presentations are made by those attendees as and when required.
Conclusion and Recommendation
After reviewing various reports such as the operational and risk management framework and performance reports from management, liaising where necessary with
The Audit Committee is also satisfied that the significant assumptions used for determining the value of assets and liabilities have been appropriately scrutinised, challenged and are sufficiently robust.
The Independent Auditor reported to the Audit Committee that no material misstatements were found in the course of its work. Furthermore, both the Investment Manager and the Administrator confirmed to the Audit Committee that they were not aware of any material misstatements including matters relating to presentation. The Audit Committee confirms that it is satisfied that the Independent Auditor has fulfilled its responsibilities with diligence and professional scepticism.
Consequent to the review process on the effectiveness of the independent audit and the review of audit services, the Audit Committee has recommended that
For any questions on the activities of the Audit Committee not addressed in the foregoing, a member of the Audit Committee will attend each Annual General Meeting to respond to such questions.
Audit Committee Chairman
INDEPENDENT AUDITOR’S REPORT
Opinion
We have audited the financial statements of
In our opinion, the financial statements:
►
give a true and fair view of the state of the Company’s affairs as at
►
have been properly prepared in accordance with accounting principles generally accepted in
►
have been properly prepared in accordance with the requirements of The Companies (
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements, including the
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent of the Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included:
-- The audit engagement partner directed and supervised the audit procedures on going concern; -- We assessed the determination made by the Board of Directors of the Company and the Investment Manager that the Company is a going concern and hence the appropriateness of the financial statements to be prepared on a going concern basis; -- We obtained the going concern assessment prepared by the Investment Manager for the period up until30 June 2025 and tested for arithmetical accuracy and reasonability; -- We independently assessed the appropriateness of the assumptions by reviewing historical forecasting accuracy; performing an evaluation of the levels of liquidity of the Company’s investments in theMaster Partnership (Third Point Offshore Master Fund L.P. ) through theMaster Fund (Third Point Offshore Fund, Ltd. ) for future share buyback plans, the Redemption Offer announced on09 April 2024 and ongoing operating expenses; and applied a stress test to understand the impact on liquidity of the Company as a whole; -- We assessed whether the liquidity of theMaster Partnership at the year end, taking account of the level of redemptions, potential gating and its ability to meet periodic discretionary redemptions of its investors, cast significant doubt over the going concern status of the Company; and -- We assessed the disclosures in the annual report and financial statements relating to going concern to ensure they were fair, balanced and understandable.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period up until
In relation to the Company’s reporting on how they have applied the
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company’s ability to continue as a going concern.
Overview of our audit approach
► Investment Valuation Key audit matters ► Investment Existence and Ownership Audit scope ► We performed an audit of the complete financial information of the Company for the year ended31 December 2023 . Materiality ► Overall materiality ofUS$12.8m which represents 2% of net assets.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the Company and effectiveness of controls, including controls and changes in the business environment and the potential impact of climate change when assessing the level of work to be performed.
All audit work was performed directly by the audit engagement team. The audit was led from
Climate change
The Company has explained in the “Section 172 Report” of their annual report climate-related risks and this forms part of the “Other information,” rather than the audited financial statements. Our procedures on these disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial statements as set out in Note 3 and the conclusion that there was not a material impact on the recognition and separate measurement considerations of the assets and liabilities of the Company as at
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the Key observations communicated to risk the Audit Committee Our response comprised of substantive audit testing of the investment valuation, including: Valuation of investments (US$634m , ► Agreeing the PY comparativeUS$822m ) valuation per share of the Company’s Refer to the Report of investments in the the Audit Committee; investee fund to the Accounting policies). NAV per share of the investee fund in the The investments held confirmation obtained are measured at fair from its independent value through profit or Administrator; loss, and their fair value is determined by ► Agreeing the reference to the valuation per share of published NAV per share the Company’s of the investee fund, investments in the We confirm that there were no as calculated by its investee fund to the matters identified during our independent NAV per share of the work on valuation of investments Administrator. The investee fund per its that we wanted to bring to the valuation risk audited financial attention of the Audit considers the risk of statements for the year Committee. an error in the ended 31 December 2023, application of the which were approved on published NAV per 18 March 2024; share, obtained from the independent ► Directing Ernst & Administrator of the Young in New York to investee fund, when perform testing on our calculating the fair behalf and reporting value of the Company’s that no material investments, as well as adjustments to the NAV the effect on valuation were required; and of any gating/suspension of ► Reviewing the redemptions by the subscriptions and investee fund. redemptions schedule of the investee fund around the year-end date to assess the liquidity of the Company’s investments in the investee fund. Our response comprised the performance of substantive audit testing of investment existence and ownership Investment existence including: and ownership ► Obtaining a (US$634m , PY confirmation, as at 31 comparativeUS$822m ) December 2023, of the Company’s holdings in Refer to the Report of the investee fund into the Audit Committee; which the Company We confirm there were no Accounting policies. invests, from the matters identified independent during our audit work on Risk that the Administrator of the existence and ownership investments presented investee fund, and of investments that we in the financial agreeing it to the wanted to bring to the statements do not exist accounting records of attention of the Audit or the Company does not the Company; and Committee. have the rights to cash flows derived from ► Agreeing supporting them. Failure to obtain documentation for all good title exposes the additions and disposals Company to significant of holdings in the risk of loss. investee fund that took place during the year ended 31 December 2023 and agreeing the details to the accounting records of the Company.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Company to be
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, our judgement was that performance materiality was 75% (2022: 75%) of our planning materiality, namely
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which The Companies (
► proper accounting records have not been kept by the Company; or
► the financial statements are not in agreement with the Company’s accounting records and returns; or
► we have not received all the information and explanations we require for our audit.
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
► Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified;
► Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate;
► Director’s statement on whether it has a reasonable expectation that the Company will be able to continue in operation and meets its liabilities;
► Directors’ statement on fair, balanced and understandable;
► Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks;
► The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and;
► The section describing the work of the audit committee.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud . The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion . The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company and management.
► We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are:
oFinancial Conduct Authority ("FCA") Listing Rules o Disclosure Guidance and Transparency Rules ("DTR") of theFCA o TheUK Corporate Governance Code o The 2019 AIC Code of Corporate Governance o The Companies (Guernsey ) Law, 2008
► We understood how the Company is complying with those frameworks by:
o Discussing the processes and procedures used by the Directors, the Investment Manager, the Company Secretary and Administrator to ensure compliance with the relevant frameworks; o Reviewing internal reports that evidenced quarterly compliance testing; and o Inspecting any correspondence with regulators
► We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur by undertaking the audit procedures set out in Key Audit Matters section above and reading the financial statements to check that the disclosures are consistent with the relevant regulatory requirements; and
► Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved:
o Making enquiries and gaining an understanding of how those charged with governance, the Investment Manager, the Company Secretary and Administrator identify instances of non-compliance by the Company with relevant laws and regulations; o Inspecting the relevant policies, processes and procedures to further our understanding; o Enquiring of the Company’s nominated Compliance Officer; o Reviewing internal compliance reporting,Board and Audit Committee minutes; o Inspecting correspondence with regulators; o Obtaining relevant written representations from the Board of Directors; and o Performing journal entry testing.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
-- Following the recommendation from the Audit Committee, we were appointed by the Company to audit the financial statements for the year ending 31December 2007 and subsequent financial periods. We signed an initial engagement letter on12 November 2007 . -- The period of total uninterrupted engagement including previous renewals and reappointments is seventeen years, covering the years ending 31December 2007 to31 December 2023 . -- The audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies (
for and on behalf of
Notes:
(1) The maintenance and integrity of the Company’s website is the sole responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
(2)
Legislation in
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As at 31 December
2023 2022 Notes US$ US$ Assets Investment inThird Point Offshore Fund Ltd at fair value 628,751,973 822,440,287 (Cost:US$340,474,153 ;31 December 2022 :US$425,367,214 ) Investment in Participation Note 3 5,005,646 - Cash and cash equivalents 190,603 64,597 Due from broker 12,538 11,944 Redemption receivable 4,258,882 6,121,484 Other assets 81,405 79,388 Total assets 638,301,047 828,717,700 Liabilities Accrued expenses and other liabilities 330,194 344,792 Loan facility 4 - 149,425,845 Loan interest payable - 2,101,177 Administration fee payable 3,187 3,007 Total liabilities 333,381 151,874,821 Net assets 637,967,666 676,842,879 Number of Ordinary Shares in issue7 US Dollar Shares 25,089,924 27,666,789 Net asset value per Ordinary Share 9,12 US Dollar Shares$25.43 $24.46 Number of Ordinary B Shares in issue7 US Dollar Shares 16,726,618 18,444,526
The financial statements were approved by the Board of Directors on
Chairman
Director
See accompanying notes and Audited Financial Statements of
Statement of Operations
For the year ended 31 December
2023 2022 Notes US$ US$ Realised and unrealised gain/(loss) from investment transactions allocated from Master Fund Net realised (loss)/gain from securities, derivative contracts and foreign currency (18,804,101) 58,236,092 translations Net change in unrealised gain/(loss) on securities, derivative contracts and foreign 25,304,602 (326,475,586) currency translations Net gain from currencies allocated from Master 181,370 3,118,956 Fund Total net realised and unrealised gain/(loss) from investment transactions allocated from 6,681,871 (265,120,538) Master Fund Net investment gain allocated fromMaster Fund Interest income 27,705,576 38,342,786 Dividends, net of withholding taxes of 3,596,783 2,572,298US$1,090,325 ; (31 December 2022 :US$1,102,843 ) Other income 2,136,533 995,033 Stock borrowing fees (208,393) (841,041) Investment Management fee (7,923,740) (10,295,508) Dividends on securities sold, not yet purchased (1,452,886) (2,322,396) Interest expense (10,288,315) (5,090,386) Other expenses (2,152,415) (2,891,319) Total net investment gain allocated from Master 11,413,143 20,469,467 Fund1 Company expenses Administration fee 5 (128,497) (138,382) Directors' fees 6 (356,091) (331,634) Other fees (861,214) (1,129,755) Loan interest expense 4 (5,218,020) (7,328,928) Expenses paid on behalf of Third Point Offshore (111,940) (83,087)Independent Voting Company Limited2Total Company expenses (6,675,762) (9,011,786) Net gain 4,737,381 11,457,681 Net increase/(decrease) in net assets resulting 11,419,252 (253,662,857) from operations
1
Net gain/(loss) components allocated from the
2
See accompanying notes and Audited Financial Statements of
Statement of Changes in Net Assets
For the year ended 31 December
2023 2022 Notes US$ US$ Increase/(decrease) in net assets resulting from operations Net realised (loss)/gain from securities, commodities, derivative contracts and foreign (18,804,101) 58,236,092 currency translations allocated from Master Fund Net change in unrealised gain/(loss) on securities, derivative contracts and foreign 25,304,602 (326,475,586) currency translations allocated from Master Fund Net gain from currencies allocated from Master 181,370 3,118,956 Fund Total net investment gain allocated from Master 11,413,143 20,469,467 FundTotal Company expenses (6,675,762) (9,011,786) Net increase/(decrease) in net assets resulting 11,419,252 (253,662,857) from operations Increase in net assets resulting from capital share transactions Share redemptions 7 (50,294,465) (126,736,786) Net assets at the beginning of the year 676,842,879 1,057,242,522 Net assets at the end of the year 637,967,666 676,842,879
See accompanying notes and Audited Financial Statements of
Statement of Cash Flows
For the year ended 31 December
2023 2022 Notes US$ US$ Cash flows from operating activities Operating expenses (878,393) (1,452,090) Interest paid (6,735,881) (5,020,348) Directors' fees (356,091) (331,634) Administration fee (128,317) (138,761) Third Point Independent Voting Company Limited¹ (111,940) (83,087) Change in investment in the Master Fund 158,336,628 6,624,925 Cash inflow/(outflow) from operating activities 150,126,006 (400,995) Cash flows from financing activities Credit facility repayment (150,000,000) - Cash outflow from financing activities (150,000,000) - Net increase/(decrease) in cash 126,006 (400,995) Cash and cash equivalents at the beginning of 64,597 465,592 the year Cash and cash equivalents at the end of the year 190,603 64,597
1
2023 2022 Notes US$ US$ Supplemental disclosure of non-cash transactions from: Operating activities Subscriptions (54,429,821) - Redemption of Company Shares from Master Fund 7 104,724,286 126,736,786 Receipt of Participation Note 5,181,538 - Financing activities Share redemptions 7 (50,294,465) (126,736,786) Amortisation of loan cost 574,155 862,415
See accompanying notes and Audited Financial Statements of
Notes to the Audited Financial Statements
For the year ended
1. The Company
2. Organisation
Investment Objective and Policy
The Company’s investment objective is to provide its Shareholders with consistent long-term capital appreciation, utilising the investment skills of the Investment Manager, through investment of all of its capital (net of short-term working capital requirements) through a master-feeder structure in shares of
The Master Fund’s investment objective is to seek to generate consistent long-term capital appreciation, by investing capital in securities and other instruments in select asset classes, sectors and geographies, by taking long and short positions.
Investment Manager
The Investment Manager is a limited liability company formed on
During the year ended
Additionally, the
3. Significant Accounting Policies
Basis of Presentation
These Financial Statements have been prepared in accordance with relevant accounting principles generally accepted in
The Directors have determined that the Company is an investment company in conformity with US GAAP. Therefore, the Company follows the accounting and reporting guidance for investment companies in the
The following are the significant accounting policies adopted by the Company:
Cash and cash equivalents
Cash in the Statement of Assets and Liabilities and for the Statement of Cash Flows is unrestricted and comprises cash at bank and on hand.
Due from broker
Due from broker includes cash balances held at the Company’s clearing broker at
Redemptions Receivable
Redemptions receivable are capital withdrawals from the
Valuation of Investments
The Company records its investment in the
The following schedule details the movements in the Company’s holdings in the
Net Asset Shares Net Asset Shares Value Shares Shares Shares held at Per Value at held at Shares Shares Share Rolled Transferred Transferred adjustments* 31 Share at 31 1 January Issued Redeemed Up In Out December 31 December 2023 2023 December 2023 2023** Class YSP - 1.25, 490,000 — — — — (490,000) — — — — Series 1 Class YSP - 1.25, 2,077,599 — — — — (548,872) (18) 1,528,709 343.84 525,635,128 Series 1-1 Class YSP - 1.25, 22,699 — — — — (22,699) — — — — Series 1-2 Class YSP - 1.25, 451 — — — — (451) — — — — Series 1-3 Class YSP - 1.25, 441,000 — — — — — (5) 440,995 78.50 34,616,564 Series 1.4 Class YSP - 1.25, 450,000 — — — — — (5) 449,995 74.64 33,589,202 Series 1.5 Class YSP - 1.25, 49,000 — — — — — (1) 48,999 78.50 3,846,250 Series 2. Class YSP - 1.25, 53,839 — — — — (53,839) — — — — Series 2-1 Class YSP - 1.25, 50,000 — — — — — (1) 49,999 74.64 3,732,100 Series 2-2 Class YBSP-125, — — — — 197,860 (197,860) — — — — Series 1 Class YBSP-125, — — — — 114,725 (76,481) — 38,244 108.81 4,161,429 Series 2 Class YBSP-125, — — — — 231,713 — — 231,713 100.00 23,171,300 Series 3 Total 628,751,973
* Share adjustments relate to transfers from the portion of shareholders' capital attributable to Legacy Private Investments.
** Rounded to two decimal places.
A portion of the Company’s investment in the
The valuation of securities held by the
The Company has adopted ASU 2015-07, Disclosures for Investments in Certain Entities that calculate Net Asset Value per Share (or its equivalent) (“ASU 2015-07”), in which certain investments measured at fair value using the net asset value per share method (or its equivalent) as a practical expedient are not required to be categorised in the fair value hierarchy. Accordingly the Company has not levelled applicable positions.
Uncertainty in Income Tax
ASC Topic 740 “Income Taxes” requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more- likely-than-not” of being sustained by the applicable tax authority based on the technical merits of the position. Tax positions deemed to meet the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the year of determination. Management has evaluated the implications of ASC 740 and has determined that it has not had a material impact on these Audited Financial Statements.
Income and Expenses
The Company records its proportionate share of the Master Fund’s income, expenses and realised and unrealised gains and losses on a monthly basis. In addition, the Company accrues interest income, to the extent it is expected to be collected, and other expenses.
Use of Estimates
The preparation of Audited Financial Statements in conformity with US GAAP may require management to make estimates and assumptions that affect the amounts and disclosures in the financial statements and accompanying notes. Actual results could differ from those estimates. Other than what is underlying in the
Going Concern
The
In addition, the Company has committed to hold a Redemption Offer for 25% of NAV, at a discount of 2% to NAV. The Redemption Offer is expected to be completed in
The Board has announced that it will carry out a Strategy Review over the next six months. At the conclusion of the Strategy Review, the Strategy Committee will present its findings to the Board. If approved by the Board, the outcome will then be reported by the Board to Shareholders, and any recommended new proposals will be put to Shareholders, and voted on by them as appropriate. On the assumption that the Committee is able to identify a positive direction for the Company, which is approved by Shareholders, the Company will continue into the future.
On that basis, after due consideration, and having made due enquiry of Third Point, the Directors are satisfied that it is appropriate to continue to adopt the going concern basis in preparing these Audited Financial Statements for the period through
Foreign Exchange
Investment securities and other assets and liabilities denominated in foreign currencies are translated into United States Dollars using exchange rates at the reporting date. Purchases and sales of investments and income and expense items denominated in foreign currencies are translated into United States Dollars at the date of such transaction. All foreign currency transaction gains and losses are included in the Statement of Operations.
Recent accounting pronouncements
The Company has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective. The amendments and interpretations which apply for the first time in 2023 have been assessed and do not have an impact on the Audited Financial Statements.
Credit facility
The Company accounted for the credit facility as a liability, initially recognised at the amount drawn less any related costs. Issuance costs were amortised and recognised as additional interest expense over the life of the loan. At each balance sheet date, the liability was adjusted for the repayment of principal, accrual of interest and amortization of issuance costs. The credit facility was fully repaid as of
4. Credit Facility
On
In conjunction with the negotiation and execution of the agreement there were costs incurred by the Company. The Company paid the issuer of the facility
5. Material Agreements
Management and Incentive fees
The Investment Manager was appointed by the Company to invest its assets in pursuit of the Company’s investment objectives and policies. As disclosed in Note 2, the Investment Manager is remunerated by the
Administration fees
Under the terms of an Administration Agreement dated
The Administrator is paid fees based on the NAV of the Company, payable quarterly in arrears. The fee is at a rate of 2 basis points of the NAV of the Company for the first £500 million of NAV and a rate of 1.5 basis points for any NAV above £500 million. This fee is subject to a minimum of £4,250 per month. The Administrator is also entitled to an annual corporate governance fee of £30,000 for its company secretarial and compliance activities.
In addition, the Administrator is entitled to be reimbursed out-of-pocket expenses incurred in the course of carrying out its duties, and may charge additional fees for certain other services.
Total Administrator expenses during the year amounted to
VoteCo
The Company has entered into a support and custody agreement with
6. Directors’ Fees
At the AGM in
The Directors’ fees during the year amounted to £286,000 (
The current fee rates for the individual Directors are as follows;
Chairman £76,000
Audit Committee Chairman £57,000
Director £48,000
Senior Independent Director £3,000
Chairman of the Management Engagement Committee £3,000
Chairman of the
The Directors are also entitled to be reimbursed for expenses properly incurred in the performance of their dutiesas Director.
7.
The Company was incorporated with the authority to issue an unlimited number of Ordinary Shares (the “Shares”) with no par value and an unlimited number of Ordinary B Shares (“B Shares”) of no par value.
Number of Ordinary Shares US Dollar Shares
Shares issued
Shares Cancelled
Shares cancelled during the year (2,576,865)
Total shares cancelled during the year (2,576,865)
Shares in issue at end of the year 25,089,924
US Dollar Shares
US$
Net assets at the beginning of the year 676,842,879
Shares Cancelled
Share value cancelled during the year (50,294,465)
Total share value cancelled during the year (50,294,465)
Net increase in net assets resulting from operations 11,419,252
Net assets at end of the year 637,967,666
Number of Ordinary B Shares US Dollar Shares
Shares in issue as at
Shares Cancelled
Shares cancelled during the year (1,717,908)
Total shares cancelled during the year (1,717,908)
Shares in issue at end of the year 16,726,618
Voting Rights
Ordinary Shares carry the right to vote at general meetings of the Company and to receive any dividends, attributable to the Ordinary Shares as a class, declared by the Company and, in a winding-up will be entitled to receive, by way of capital, any surplus assets of the Company attributable to the Ordinary Shares as a class in proportion to their holdings remaining after settlement of any outstanding liabilities of the Company. B Shares also carry the right to vote at general meetings of the Company but carry no rights to distribution of profits or in the winding-up of the Company.
As prescribed in the Company’s Articles, each Shareholder present at general meetings of the Company shall, upon a show of hands, have one vote. Upon a poll, each Shareholder shall, in the case of a separate class meeting, have one vote in respect of each Share or B Share held and, in the case of a general meeting of all Shareholders, have one vote in respect of each Share or B Share held. Fluctuations in currency rates will not affect the relative voting rights applicable to the Shares and B Shares. In addition all of the Company’s Shareholders have the right to vote on all material changes to the Company’s investment policy.
Repurchase of Shares
At each AGM, the Directors seek authority from the shareholders to purchase in the market for the forthcoming year up to 14.99 percent of the Shares in issue. Pursuant to this repurchase authority, the Company, through the
In September, 2019, it was announced that the Company, again through the
Further issue of Shares
Under the Articles, the Directors have the power to issue further shares on a non-pre-emptive basis. If the Directors issue further Shares, the issue price will not be less than the then-prevailing estimated weekly NAV per Share of the relevant class of Shares.
8. Taxation
The Fund is exempt from taxation in
9. Calculation of Net Asset Value
The NAV of the Company is equal to the value of its total assets less its total liabilities. The NAV per Share is calculated by dividing the NAV by the number of Ordinary Shares in issue on that day.
10. Related Party Transactions
At
11. Significant Events
In
On
On
On
There were no other events during the financial year outside the ordinary course of business which, in the opinion of the Directors, may have had an impact on the Audited Financial Statements for the year ended
12. Financial Highlights
The following tables include selected data for a single Ordinary Share in issue at the year-end and other performance information derived from the Audited Financial Statements.
US Dollar Shares
US$
Per Share Operating Performance
Net Asset Value beginning of the year 24.46
Income from Operations
Net realised and unrealised gain from investment transactions allocated from
Net gain 0.18
Total Return from Operations 0.53
Share buyback accretion 0.44
Net Asset Value, end of the year 25.43
Total return before incentive fee allocated from
Total return after incentive fee allocated from
Total return from operations reflects the net return for an investment made at the beginning of the year and is calculated as the change in the NAV per Ordinary Share during the year ended
US Dollar Shares
US$
Per Share Operating Performance
Net Asset Value beginning of the year 32.37
Income from Operations
Net realised and unrealised gain from investment transactions allocated from
Net loss (0.30)
Total Return from Operations (8.18)
Share buyback accretion 0.27
Net Asset Value, end of the year 24.46
Total return before incentive fee allocated from
Total return after incentive fee allocated from
Total return from operations reflects the net return for an investment made at the beginning of the year and is calculated as the change in the NAV per Ordinary Share during the year ended
US Dollar Shares
US$
Supplemental data
Net Asset Value, end of the year 637,967,666
Average Net Asset Value, for the year 1 631,249,876
Ratio to average net assets
Operating expenses 2 (4.55%)
Total operating expenses 2 (4.55%)
Net gain 3 0.75%
1 Average Net Asset Value for the year is calculated based on published monthly estimates of NAV.
2
Operating expenses are Company expenses together with operating expenses allocated from the
3
Net gain (or loss) is taken from the Statement of Operations and is the net investment gain / (loss) for the year allocated from the
US Dollar Shares
US$
Supplemental data
Net Asset Value, end of the year 676,842,879
Average Net Asset Value, for the year 1 793,974,457
Ratio to average net assets
Operating expenses 2 (3.84%)
Total operating expenses 2 (3.84%)
Net gain 1.44%
1 Average Net Asset Value for the year is calculated based on published monthly estimates of NAV.
2
Operating expenses are Company expenses together with operating expenses allocated from the
3
Net gain (or loss) is taken from the Statement of Operations and is the net investment gain / (loss) for the year allocated from the
13. Ongoing Charge Calculation
Ongoing charges for the year ended
Excluding performance fees
US Dollar Shares 1.92% 1.98%
Including performance fees
US Dollar Shares 1.92% 1.98%
14. Subsequent Events
As at
On
On
The Directors confirm that, up to the date of approval, which is
ADDITIONAL INFORMATION
Investor Information
Financial Calendar
Year end 31 December.
Annual results announced and Annual Report published in April.
Annual General Meeting held in May/June.
Interim results announced in September.
Website
Further information about
How to invest
Information is available on
Management and Administration
Directors
Richard Boléat*
Joshua L Targoff
PO Box 255, Trafalgar Court, Les Banques,
* These Directors are independent.
Investment Manager
55 Hudson Yards,
Auditors
PO Box 9,
St Julian’s Avenue,
Exchange House,
Registrar and CREST Service Provider
(formerly
Registered Office
PO Box 255, Trafalgar Court, Les Banques,
Administrator and Secretary
PO Box 255, Trafalgar Court, Les Banques,
Mourant
Receiving Agent
The Registry,
Beckenham, Kent, BR3 4TU,
Corporate Broker
Deutsche Numis
Glossary
Activism/Constructivism
An approach where an investment manager engages in dialogue with investee companies to suggest opportunities to enhance value.
Buyback programme
A buyback is when a corporation purchases its own shares in the stock market.
Capital allocation
Asset and capital allocation are the processes of deciding where to put money to work in the market.
Corporate credit
A corporate credit strategy typically looks to generate an attractive return in excess of the current rate of inflation and an attractive total return, investing in the debt securities of corporations.
Discount
The discount, typically expressed as a percentage, is the amount by which the share price is less than the net asset value per share.
Event-driven
Event-driven refers to an investment strategy where the investment manager attempts to profit from a company’s stock mispricing that may typically occur before, during or after a corporate event.
Fundamental
Fundamental analysis is a valuation tool used by stock analysts to determine whether a stock is over- or undervalued by the market.
Hedge basket
A hedge basket is an investment approach designed to reduce risk or exposure to other asset classes or currencies by bundling certain securities together and selling this bundle short (see Short selling).
Inflation
Inflation is a measure of how much more expensive goods and services have become over a certain time period.
JP Morgan Investment Grade Index
This is an index that measures the performance of fixed rate debt markets.
Long equity
Long equity is an investment strategy that seeks to take a position in under-priced stocks in the manager’s opinion. Its counterpart is Short selling, which seeks to profit from declining prices of over-priced stocks.
Mark to market
Mark to market is an accounting measure based on valuing assets on their current market price, as opposed to the historic cost.
Monetary policy
Monetary policy is the action a central bank or a government can take to influence how much money is in a country’s economy and how much it costs to borrow.
MSCI World Index
This index includes a collection of stocks of all the developed markets of the world, as defined by MSCI.
NASDAQ Index
The Nasdaq Composite is an index that measures the performance of more than 3,000 securities that are all listed on the tech-focused Nasdaq stock market.
Net equity exposure
Net equity exposure is the difference between a fund’s long positions and its short positions in its equity holdings.
Privates
A private investment is an asset that is not listed on a public exchange, and as a result has a more restricted ability to be bought and sold.
Public listing
A publicly-listed company is one whose shares are traded on an exchange.
S&P 500 Index
This is a market-capitalisation weighted index of the top 500 publicly traded companies in the
Short selling
A strategy that attempts to profit from a pessimistic view of a certain company, in which the investment manager borrows the security and sells it on the open market, hoping to buy it back later for a lesser amount.
Structured credit
Mortgage-backed securities and other consumer asset-backed securities.
The Investment Manager
An exempted company formed under the laws of the
Value strategies
Value investing involves a strategy of buying stocks that seem under-priced relative to their intrinsic value.
Notice of Annual General Meeting
Notice is hereby given that the 2024 Annual General Meeting of the Company will be held at the offices of
Resolution on Form Agenda of Proxy Business to be proposed as Ordinary Resolutions: 1. To receive and adopt the Annual Report and Audited Financial Statements of the Company for the year ended31 December 2023 . To receive and adopt the Directors Remuneration Report as detailed in 2. the Annual Report and Audited Financial Statements of the Company for the year ended31 December 2023 . 3. To re-appointErnst & Young LLP as Auditor of the Company until the conclusion of the next Annual General Meeting. 4. To authorise the Board of Directors to determine the Auditor’s remuneration. 5. To re-electRupert Dorey as a Director of the Company. 6. To re-electHuw Evans as a Director of the Company. 7. To re-electClaire Whittet as a Director of the Company. 8. To re-elect Richard Boléat as a Director of the Company. 9. To re-electVivien Gould as a Director of the Company. 10. To electDimitri Goulandris as a Director of the Company. 11. To electLiad Meidar as a Director of the Company. Special Business to be proposed as Special Resolutions: That the Company be authorised in accordance with Section 315 of the Companies Law to make market acquisitions (within the meaning of section 316 of the Companies Law) of its Shares (either for retention as treasury shares for future reissue and resale or transfer, or cancellation) provided that: i. the maximum number of Shares hereby authorised to be purchased shall be 14.99% of the issued Ordinary share capital of the Company (excluding treasury shares) as at the date of this Annual General Meeting; ii. ii. the minimum price (exclusive of expenses) which may be paid for a Share shall be$0.01 ; iii. the the maximum price (exclusive of expenses) which may be paid for a Share shall be the higher of: (a) 105 per cent of the 12. average of the middle market quotations for a Share taken from the London Stock Exchange’s main market for listed securities for the five business days before the purchase is made; (b) the higher of the price of the last independent trade and the highest current independent bid at the time of the purchase; and (c) such other price as may be permitted by the Listing Rules of theUK Listing Authority ; iv. the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the Company, or, if earlier, on the expiry of eighteen months from the passing of this resolution, unless such authority is renewed, varied or revoked by the Company in general meeting prior to such time; and v. the Company may make a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract.
By Order of the Board
For and on behalf of
Secretary
Notes
1. A member entitled to attend and vote at the meeting may appoint one or more proxies to exercise all or any of the member’s rights to attend, speak and vote at the meeting. A proxy need not be a member of the Company but must attend the meeting for the member’s vote to be counted. If a member appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or shares held by the member. If a member wishes to appoint more than one proxy they may do so at www.signalshares.com.
2. To be effective, the proxy vote must be submitted at www.signalshares.com so as to have been received by the Company’s registrars not less than 48 hours (excluding weekends and public holidays) before the time appointed for the meeting or any adjournment of it. By registering on the Signal shares portal at www.signalshares.com, you can manage your shareholding, including:
-- cast your vote -- change your dividend payment instruction -- update your address -- select your communication preference.
Any power of attorney or other authority under which the proxy is submitted must be returned to the Company’s Registrars,
3. Pursuant to Regulation 41(1) of the Uncertificated Securities Regulations 2001 (as amended), the Company has specified that only those members registered on the register of members of the Company at close of business on 23 May 2024 (the Specified Time) (or, if the meeting is adjourned to a time more than 48 hours after the Specified Time, by close of business on the day which is two days prior to the time of the adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. If the meeting is adjourned to a time not more than 48 hours after the Specified Time, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purposes of determining the number of votes they may cast) at the adjourned meeting. Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
5. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear
6. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear
7. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended).
8. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.
9. Any electronic address provided either in this Notice or in any related documents may not be used to communicate with the Company for any purposes other than those expressly stated.
10. If you need help with voting online, or require a paper proxy form, please contact our Registrar,
Explanatory notes:
Resolutions 1 to 11 will be proposed as Ordinary Resolutions and each will require the approval of not less than 50 per cent. of those members present and voting, whether in person or by proxy, in order to be passed.
Resolution 12 will be proposed as a Special Resolution and will require the approval of not less than 75 per cent. Of those members present and voting, whether in person or by proxy, in order to be passed.
Ordinary Resolution 1 seeks Shareholder ratification of the Annual Report and Audited Financial Statements of the Company for the year ended 31 December 2023. The Annual Report provides a detailed overview of the Company’s performance over the financial year ended 31 December 2023 and a projected outlook for the present financial year.
Ordinary Resolution 2 seeks Shareholder ratification of the Directors’ Remuneration Report as detailed in the Annual Report and Audited Financial Statements of the Company for the year ended 31 December 2023. The Directors’ Remuneration Report describes how the Board has applied the principles relating to Directors’ remuneration and the amount each individual Director received for the financial year ended 31 December 2023.
Ordinary Resolutions 3 and 4 seek to re-appoint
Ordinary Resolutions 5 to 9 propose the re-election of
Ordinary Resolutions 10 and 11 propose the election of
Biographical details for the Directors are contained within the Annual Report.
Special Business to be proposed as a Special Resolution:
Special Resolution 12 seeks to renew the authority granted to the Directors pursuant to section 315 of the Companies Law, enabling the Company to make market purchases (within the meaning of section 316 of the Companies Law) of its Shares (either for retention as treasury shares for future reissue and resale or transfer, or cancellation). The Board will use the repurchase authority to assist in managing any excess supply in the market and demand for the Company’s Shares thereby seeking to reduce the volatility of any discount.
This authority will expire at the conclusion of the next annual general meeting of the Company or on a date which is 18 months from the date of passing of this resolution (whichever is earlier) and it is the present intention of the Directors to seek a similar authority annually.
RECOMMENDATION
The Board considers that the proposals and subjects of all the resolutions are in the best interests of the shareholders as a whole. Accordingly, the Board recommends to members that they vote in favour of all of the resolutions to be proposed at the forthcoming Annual General Meeting.
Legal Information
Unless otherwise noted, all performance, portfolio exposure and other portfolio data included herein relates to the Third Point Offshore Master Fund L.P. (the “Fund”). Exposures are categorised in a manner consistent with the Investment Manager’s classifications for portfolio and risk management purposes.
Past performance is not necessarily indicative of future results, and there can be no assurance that the Funds will achieve results comparable to those of prior results, or that the Funds will be able to implement their respective investment strategy or achieve investment objectives or otherwise be profitable.
This document is being furnished to you on a confidential basis to provide summary information regarding a potential investment in the Funds and may not be reproduced or used for any other purpose. Your acceptance of this document constitutes your agreement to (i) keep confidential all the information contained in this document, as well as any information derived by you from the information contained in this document (collectively, “Confidential Information”) and not disclose any such Confidential Information to any other person, (ii) not use any of the Confidential Information for any purpose other than to consider an investment in the Funds, (iii) not use the Confidential Information for purposes of trading any security, (iv) not copy this document without the prior written consent of Third Point and (v) promptly return this document and any copies hereof to Third Point, or destroy any electronic copies hereof, in each case upon Third Point’s request (except that you may retain copies as required by your compliance program). The distribution of this document in certain jurisdictions may be restricted by law. Prospective investors should inform themselves as to the legal requirements and tax consequences of an investment in the Funds within the countries of their citizenship, residence, domicile and place of business.
All profit and loss or performance results are based on the net asset value of fee-paying investors only and are presented net of management fees, brokerage commissions, administrative expenses, any other expenses of the Funds, and accrued incentive allocation, if any, and include the reinvestment of all dividends, interest, and capital gains. From Fund inception through December 31, 2019, each the Fund’s historical performance has been calculated using the actual management fees and incentive allocations paid by the Fund. The actual management fees and incentive allocations paid by the Fund reflect a blended rate of management fees and incentive allocations based on the weighted average of amounts invested in different share classes subject to different management fee and/or incentive allocation terms. Such management fee rates have ranged over time from 1% to 3% (in addition to leverage factor multiple, if applicable) per annum. The amount of incentive allocations applicable to any one investor in the Fund will vary materially depending on numerous factors, including without limitation: the specific terms, the date of initial investment, the duration of investment, the date of withdrawal, and market conditions. As such, the net performance shown for the Fund from inception through December 31, 2019 is not an estimate of any specific investor’s actual performance. During this period, had the highest management fee and incentive allocation been applied solely, performance results would likely be lower. For the period beginning January 1, 2020, each Fund’s historical performance shows indicative performance for a new issues eligible investor in the highest management fee (2% per annum), in addition to leverage factor multiple, if applicable, and incentive allocation rate (20%) class of the Fund, who has participated in all side pocket private investments (as applicable) from March 1, 2021 onward. An individual investor’s performance may vary based on timing of capital transactions. The market price for new issues is often subject to significant fluctuation, and investors who are eligible to participate in new issues may experience significant gains or losses. An investor who invests in a class of Interests that does not participate in new issues may experience performance that is different, perhaps materially, from the performance reflected above due to factors such as the performance of new issues. The inception date for Third Point Offshore Fund, Ltd. Is December 1, 1996, Third Point Partners L.P. is June 1, 1995, Third Point Partners Qualified L.P. is January 1, 2005, Third Point Ultra Ltd. is May 1, 1997, and Third Point Ultra Onshore LP is January 2019. All performance results are estimates and should not be regarded as final until audited financial statements are issued.
While the performances of the Funds have been compared here with the performance of well-known and widely recognised indices, the indices have not been selected to represent an appropriate benchmark for the Funds whose holdings, performance and volatility, among other things, may differ significantly from the securities that comprise the indices. Investors cannot invest directly in an index (although one can invest in an index fund designed to closely track such index). Indices performance includes reinvestment of dividends and other earnings, if any.
All information provided herein is for informational purposes only and should not be deemed as a recommendation or solicitation to buy or sell securities including any interest in any fund managed or advised by Third Point. All investments involve risk including the loss of principal. This transmission is confidential and may not be redistributed without the express written consent of
Specific companies or securities shown in this presentation are for informational purposes only and meant to demonstrate Third Point’s investment style and the types of industries and instruments in which the Funds invest and are not selected based on past performance. The analyses and conclusions of Third Point contained in this presentation include certain statements, assumptions, estimates and projections that reflect various assumptions by Third Point concerning anticipated results that are inherently subject to significant economic, competitive, and other uncertainties and contingencies and have been included solely for illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of such statements, assumptions, estimates or projections or with respect to any other materials herein. Third Point may buy, sell, cover or otherwise change the nature, form or amount of its investments, including any investments identified in this letter, without further notice and in Third Point’s sole discretion and for any reason. Third Point hereby disclaims any duty to update any information in this letter.
Information provided herein, or otherwise provided with respect to a potential investment in the Funds, may constitute non-public information regarding
While Third Point believes the information in this presentation to be accurate, no reliance on this presentation should be placed. The information contained herein is subject to change without notice. An offer to invest in the Funds will only be made pursuant to the confidential private placement memorandum (the “PPM”), the Fund’s limited partnership agreement (as applicable), and the Fund’s subscription agreement, subject to any disclaimers, terms and conditions contained therein. Investors are encouraged to read the PPM and consult with their own advisers before deciding whether to invest in the Funds and periodically thereafter. Third Point will not accept new subscriptions into Third Point Partners L.P. and Third Point Partners Qualified L.P. from any non-US investor unless otherwise permissible under applicable law.
The representative in