SLF REALISATION FUND LIMITED

(formerly known as KKV SECURED LOAN FUND LIMITED)

Annual Report and Audited Cons

olidated Financial Statements

for the year ended 30 June 2022

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

GROUP

METRICS FOR THE YEAR ENDED 30 JUNE 2022

As at 30 June 2022, the investment objective of SL

F Reali

sation Fund Limited (the “Comp

any” and together

with its subsidiaries, the “Group”) is to reali

se all re

maining assets in the portf

olio of the Ordinary Share

class and the 2016 C Share cla

ss in a prudent manner co

nsiste

nt with the principles of good investme

management and to return ca

sh to shareholders in

an orderly manne

r. The Group’s ba

se currency is

Sterling.

(2.86)%

per Ordinary

1.81%

per 2016 C Share

17.44p

per

Ordina

ry Share

18.79p

per

2016 C Share

(65.60)%

Ordina

ry Share

(41.03)%

2016 C Share

NAV total return per share for

the year ended 30 June 2022

NAV per Share as at

30 June 2022

Share price discount to NAV

as at 30 June 2022

£21.36 million

for

Ordinar

y Shares

£15.39 million for

2016

C Shares

£28.48 million

for the

Ordinary Share class

£58.35 million

for the 2016 C

Share class

£3.60 million

for the

Ordinar

y Share c

lass

£6.95 million

for the

2016

C Share class

Market capitalisation as at

30 June 2022

Return of capital to shareholders

during the year ended 30 June

2022

Return of capital to

shareholders after the

reporting year ended 30 June

2022

The compara

tives for the other group metrics det

ailed above are d

isclosed on p

age 7.

These are

Alternative Performance Measures; refer to pages 106 to 108 for details.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

GROUP

METRICS FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)

The key drivers of the change in Net Asset Va

lue (“NAV”) between 1 July 2021 and 30 Jun

e 2022 are

highlighted in the graphs below:

Ordinar

y Shares

2016 C Share

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

Index Page

Financial Metrics and Performance Summary

Company Ov

erview

Chairman’

s S

tatement

trategic Report

Investment Report

Directors’

Report

- S

tatement of Director

s’

Responsibilities

Director

s’ Biographies

Corporate Governance Re

port

Audit and Risk Committee Report

tatement of Compliance with the UK

Code of Co

rporate Governance

Independent Auditor

’s

Report

Consolidated S

tatement of Comp

rehensive Income

Consolidated S

tatement of Financial Po

sition

Consolidated S

tatement of Cha

nges in Equity

Consolidated S

tatement of Ca

sh Flows

Notes to the Financial S

tat

ements

Alternative Performance Measures

106

Company Information

109

List of

Acronyms

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

FINANCIAL METRICS

AND PERFORMANCE SUMMAR

Financial Metrics

V T

al Return

The NA

V tot

al return measures how the

V per Ordinary share

and 2016 C share has performe

d over a

period, taki

ng into account both capit

al distributions and divide

nds paid to sha

reholders. The NA

V total

return achieved by the Group is det

ailed in the table below:

Period

Ordinary

2016

ear

June

2022

(2.86)%

1.81%

3 year

(56.40

(14.18)%

Since inception

(26.90)%

(7.08)%

The NA

V total return since inception is ill

ustrated in the graph below:

Return of Capital

The investment objective of the Ordinary Share

s and the

2016 C Shares is to realise all remaining asset

a prudent manner consist

ent with the principles of

good investment manage

ment and to return cash to

shareholders in an orderly manner. Du

ring the year

ended 30 June 2022, the Company made a return o

capital on four separate occasions, as detailed

below, retu

rning a total of £28,478,054 to Ordinary

shareholders and £5

8,348,173 to 2016 C share

holders.

Ordinary Shares

2016 C Shares

Record date

Amount

per Share

Amount returned to

shareholders

Amount

per Share

Amount returned to

shareholders

20 July 2021

£10,679,270

£9,724,695

2 September 2021

£10,679,270

21p

£29,174,087

9 March 2022

£3,559,757

10p

£13,892,422

10 May 2022

£3,559,757

£5,556,969

Refer to pages 106 to 108 for the calculation

of these alternative performance me

asures.

V total return over a 3-year period from 1 July 2019 to 30 June 2022.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

FINANCIAL METRICS

AND PERFORMANCE SUMMAR

Y (CONTINUED)

Financial Metrics (Continued)

Return of Capital Continued)

Refer to note 14 for full details of the Company’s return of capital.

Post year-end, the Company made one further return

of capital to Ordinary share

holders and 2016 C

shareholders. Refer to the

Strategic

Report and note 18 for furthe

r details.

Ongoing Charges

The ongoing charges for th

e year ended 30 June 2022

were 2.60% (30 June 2021: 1.63%).

Dividend History

With the Company in managed win

d down, the Board does

not intend to de

clare any further divide

nds. No

dividends were paid during the years e

nded 30 June 2022 and 30 June 20

21.

Acquisition of O

wn Ordinary Shares

The Group did not repurchase any Ordi

nary Shares or 2016 C share

s during the years ende

d 30 June 2022

and 30 June 2021.

On 1 September 2021, 1,731,838 Ordi

nary Shares held in treasu

ry were cancelled. As at 30 June

2022, no

Ordinary Shares or 2016

C Shares were held in tr

easu

ry. As at 30 June 2021, 1,731,838

Ordinary Shares

and no 2016 C Shares were held in treasury.

Refer to pages 106 to 108 for the calculation

of this alternative performance meas

ure.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

FINANCIAL METRICS

AND PERFORMANCE SUMMAR

Y (CONTINUED)

Performance Summary

The number of Ordinary Shar

es in issue as at 30 June 202

1 is presented after deducting 1,731,838 trea

sury shares.

Source: Bloomberg.

Sterling in millions, except per share data and

number of shares in issue

30 June 2022

30 June 2021

Number of shares in issue

- Ordinary Shares

355,975,669

- 2016 C Shares

138,924,222

NAV

- Ordinary Shares

£62.07

£93.24

- 2016 C Shares

£26.10

£82.95

NAV pe

r share

- Ordinary Shares

17.44p

26.19p

- 2016 C Shares

18.79p

59.71p

NAV total return per share

- Ordinary Shares

(2.86)% 1.38%

- 2016 C Shares

1.81% 13.99%

Share price

- Ordinary Shares

6.00p

17.50p

- 2016 C Shares

11.08p

35.00p

Share price discount

- Ordinary Shares

(65.60)% (33.18)%

- 2016 C Shares

(41.03)% (41.38)%

Market capitalisation

- Ordinary Shares

£21.36

£62.30

- 2016 C Shares

£15.39

£48.62

(Loss)/earnings per share

- Ordinary Shares

(0.73)p

0.51p

- 2016 C Shares

1.02p

9.54p

Return of Capital during the year

- Ordinary Shares

£28.48

£37.38

- 2016 C Shares

£58.35

£25.01

Comprehensive (loss)/income

- Ordinary Shares

£(2.62) £1.80

- 2016 C Shares

£1.42

£13.25

Investments and other receiv

bles and

prepayments

- Ordinary Shares

£55.93 £81.02

- 2016 C Shares

£16.52 £70.32

Cash and cash equivalents

- Ordinary Shares

£7.72 £12.57

- 2016 C Shares

£10.95 £12.78

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

COMPANY OVERVIEW

The investment objective and policy of the Co

mpany is set out in the Strategi

c Report.

Company

SLF Realisation Fund Limited

(formerly known as KKV Secured Loan

Fund Limited and SQN Asset Finance Income Fund Limited)

Incorporated in Guernsey on 28 May 2014.

Change of Name to SLF Realisation Fund Limited regi

stered on 1

December 2021.

Registered Guernsey Closed-e

nded Collective Investment Schem

Admitted to the Premium Segment of the

UK Li

sting Authority’s Official List

and to trading on the Main Market of the London Stock Exchange on 14

July 2014 for Ordinary Shares, 9 November 2015 for the first issua

nce of C

Shares (which were converted into Ordinary Sha

res on the 25 October

2016) and 12 De

cember 2016 for the

second issu

ance of C Sh

ares (the

“2016 C Shares”).

Registration number 5851

Portfolio Manager

KKV Investment Management Limited

(from 6 June 2020

to 31 December 2021)

Incorporated in England and Wales on 2

0 February 2020.

A subsidiary of Kvika Securities Limi

ted, the UK operation of Kvika Banki hf,

a Nordic bank listed on the NASDAQ Iceland main market.

Registration number 1247

5228.

(the “Portfolio Manage

r”)

Alternative Inv

estment Sanne

Fund Management (Guernsey

) Limited (“Sanne”)

Fund Manager

(formerly known as International Fund M

anagement Limited)

(from 6 June 2020 to date)

Regulated by the Guernsey

Financial Services Commissi

on under the

Protection of Investors (Bai

liwick of Guernsey) Law 2

020.

Incorporated in Guernsey with registration number 1

7484.

(the

“AIFM”)

Details of other service providers a

re provided on page 109.

On 20 August 2021, the Compan

y reached agreement with the then Portfolio Manager to

terminate the Investment Management

Agreement between the Company, the

Portfolio Manager and the

AIFM with effect from midnight on

31 December 2021. Sanne Fu

Management (Guernsey) Limited continues to act as the Compan

y's AIFM and has

, with effect from 1 January 2022, delegat

responsibility for the management of the portfolio to the Compan

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CHAIRMAN’S STATEMENT

Introduction

I am pleased to provide share

holders with my second annual Chairm

an’s Statement, covering the peri

from 1 July 2021 to 30 June 20

22. It has been another b

usy year with significant progress

being made in

achieving the investment objective of the Company,

namely to follow a realisation strategy and return

capital to shareholders.

I am pleased to report that the realisation progra

m for both the Ordinary Share class and the 2016 C Share

class has made excell

ent progress, with return

s of

capital having been made during the year of 8p per

Ordinary Share (£28.5 million) and 42p per 2016 C S

hare (£

58.3 million). In addition, post year-end, we

have returned a further 1p per Ordinary Share (£3.6 million) and 5p

per 2016 C Share (£6.9 million).

In total, as at the date hereof, £69.4 million or 19.5p

per share has been returned to Ordinary share

holders

and £90.3 million or 65p per share has been retu

rned to 2016 C shareholde

rs since the realisation progra

began.

Performance

The NAV total return per Ordinary Share was (2.86

)% and the NAV total return per 2016 C Share was

1.81% for the year ended 30 June 202

2. Other key metrics were:



For the year ended 30 June 2022, the Company has

reported a combined loss after tax of £(1.20)

million, compared to a profit of £15.06 million for the year en

ded 30 June 2021.



The Ordinary Share NAV

at 30 June 2022

s £62.07 million (17.44p per Ordinary Share)

compared to £93.24 million (26.19p per Ordina

ry Share) as at 30 June 2021.



The 2016 C Share NAV at 30 June 2022 was £26.10 million (18.

79p per 2016 C Share) compared

to £82.95 million (59.71p per 2016 C Sh

are) as at 30 June 2021.

Shareholder Engagement

The Board have engaged with sharehol

ders over the reporting p

eriod,

taking feedback and resp

onding to

their recommendations where a

ppropriate. Brett Miller ha

led this activity and will continue to do so as

continue to wind down the Comp

any.

Key Dev

elopments

It has been an incredibly busy year. Some events to note:



A return of capital was announ

ced in July 2021 with 3p per

Ordinary Share and 7p per 2

016 C

Share being returned to shareholde

rs.



In August 2021, a loan held in the 2016 C Shares portfo

lio (referred to as Borrower 4

1 in this report)

was refinanced for £16.8 million

(the Company also received an early repayment premium of

approximately £700,000) and a loan in the Ordinary S

hare portfo

lio (referred to as Borrower 16 in

this report) was disposed

of for

US$1 million (£0.7

million). As at

30 June 2021, the loan

s had a fair

value of £17.0 million and

£0.7 million respectively. In addition, a packa

ge of loans se

cured against

shipping vessels was refi

nanced generating proceeds of US$16.6 million (£12.0 million) for the

Ordinary Shares and US$18.4 millio

n (£13.3 million) for the

2016 C Shares (referred

to as

Borrowers 8, 47, 48 and 51 in this repo

rt). As at

30 June 2021, the loan

s had a fair value of £11.6

million for Ordinary Shares and £13.5 million for 2016 C Sha

res.



A further return of capital was ann

ounced in August 2021 with 3p

per Ordinary Share and 21

p per

2016 C Share being returned to shareholders.



Also in August 2021, the Comp

any reached agreem

ent with the Portfolio Manager to terminate the

Investment Management Agreement with effect

from midnight

on 31 December 2021. Further

details were contained in t

he RNS dated 20 August 2021.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CHAIRMAN’S STATEMENT (CONTINUED)

Key Developments (Conti

nued)



In Octobe

r 2021, two loans within the 2016 C Sha

e Class portfolio, that provided regulatory ca

pital

for a US insurance business, were disposed of

for consideration of US$4.0 million (£3.0 million)

(referred to as Borrowers 42 and 58 in

this report). As at 30 June

2021, the loans had a fair value of

£2.7 million. A further loan in the Ordinary Share cl

ass (referred to as Borrower 10 in this report)

was realised for £3.8 million. As at 30 Ju

ne 2021,

the loan had a fair value of £3.6 million.



At the Company’s Annual General Meeting (“AGM”)

held on 29 November 2021, shareh

olders

approved all the resolutions, incl

uding a resolution

to adopt an incentive plan.

Further details are

set out in the Strategic Report.



On 1 December 2021, the Compa

ny changed its name to SLF Realisation Fund Limited.



A further return of capital was announ

ced in

February 2022 with 1p per Ordina

ry Share and 10p per

2016 C Share being returned to shareholders.



A further return of capital

was announced in Ap

il 2022 with 1p per Ordinary Sh

are and 4p per 20

C Share being returned to shareholde

rs.



In June 2022, the Compan

y announced that Borrower 43 within the 2016 C Share Class portfolio, a

wholesale portfolio of Mexican leases, had refi

nanced

and bought back the participation in the loan

for $6.4 million (£5.1 million). The loan

had a fair value of £7.0 million as at 30 June 2

021, since

which time the Company has also received amo

rtisation and interest payments amounting to

US$3.05m (£2.26 million). Also in

June 2022, a loan within the Or

dinary Share Class portfolio,

Borrower 37, an operatin

g lease of earth moving

vehicle

s, agreed a fi

nal repayment schedule,

whereby the borrower paid to the Company an

amount of £174,6

25 on each of 6 May 2022, 31

May 2022 and 30 June 2022, with a final payment received £176,175 on 29 July 2022 for full and

final settlement. The position had a fair value of £0.9 million as at 30 Jun

e 2021.



Also in June 2022, the Company a

nnounced that Borrowe

r 11 within the Ordinary Share

Class

portfolio, an anaerobic digestio

n (“AD”) plant located in Eire, had refinanced and repaid

£3.0

million. The loan had a fair value of £4.1 million as at 30 June 2021

Post Year End

Subsequent to the year end, the pace of activity has continued:



A further

return of capital was ann

ounced in July

2022 with 1p per Ordina

ry Share and 5p per 20

C Share being returned to shareholde

rs.



In July 2022, it was announced that Borrower 4

(an AD plant in Scotland)

was refinanced an

d sold

and the Company received £2.7 mil

lion, plus the potential of a furthe

r £0.2 million deferred

consideration. The loan ha

d a fair value of £2.8 million as at 30 June 2022.

Management Arrangements

On 20 August 2021, the Company anno

unced that it had reached an ag

reement with the Portfolio Manage

for termination of the IMA between the Company, the

AIFM and the Portfolio Manager with effect from

midnight on 31 December 2021. The

IMA was duly terminated on 31 December 2021

. Sanne Fund

Management (Guernsey) Li

mited (formerly International Fund Manageme

nt Limited) continues to act as th

Company's AIFM and has, with effect from 1 Januar

2022, delegated responsib

ility for the management of

the portfolio to the Company. In order to assist

the Board with

the management of the portfolio, the

Company has, with effect from 1

January 2022, entered into consultancy

agree

ments to secure the se

rvices

of the four investment professi

onals with the greatest knowledge of the Company

's assets (the

“Consultants”). In addition, an empl

oyee providing operational support ha

s tra

nsferred from the Portfolio

Manager to the Company by virtue of the Transfer of

Und

ertakings (Protection of

Employment) Regulations

2006 ("TUPE"). Brett Miller continues to oversee the

Company's reali

sation program and

continues to be

directly involved in the managed win

d down of the Co

mpany'

s portfolio. The appointment of the Consultants

and the transfer of the operational employee p

rov

ides continuity and ensures the

Company has the

necessary resource and e

xpertise for the realisation

of the balance of the portfolio. The Board may enga

specialist consultants wher

e it is considers that su

ch appointments will assi

in maximising returns for,

and/or expediting capital returns to, shareholders.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CHAIRMAN’S STATEMENT (CONTINUED)

Management Arrangements (Continu

ed)

Dawn Kendall was also T

UPE transferred from the Portfolio Manager to the Comp

any as an employee.

However she had been on leave of absence sinc

May 2021. As announced on 24 January 2022, the

Board reached a mutual agreement wit

h Dawn

Kendall to end her employment on 21 April 2022.

In summary, these arrangements are working extrem

ely well so far and are proving to be much mo

efficient than was the case whe

n the Company was externally man

aged.

The Score So Far

In posing the question: How is the realisati

on proceed

ing its worth recalling the backgroun

With effect from 31 December 202

0, the current Direct

ors

constituted a majorit

of the Board and from that

point Brett Miller then had free rein to

really work wi

the Portfolio Manager initially and then

subsequently

with the Consultants and employee on running off the por

tfolio and returning

cash to shareholders. So far

the results have been qui

cker and better than expe

cted but there rem

ains much wo

rk to be done on a

portfolio that comprises some very d

ifficult assets,

a large proportion of which a

re distressed. At 31

December 2020, the share price of the Ordinary Sha

res was 16.5p bid and the 2016 C Shares was 41.9p

bid. Since then we have returned 19.5p a share in ca

sh to the Ordinary shareholders and 6

5p a share to the

2016 C shareholders. As of 22 September 20

22, t

he Ordinary Shares trade

d at 6.45p and the 2016 C

Shares at 7.40p. That’s approximately a 57% return fo

r the Ordinary sha

reholders and a 73%

return for the

2016 C shareholders. And

there’s still more work to do.

We have repeatedly represented to sh

areholders that we would

aim to get back to them as much as

possible of the June 2020 NAV in cash.

That NAV wa

s prepared with the bene

fit of independent valuations

for quite a few names in the portfolio that the Portfolio Manager had determine

d were difficult to value. The

30 June 2020 NAV was 36.19p pe

r Ord Share and 68.17p per

C Share. We hav

e therefore already returned

circa 51% of the Ordinary NAV and 95

% of the C Shar

e NAV within 19 month

s. Certainly for the 2016 C

Share class that is significantly

ahead of expectations at the outset

and we remain confid

ent about being

able to exceed 100%. In respe

ct of the Ordinary

Share class, p

rogress ha

been slower than expected

largely due to the problems with Suniva and the AD pl

ants but we remain optimistic abo

ut making further

progress.





Outlook

The Board expects the win

d-down plan will likely ta

ke appr

oximately 18 to 24 months to exit the majo

rity of

the remainder of the portfolio. Our

goal is to achieve a bal

ance between maximising val

ue received for

assets and making timely returns of capital. Whilst

the realisation program ha

s proceeded extremely well so

far and certainly ahead of expectatio

ns, we are cognisant of

the greater risk that

remains in the balance of

the portfolio, as whatever remains in the portfolio

has

not yet achieved a satisfactory exit. The Board

continues to work on a

chieving positive outcomes.

he task ahead remain

s great and as always,

we shall

keep investors informed of any devel

opments as they occur. We than

investors for their continued suppo

and we hope to be in a position to report more progress in the co

ming months.

Bren

dan Haw

thorne

Chairman

29 September 2022

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT

This Strategic Report is designed to provide inform

tion about the Company’s business an

d results for the

year ended 30 June 2022. It should be read in c

onjunction wi

th the Chairman’s Statement and the

Investment Report, which give a detailed review of inve

stment activities for the year and an

outlook for the

future. These include a review of the business of the

Group and its core activities, the principal risks and

uncertainties it faces, dividend policy and results for t

he year.

Corporate Summary

The Company is a non-ce

llular company limited by shares, regist

ered in Guernsey un

der the Companie

(Guernsey) Law 2008 (as

amended) with registere

d number 58519. The registe

red office of the Company is

BNP Paribas House, St Julian’s Avenue, St Peter Port, Guernsey, GY1 1WA, Channel Islan

ds.

The Company is an authorise

d collective investment sch

me in Guernsey, pursuant to the Protection of

Investors (Bailiwick of Guernsey) La

w 2020. The Company’s O

rdinary Shares and 2016 C S

hares are listed

on the premium segment of the Official List of the

UK Listing Authority and are admitted to

trading on the

Main Market of the London Stock Exchange.

With effect from 1 October 2021, the

Company ceased

to be a m

ember of the Association of Investment

Companies (the “AIC”) as the Directors decided not to

renew the Company’s membe

rship. The Directors

have decided to follow the UK Corpo

rate Governance Code (the “UK Code”).

Significant Events during the Year En

ded 30 June 2022

Management Arrangements

Amendment and Termination of Inve

stment Management Agreem

ent

On 20 August 2021, the Board announced that it had

rea

ched an agreement with the Portfolio Manager to

amend the IMA between

the Company, the Portfolio M

ana

ger and the AIFM, and for the I

MA to terminate

with effect from midnight on 31 December 2021. San

ne Fund Management (Guern

sey) Limited continues to

act as the Company's AIFM and has, with effect

from 1 January 2022, del

egated responsibility for the

management of the portfolio to the Company.

The key terms of the amended IMA were:



Management fees payable by the Company to the

Portfolio Manager of: (i) £2

30,000 for the month

of July 2021; and (ii) £218,500 per mont

h from 1 August 2021 to 31 Decemb

er 2021;



A payment of £100,000 in total payable by the Com

pany to the Portfolio Manager conditional

on the

publication of the Company's Annual Report and A

udited Consolidated Financial Statements for the

year ended 30 June 202

1 and the continued prov

ion of certain employees' services to the

Company to 31 December

2021;



The cla

wback arrangement being cancelled with

effect from 1 Ju

ly 2021. The amount outstanding

of £313,733 was cancelled on 1 July 2

021; and



No fees were payable by either party on terminatio

n other than those referred to above. In particular,

the Company was not be req

uired to make any payment to

the Portfolio Manager for the

termination of the IMA within the first 36 months

of the Portfolio Manager's appointment (wh

ere the

IMA currently stated that the Company would be re

quired to reimburse KKV for certain cost

s that

the Company would otherwise have incurred in connection with the transfe

r of the management

contract to the Portfolio Manager in June 2020).

The amended IMA provided for the on

going management of the

portfolio to 31 December 2

021 and allowed

for an orderly transition of the portfolio to the Company

. Brett Miller worked closely with the team at the

Portfolio Manager with respect to asset real

isations a

nd ongoing management of

the assets.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Significant Events during the Year En

ded 30 June 2022

(Continued)

Management Arrangements (Continu

ed)

Amendment and Termination of Investm

ent Management Agreeme

nt (Continued)

In order to assist the Board with th

e management of

the portfolio, the Com

pany has, with effect from 1

January 2022, entered into

consultancy agreeme

nts to se

cure the service

s of the Consultants. In addition,

an employee providing operational sup

port and Dawn Kendall

transferred from the Portfolio Manag

er to the

Company by virtue of the TUPE. Dawn Kendall e

nded her

employment with the

Company on 21 April 2022.

Brett Miller continues to oversee the Company's reali

ation program and continues to be dire

ctly involved in

the managed wind down of the Company'

s portfolio.

The appointment of the Consultants and the transfer

of the operation

al employee

provides continuity and

ensures the Company ha

s the necessary resource

and ex

pertise for the reali

sation of the balance of the

portfolio. The Board may engage specialist con

sultants where it is considers that such appointments will

assist in maximising returns for, and/or expediting

capital returns to, shareholde

rs.

Return of Capital

On 7 July 2021, the Company announ

ced the third retu

rn of capital whi

ch was paid to sharehold

ers on 29

July 2021. This return of capital wa

s effected

by way of an issue and i

mmediate redemption an

cancellation of 355,975,669

B Shares and

138,924,222 D Shares on 21 July 2021.

On 18 August 2021, the Company anno

unced the fourth return of capita

l, whic

h was paid to shareholders

on 13 September 2021. This return of

capital was

effected by wa

y of an issue and immediate redempti

and cancellation of 355,975,669 B Share

s and 138,924,222 D Shares on 3 Sept

ember 2021.

On 24 February 2022, the Company announ

ced the fifth retu

rn of capital whi

ch was paid to sharehold

ers on

18 March 2022. This return of capital wa

s effected

by way of an issue and immediate re

demption and

cancellation of 355,975,669

B Shares and 138,924,222 D Shares on 10 March 2

022.

On 21 April 2022, the Com

pany announced the sixth

return of capital which was paid to

shareholders on 1

May 2022. This return of capital

was effected by way of an issue an

d immediate rede

mption and

cancellation of 355,975,669

B Shares and

138,924,222 D Shares on 11 May 2022.

The table below summaries the amounts retu

rned to shareholders

during the year:

Ordinary Shares

2016 C Shares

Record date

Amount per

Amount returned to

shareholders

Amount per Share

Amount returned to

shareholders

20 July 2021

£10,679,270

£9,724,695

2 September 2021

£10,679,270

21p

£29,174,087

9 March 2022

£3,559,757

10p

£13,892,422

10 May 2022

£3,559,757

£5,556,969

Sale of Investments

Borrower 41 within the C Share Class portfolio

(as outlined in the Investm

ent Report)

On 4 August 2021, the Board announc

ed that a further loa

n underwritt

en by the Company, which

was held

solely within the 2016 C Share class portfolio, was

refinanced with another provid

er.

The loan was

refinanced for considerati

on of £16.82 million, bei

ng the total amount outstanding under the loan. Th

Company also received an early repayment premiu

m of

£0.7 million.

As at 30 June 2021, the investment

had a fair value of £17.0 million.

Borrower 16 within the Ordinary Share

Class portfo

lio (as o

utlined in the Investment Report)

On 4 August 2021, the Bo

ard announced the disp

osal of

the Company's interest in a l

oan, which wa

s held

solely within the Ordinary

Share class portfolio, for a

consideration of

US$1.0 milli

on.

As at 30 June 2021,

the investment had a fair value of £0.7 million.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Significant Events during the Year En

ded 30 June 2022

(Continued)

Sale of Investments (Continued)

Borrower 8 within the Ordinary Sha

re Class portfolio

and Borrowers 47, 4

8 and 51 within the

2016 C Share

Class portfolio (as outlined

in the Investment Report)

On 9 August 2021, the Board

announced that a package

of loans secu

red against shippi

ng vessels to a

single borrower, which were unde

rwri

tten by the Company have been refina

nce

d with another provider.

The

loans were refinanced fo

r consideration of US$35.0 million (£25.

3 million). As the loans were held within

both the Ordinary and 2016 C Share class portfolio

US$16.6 million (£12.0 million) and US$18.4 million

(£13.3 million) were allocat

ed to the Ordinary and 2016 C Share cla

ss portfolio respectively.

As at 30 June 2021, the investments had a fair val

ue of £11.6 million (Ordinary) and £13.5 million (2016 C

share)

Borrower 42 and 58 withi

n the C Share Class po

rtfolio

and Borrower 10, 18

and 35 within the Ordinary

share class portfolio (as ou

tlined in the Investment Report)

On 6 October 2021, the Board a

nnounced that two loan

within the C Share Cla

ss portfolio, that provided

regulatory capital for a US insu

rance busi

ness,

have been

purchased by another party.

The loans have

been purchased for consideration of

US$4.0 million (£3.0 million).

As at 30 June 2021, the loans had a fair value of £2.7 million.

Borrower 10, a loan withi

n the Ordinary

Share Class

portfolio that financed do

mestic heating systems a

associated maintenance c

ontra

cts has been settled. The loan wa

s pur

chased for consideration of £3.8m.

As at 30 June 2021, the loan had a fair value of £3.6 million.

In addition, two smaller settlements of position

s within

the Ordinary Share Clas

s portfolio were transacted,

as detailed below:

Borrower

Consideration

Date of

Completion

Fair value as at 30

June 2021

Loan Description

£0.0m

12 July 2021

£0.0m

Farm scale AD Plant

£0.3m

31 August 2021

£0.3m

Moveable micro hotel

Position was written off post receiving nil value from administ

ration.

Borrower 36 within the Ordinary Share

Class portfo

lio (as o

utlined in the Investment Report)

In October 2021, borrower 36 within th

e Ordinary Share Class p

ortfolio was sold for £1.0 million.

The loan

had a fair value of £0.9 million as at 30 June 2021.

Borrower 54 within the 2016 C Sha

re Class portfo

lio (as outlined in the Inve

stment Report)

Borrower 54 within the

2016 C

Share Class portfolio agreed

settl

ement of £2.4 million in December

2021. The loan had a fair value of £2.4 million as at 30 Jun

e 2021.

Borrower 55 within the 2016 C Sha

re Class portfo

lio (as outlined in the Inve

stment Report)

Borrower 55 within the

2016 C

Share Class repaid £1.2 million, with the

final payment received in

December 2021. The loan

had a fair value of £1.2 million as at 30 June 202

Borrower 49 within the 2016 C Sha

re Class portfo

lio (as outlined in the Inve

stment Report)

In February 2022, borrowe

r 49 within the

2016 C

Share Cla

ss portfolio repaid £4.7 million.

The loan had a

fair value of £4.9 million as at 30 June 2021.

Borrower 57 within the 2016 C Sha

re Class portfo

lio (as outlined in the Inve

stment Report)

During the year, borrower 57 within the

2016 C

Share Class portfolio repaid £1.2 million, with the final

payment received in May 2022. The loan had a fair value of £1.2 million as at 30

June 2021.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Significant Events during the Year En

ded 30 June 2022

(Continued)

Sale of Investments (continued)

Borrower 43 within the 2016 C Sha

re Class portfoli

o and Borrower 37 within the Ordina

ry Share Class

portfolio (as outlined in the Investment Report

)

On 13 June 2022, the Board annou

nced that Borrower 43 within the 2016 C Share Cla

ss portfolio, a

wholesale portfolio of Mexican leases, h

ad refinanced

and bought back the participatio

n in the loan for $6.4

million (£5.3 million). The loan had a fair value of £7

.0 million a

s at 30 June 2021, since which time th

Company has also received amorti

sation and inte

rest payments amounting to US$3.05m (£2.26 million

A loan within the Ordinary Share Class portfolio, Borro

wer 37, an operating lease of earth moving vehicles,

agreed a final repayment schedule, wh

ereby the bor

rower paid the Com

pany an amount of £174,62

5 on

each of 6 May 2022 and 31 May 202

2 and agreed a pay

ment of £

174,625 due on 30

June 2022, and a final

payment of £176,175 due on 29 July 2

022 for full and final

settlement. The investment had a fair value

£0.9 million as at 30 June 2021.

Borrower 11 within the Ordinary Share

Class portfo

lio (as o

utlined in the Investment Report)

On 30 June 2022, the Board announced that Borrowe

r 11 within the Ordinary Share Class p

ortfolio, an AD

plant located in Eire, has refinanced repaying £3.0 million.

The loan had a fair value of £4.1 million as at 30

June 2021.

Borrower 28 within the Ordinary Share

Class portfo

lio (as o

utlined in the Investment Report)

In June 2022, borrower 28

within the Ordinary Shar

e Class portfolio, was written off due to vandalism to

assets located in Sierra Leone preventing any recov

ery.

The loan had a fair value of £0.1 m

illion as at 30

June 2021.

Cancellation of treasury

On 1 September 2021, 1,731,838 Ordin

ary Shar

es held in treasury were cancelled.

AGM held on 29 November 2021

Bonus payments

At the AGM, shareholders approved

a one-off cash

bonus of £280,000 to t

he Dire

ctors, payable in such

proportions as the Dire

ctors determine

to recognise

their achievem

ents to 30 June 2021 in achievin

g the

aims of the Company’s investment objective of a managed wind d

own.

The Board voluntarily agreed to split the bonu

s into two

parts, with the first half

to be paid immediately and

to defer the other half until the earlier of 1 January

2023 or the date at which a further £30 mi

llion had been

returned to shareholders.

During the year, a £140,000 bonus was

paid to the Direct

ors, with an accrual pa

yable of £140,000 as at 30

June 2022. £140,000 was

paid to the Directors po

st year

end, refer to note 18 for further information.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Significant Events during the Year En

ded 30 June 2022

(Continued)

AGM held on 29 November 2021 (Co

ntinued)

Incentive plan

Shareholders at the AGM approved an in

centive plan (the

“Incentive Plan”).

The structure of the Ince

ntive Plan is for a bonus pool to be cre

ated for the Board (excluding David

Copperwaite as the indep

endent Dire

ctor), employe

es and consultants

of the Company (both pre

sent and

future) comprising cash

equivalent to 1.4% of the ag

gregate funds di

stributed to sharehold

ers since 1 Jul

2021 for a period up to 31 Decemb

er 2023, following whi

h the amount shall fall to

1.0% of aggregate funds

distributed to shareholders

for the period from 1 January 2024 to 30

June 2024 and will thereafter re

duce by

a further 0.2% every 3 months (the

"Bonus Pool"). The preci

se allocation of the Bonus Pool will be at the

discretion of the Board, subject

to the approval of the independent Di

rector. The Board wi

ll not distribute

more than 50% of the Bonus Pool

until the net assets

of the Co

mpany fall below £20 million a

nd no part of

the Bonus Pool will be paid out until a minimu

m of £80 million has been

returned to shareholders

cumulatively since 1 July 2021. The Bonu

s Pool has been capped a

t £2.3 million.

For the year ended 30 June 2022, an ince

ntive fee ac

crual of £2,266,001 (30

June 2021: £nil) has been

recognised.

Change of name

At the AGM, a resolution to change the Company’s name from KKV Secured Loan Fu

nd Limited to SLF

Realisation Fund Limited was app

roved by the requisite majority.

Update on Resolution 6 and Resol

ution 7 at the AGM

On 25 May 2022, the Board made an anno

uncement in regard to votes agai

nst Resolution 6

(Approval of

one-off bonus)

and Resolution 7 (Approval of the Inc

entive Plan) at the AGM on 29 November 2021 which

represented 27.47% and 27.05% of those

shares voting at the meeting.

The Board believes that certain investors may

have had some con

cerns regarding the payment of

performance incentive arra

ngements.

The Board is of t

he view that the policy is important in aligning the

incentives of those respon

sible for implementing the

investment policy of the Company wit

h shareholder

interests.

The Board has overseen the successf

ul revision of

the management arr

angements now in place, furth

details of which were set out in the announcement

on 10 Jan

uary 2022. The Board is satisfied that the

Company is now operating

efficiently

and whilst much

work remains to be done, the realisation

program has

advanced significantly since sha

reholders approved the new inve

stment policy.

Share Capital and voting rights

The Company’s issued sh

are capital as at 30 June

2022 consist

ed of 355,975,669 Ordinary Shares and

138,924,222 2016 C Shares of no par value. The share

capital

of the Company is represented by an

unlimited number of shares of no par value. All shar

es hold equal voting rights with no rest

rictions and no

shares carry special rights with regard to the contro

l of the Compa

ny. There are no special rights attached

to the shares in the winding up of the Co

mpany.

Please refer to note 13 for further info

rmation.

Subsidiaries and entities controlled by

the Group

The Company’s subsidiaries

are detailed in note 1. Brett Miller and

David Copperwaite ar

e the Directors of

all the Company’s subsidi

aries, except for SQN As

set Finance (Irela

nd) Designated Activity Company

(“SQN Ireland”), as mentioned on the ne

xt page. Information of each Director is shown on page 38.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Subsidiaries and entities controlled by

the Group (Continued)

Effective 1 January 2022, the Company meets the def

inition of control under IFRS 10 – “Consolidate

Financial Statements” in respect to its investment ho

lding in SQ

N Ireland. As such, the results for SQN

Ireland have been consolidated with the Group’s Audit

ed Consolidated Fin

ancial Statements from this

effective date. The consolidation of SQN Irel

and has

had a limit

ed impact on the NAV of the Group. The

Board of SQN Ireland are employees of it

s administrator, Cafico Internatio

nal.

Refer to note 2.1 for further detail.

Purpose

The Company is an investment com

pany with wholly

owned subsidiarie

s incorporated in

Guernsey and

SQN Ireland incorporated in the Repu

blic of Ireland,

and establish

ed for the primary purpose of acting as

investment holding companies. The

Company’s purpose to

gether with its sub

sidiaries is to realise all

remaining assets in the p

ortfolio of the Ordinary Share

s and the 2016 C S

hares in a prudent manner

consistent with the principles of good i

nvestment m

anagement a

nd to return cash to sharehold

ers in an

orderly manner.

Investment Objective and Inv

estment Policy

Each share class has its o

wn investment objective and investmen

t policy, which are identi

cal and are set

out below.

Investment Objectiv

The investment objective of the Ordinary Share

s and the

2016 C Shares is to realise all remaining asset

the portfolio of both share

classes in a prudent ma

nner consi

stent with the principles

of good investment

management and to return ca

sh to shareholders in an orde

rly manner.

Investment Policy

The Company will pursue the investment objective

of the Ordinary Share

ass and the 2016 C Share

Class by effecting an orderly reali

ation of the assets in a ma

nner that

seek

s to achieve a bal

ance between

maximising the value received from tho

se assets and maki

ng timely returns of capital to sh

areholders. This

process might include sale

s of individual assets, mainly

structured as loans and leases, or running off the

Ordinary Share and 2016 C Share po

rtfolios in accor

dance with the existing terms of the assets, or a

combination of both.

As part of the realisation process, the Group may

also exchange existing debt instruments for equity or

other securities where, in the opinion

of the Board, th

e Group is unlikely to be able to otherwi

se realise such

debt instruments or will o

nly be able to realise them

at a material discount to the outstanding pri

ncipal

balance of that debt instrument.

The Company, on behalf of the Ordina

ry Share Class or

the 201

6 C Share Class, will cea

se to make any

new investments or to undertake

capital expenditure

except where, in the opinio

n of the Board:



the investment is a follow-on investment made

in connection with an existing asset held by the

Ordinary Share Class or t

he 2016 C Share Cla

ss in order to comply with the

Group's pre-

existing

obligations; or



failure to make the follow-on investment may resu

lt in a breach of contract or applicable law or

regulation by the Group; or



the investment is considered necessary by the

Board to prote

ct or enhance the value o

f any

existing investments of the Ordinary Share Class

or the 2016 C Share Class to facilitate orderly

disposals of assets held by the Ordinary

Share Class or the 201

6 C Share Class.

Any cash received by the Company as part of the realisat

n process prior to its di

stribution to shareholders

will be held by the Company, on behalf of

the Ordinary Share Cl

ass or the 2016 C Shar

e Class, as cash on

deposit and/or as cash equ

ivalents.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Investment Objective and Investmen

t Policy (Continued)

Investment Policy (Continued)

The Company does not intend to unde

rtake any new borrowings on behalf of the Ordi

nary Share Cla

ss or

the 2016 C Share Class,

although the Company

may bor

row where, in the opinion of

the Board, an

investment is considered necessary

to protect or enhance the value of an existing investment and the

Company does not have the available equity capital

to fund the investment. Any such borrowi

ngs are

expected to be short-term and would be repaid follo

wing the realisation of assets.

Any material change to the new Investment objective and

investment policy for the Ordina

ry Share Class or

the 2016 C Share Class would require Ordina

Shareholder or 2016 C Shareholder app

roval in

accordance with the Listing Rules.

Significant Events after the Rep

orting Period

Return of Capital

On 12 July 2022, the Company announced the seventh retu

rn of capital which was paid to share

holders on

3 August 2022. This return of capital was effected

by way of an issue and immediate redemption and

cancellation of 355,975,669

B Shares and

138,924,222 D Shares on 26 July 2022.

The table below summaries the amounts retu

rned to shareholders:

Ordinary Shares

2016 C Shares

Record date

Amount per

Amount returned to

shareholders

Amount per Share

Amount returned to

shareholders

25 July 2022

£3,559,757

£6,946,211

Asset Realisations

On 12 July 2022, the Board announce

d that within

the Ordinary Share Class portfolio, Borrower 4, an AD

plant located in Scotland had

refinanced. The positi

on was restructured and sold, repaying the fund £2.7

million plus the potential for a further £0.2 million of def

erred consideratio

n. It had a fair value of £2.8 million

as at 30 June 2022 with a further £0.

1 million advan

ced to fund creditors.

Financial risk management objectives and policies

The Board is responsible for the Company’s system

of risk managem

ent and internal control and meets

regularly in the form of periodic Board meetings to

receive reports from the Audit and Risk Committee and

to consider the effectiveness of such controls

in managing and mitigating risk. The Audit and Ri

Committee considers the detail of t

he Risk Management Framework, and

the risk re

porting from the AIFM

who has day-to-day respon

sibility for the management of risk.

The Board confirms that it has reviewed the effectiveness of the

Company’s system of risk managem

ent

and internal control for the year ende

d 30 June 2

022, and to

the date of appr

oval of these Audited

Consolidated Financial Statements. The Board has taken

into consi

deration the Financial Reporting Council

(“FRC”)’s, “Guidan

ce on Risk Mana

gement, Internal Cont

rol an

d Related Financial and Bu

siness Reporting”

to ensure that the Company’s syst

em of risk management and internal control is designe

d and operated

effectively, in line with best prac

tice guidance provided by the FRC.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Principal Risks and Uncertainties

The Principal Risks facing the Compan

y are as set out below.

Please refer to note 17 for reference to

financial risk management disclosu

res, which explains

in further detail the below risk exposures a

nd the

policies and procedure

s in place to monitor and mitigate these ri

sks.

The approach of the Audit and Risk Committee to the identification and ma

nagement of risk is set out in

more detail in the Audit and Risk Comm

ittee Report.

The Committee has, with the assistance of the AIFM,

and the Administrator est

ablished an internal co

ntrol

framework to provide reasonable but not absolu

assurance on the effectiveness of the i

nternal cont

rols operated

on behalf of the Company

by the service

providers as the management and a

inistrative functions are outsou

rced to third parties. The Risk

Framework is kept under review.

When consid

ering the total return of the Group, the

Board takes account of the risk

which has been ta

ken to

achieve that return. The Board looks at numerou

s risk

factors, an overview of which is set out below:

Principal

Risk

Description

Mitigating Factors

Counterparty

/Asset risk

The Company’s

performance is subje

to risks primarily

inherent to asset

financing; in particular,

the quality of the assets

underpinning the

transaction and the risk

of default by the

counterparties. This may

affect the Company’s

ability to operate

profitably.

No new investments have been made in

the current period.

Ongoing monitoring programme

s are in place which allows the

Board, with the assistance of the Consultants and the

Company’s employee, to identify and a

ddress risks at an e

arly

stage.

Valuation

Risk

Reliability of asset

valuations is considered

a key risk.

Given the sector of

investment, valuations

of the counterparties’

underlying businesses,

and assets over which

security exists, are

calculated and rely upon

assumptions, using

inputs such as cash

flows, discounts,

security, profitability and

going concern

assumptions.

The fair value of investments

and any fair value adjustments are

assessed and agreed by the AIFM

and Board. The

Board also

engages the Consultants, who hav

e experience in the sector

and are familiar with the valuation p

rocess, to prepare the

valuation of the investments held in the portfolio. The Board can

also engage professi

onal valuers if required.

Key reporting information is st

ructured within the transa

ctions, to

ensure that all necessary borro

wer data can be accessed where

required.

The Group’s investments are cla

ssified at fair value throug

profit or loss. Refer to note 2.3 and note 9 for detail of key

estimates and assumptio

ns applied by the Com

pany when

considering valuation of investment

s held as at 30 June 2022.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Principal Risks and Uncertainties (Continued)

Principal

Risk

Description

Mitigating Factors

Currency

Risk

The Company is invested i

n a global

portfolio and investments will not always

be in the base currency of the Company.

As a result, such investments will carry

currency risk, if the non-ba

se currency

investments are not hedged.

The Board have determined curren

cy hedging is not to be

conducted at this time.

This is closely monitored by the Company and if deemed

appropriate, the hedging transacti

ons will be re-

established.

Liquidity

risk

The Company’s investmen

ts are not

publicly traded or freely marketable. As a

result, there is likely to be a limited or no

secondary market to transact in.

Therefore, investments may be difficult to

value or sell, with a risk of any achievable

sale being at a value that is lower than the

current valuation of such assets.

With the Company being wound do

wn, all remaining

assets in the portfolio are being di

sposed of in a prudent

manner consistent with the principle

s of good investment

management.

The Company seeks to maximise the values it receives

when realising or seeki

ng repayment of investments.

Geopolitical

risk

The Company provides as

set finance to

counterparties in several jurisd

ictions

exposing the Company to potential

economic, social, legal and political ri

sks,

such as the Ukraine conflict.

The Group

therefore faces significant risks as a result

of a financial crisis.

The Company is invested in a diversified portfolio across

a wide range of industry

secto

rs and therefore the

portfolio is sufficiently diversified to assist in the mitigation

of such risk, though

this diversification will decrea

se as

the Company is wound do

wn.

Significant events causing market volatility are closely

monitored, as are the impac

ts/potential impacts on the

positions and counterpartie

s the Company is invested in.

Ukraine Conflict

Russia invaded Ukrai

ne in February 2022, which has

added to the geopolitical and macro

-economic

uncertainties faced by the Company.

The invasion itself

and resulting international san

ctions on Russia have

already caused substa

ntial economic disruption a

nd is

expected to have a severe impact on the global

economy.

The conflict has spur

red further ri

ses in already

elevated, oil, gas and food pr

ices that will continue to

drive inflation. The full effects

will take time to flow through

fully and manifest themselves in the balance sheets of

companies and impact ability to repay loan

The Company has no direct exposure to Ukrai

ne or

Russia and any impact o

n the Company

’s cash flow is not

expected to be material.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Principal Risks and Uncertainties (Continued)

Principal

Risk

Description

Mitigating Factors

Operational

risk

The Company is ultimately resp

onsible for all

of its operations. As at 30 June 2022, the

Company has one employ

ee, for other

services it enters int

o contract

s with its

service providers, including the Con

sultants,

Administrator and AIFM, to ensure

operational performance and regulato

requirements are met. With effect from 1

January 2022, the Board is more involved

with the investment management of the

investments held by the Company.

The Company conduct

s thorough due diligen

ce and

interviews each service provider prior to appointment.

Ongoing monitoring of service

providers

is carried out

through the regular repo

rts

service providers su

pply,

which include ongoin

g updates on all operational and

regulatory matters.

The Management Engag

ement Committee

periodically reviews all service providers, the

employee and the Consultants asi

de from the

auditors.

Perfor

mance

risk

The performance of the Company is la

rgely

determined by the success of the Board in

meeting or exceeding performance objectives

and the expectations of investors, in

accordance with the objectives set out in the

Investment Policy.

The Board receives regular NAV information a

cash flows. With effect from 1

January 2022, the

Board is more involved with the investment

management of the investments held by the

Company.

Regular announcement

s are provided to investo

rs to

appraise them of company performance.

Brexit is no longer considered a prin

cipal risk, as

the United Kingdom has now left the European Uni

on. As

at 30 June 2022, there has not been a material impact

on the Group due to Brexit and no material future

impact is expected.

Emerging Risks

Principal risks, including e

merging risks, are miti

gated and manag

ed by the Board through continual review,

policy setting and reviews of the Company’s risk ma

trix by the Audit and Risk Committee to ensure that

procedures are in place with the intention of mini

mising the imp

act of the above mentioned risks where

possible. The Board reli

es on periodic repo

rts pr

ovided by the AIFM, Administrator, employee and

Consultants regarding risks that t

he Company face

s. When required,

experts

will be employed to gather

information, including legal advise

rs and third-party

valuation specialists. The Comp

any has not identified

any emerging risks as at 30 June 2022.

Going C

oncern

As the Company is in ma

naged wind down, the Au

dited Consolidated Financial Statement

s for the year

ended 30 June 2022 have been prep

ared on a basis other than goi

ng concern.

Viability Statement

At least once a year the Directors are required to

rry out a robust a

ssessment of the prin

cipal and

emerging risks and make a statem

nt which explains how they hav

e assessed the pr

ospects of the

Company, over what period they have done so and why t

hey consider that peri

od to be appropriate, taking

into account the Company’s current position and

princi

pal and emerging

risks. The princi

pal and emergin

risks faced by the Compan

y are described on pages 19 to 21.

As detailed above, the Company is pre

paring the Au

dited Consolidated Financi

al Statements using a basis

other than going concern as the

Company is in ma

nage

d wind down. Accordi

ngl

y, the Directors have not

assessed the longer-term viability of the Company other

than for the managed wind down of the Company

The Directors have assessed the wind dow

n of the Company to be within 18

to 24 months of the date of the

approval of these Audited Consolidat

ed Financial Statements, although t

here i

s no guarantee that it will be

possible to realise the asse

ts within that timeframe.

Life of the Company

The Company has an inde

finite life, however as ou

tlined above the Company is in manag

ed wind-down.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Section 172(1) Statement

Although the Company is domiciled in G

uernsey, the B

oard adheres to the UK Corporate Governance Co

and acknowledges its duty to comply wit

h section 172(1)

of the UK

Companies Act 2006 to act in a way that

promotes the success of t

he Company for the benefit of

its members as a whole,

having regard to (amongst

other things and to the extent applicable):

consequences of any decision in the lon

g-term;

the interests of t

he Company’s employe

es;

need to foster business relationships

with sup

pliers, customers and others;

impact on community and environment;

maintaining reputation; and

act fairly as between members of the Company.

The Board considers this duty to

be inherent within the culture the Company and a part of its decision-

making process.

The Company’s culture is one of open

ness, tran

sparency and inclusivity.

Respe

ct for the opinions of its

diverse stakeholder’s features foremo

st, as does its desi

re to implement its operations in a

sustainable way.

The principal deci

sions section on page 24 o

utlines

decisions taken durin

g the year, which the Board

believe, have been taken to meet the Company’s invest

ment obje

ctive and policy. The Board considers the

factors outlined under section 172 an

d the wider interests of

stakeholders a

s a whole in all decisions it takes

on behalf of the Company.

Information on how the Board has enga

ged with its stakeholders is outlined belo

Stakeholder engagement

Stakeholder

w the Board engages

Shareholders

The Board recog

nises that it is important to maintain app

ropriate contact with

all shareholders to understa

nd their issues and

concerns. There is a

programme of conta

ct with major share

lders and other sh

areholders are able

to contact any Director through the Company Secre

tary.

During the year, the Board engaged

with its sharehold

ers by:

1) Publishing

announcements.

Publishing half-yearly and

annual rep

orts and accou

nts.

Making themselves available to meet major shareholde

rs as

requested.

Obtaining shareholder fee

dback di

rectly and via the Corpo

rate Broker.

Making themselves available to be contacted by shareholders.

Shareholders receive relevant information allo

wing them to make informed

decisions about thei

r investments.

The Board receives the views

shareholders allowin

g it to consider these views throughout its deli

berations.

During the year, consi

derable enga

gement with shareholde

rs took place

regarding:

the managed wind down of the Co

mpany in respe

ct of both share

classes.

2) Management

arrangements.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Section 172(1) Statement (Continued

)

Stakeholder engagement (Continued)

Stakeholder

How the Board engages

Third party service providers

The

Board

reliant

on third party service providers to help the Company

operate in a compliant and efficient manner.

During the year, the Board engaged

th its service providers by:

Receiving detailed written and ve

rbal reports at b

oard meetings.

Regular communication

with representatives via tel

ephone and

email to discuss ad hoc matters.

Undertaking an annual

review via the Management Engage

ment

Committee and providing feedback,

where a

ppropriate, regarding

service levels to service providers.

External

Auditor

The Board engages with

the external auditor to ensure that the annual

audit process operates effectively, efficiently and predictably.

The Audit Committee meets with the auditor formally

on a biannual basis

and more frequently where req

uired. The auditor p

rovide valuable

feedback on the Compa

ny and those of its service provide

rs that have a

delegated responsibility fo

r areas of accounting an

d internal control.

As noted further below and in the Audit and Risk Committee Report, the

Audit and Risk Com

mittee has engaged extensively with Deloitt

e LLP to

understand their appro

ach and requirements.

The wider community and the

environment

The Board supports fully the growi

ng importance pla

ced on

Environmental, Social and Corpo

rate Governance (“ESG

”) factors whe

delivering against the Company’s obj

ectives. The Company has made

significant investment in assets such a

s AD plants, which should

have a

positive impact on the environment. T

he Board and the AIFM, in managing

the Company’s assets, are mindful of social, ethical and environmental

issues of companies within the Gro

up’s portfolio, acknowled

ging that

companies failing to manage these issues ad

equately run a long-term ri

to the sustainability of their businesses.

Given that the Company is in wind

down, the Company will not be making

new investments but will continue

to follow good practice on ESG issues whe

re applicable.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Section 172(1) Statement (Continued

)

Principal decisions

Principal decision

Stakeholder considerations / interes

Managed wind down of the

Company

As part of the managed wind down of

the Company, the Board continue

to realise investment

s in a manner

that achieves a bal

ance between

maximising the value received from investments and maki

ng timely

returns of capital to shareholders.

During the year ended 3

0 June 2022, the Com

pany made a return of

capital on four separate occasions, re

turning a total of £28,478,054 to

Ordinary shareholders and £58,348,173 t

o 2016 C sharehol

ders.

Refer to note 14 for full details of the Company’s return of capital during

the year ended 30 June 2022 an

d note 18 for the return of capital

subsequent to the year ended 30

June 2022.

Termination of the IMA

During

the

year,

the

mpany in discussion with the Portfolio Manager

agreed to the termination of the IMA with effe

ct from midnight on 31

December 2021. Sanne F

und Management (Guernse

y) Limited continues

to act as the Company's AIFM and has,

with effect from 1 January 2022,

delegated responsibility for the manageme

nt of the portfolio to the

Company.

Following the termination of the IMA,

the Board engag

ed four Consultants,

who were previously emplo

yed by the Po

rtfolio Manager, to assist with the

management and wind down of the investment portfoli

An employee providing operational su

pport and Dawn Kendall

transferred

from the Portfolio Manager to the

Company by virtue of TUPE. Dawn

Kendall’s employment was terminate

by mutual agreement on 21 April

2022.

Employee engagement

With effect from 1 January 2022, an employee providi

ng operational support and Da

wn Kendall

transferred

from the Portfolio Manager to the Company by virtue of TUPE.

Dawn Kendall’s employme

nt was terminated

by mutual agreement on 21 April 2022.

As at 30 June 2022, the Company has o

ne employee.

Business relationships

The Board considers its busine

ss rela

tionships with stake

holders to be important and is pro

active in

fostering these relationships. For

details on the nature

of these relati

onships and how the Co

mpany fosters

relationships with its stakeholders, refer to the

stakeholder engag

ement section on pag

es 22 to 23. The

Board also considers the impact prin

cipal decisions

have on its stakeholde

rs, which is detailed in the

principal decisions sectio

n above.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

STRATEGIC REPORT (CONTINUED)

Culture of the Company

The Board recognises that its tone a

nd culture is impor

tant and will g

reatly impact its interaction

s with

shareholders and se

rvice providers. The importance of

sound ethi

cal values and behaviours is crucial to the

ability of the Company to achieve it

s corporate objecti

ves successfully.

The Board individually and collectively

seeks to act

with diligence, hone

sty and integrity. It encourages its

members to express difference

s of perspective and to chall

enge but always in a respectful, open,

cooperative and collegiate fashion. The

Board enco

ages diversity of thought and a

pproach and chooses

its members with this approach in mind. The Corporate Governance princi

ples that the Board has adopted

are designed to ensure th

at the Co

mpany delivers value to its share

holders and treats all shareholders

equally. All shareholders are encoura

ged to have an open dialogue with the Board.

The Board has adopte

d a code for Director de

alings and a proc

edure for matters reserved for the B

oard

and matters delegated to service providers to e

nsure an appropriate a

nd effective framework for

implementation and oversight. The Board inte

nds to revi

ew its internal culture and that of its service

providers on a regular b

asis.

Environmental and social issues

The Company is a clo

sed-ended investment compa

y, which has one employ

ee, and therefore its own

direct environmental impact is minimal. As the

Company is a close ended investment com

pany, the Group

is currently exempt from the requireme

nt to report

against the

recommendations of the T

ask Force for

Climate Related Disclosures. The B

oard notes that

the companies in which th

e Group invests will have

social and env

ironmental impact over

which it has no cont

rol. As the Company is in m

anaged wind down,

the business model is to actively realise assets in line with the investment poli

cy and not make any new

investments, however the Board contin

ue to follow good practice on ESG issues where appli

cable. The

Board considers that the impact of

climate chang

e does not give rise to a material impact on the Group’s

Audited Consolidated Financial Statements.

The Board holds all its meetings in Guernsey and, wh

ilst Dire

ctors and service providers may travel to

Guernsey for quarterly meetings, the G

roup’s direct

reenhouse gas e

missions and environm

ental footprint

are believed to be negligible. However, many of the companie

s and projects in which the

Group invests

have a very positive environmental footprint. The AD

plants the Group finan

ces use

waste of many types to

produce sustainable fertili

sers and electricity or ga

s, wh

ich are provided to the re

spective National Grid

Additionally, our support for oth

er renewabl

e energy sour

ces likewise provide alternative energy sources to

fossil and/or nuclear fuel

s. In these ways, the Board

is pleased that the Group p

lays a positive part in the

environmental arena.

Future strategy

The Board seeks to achieve the objectives

set out in

the investment objective and policy, to deliver a

realisation strategy and return capital to shareh

olders

whilst also protecting capit

l values.

The Directors have assessed the wind dow

n of the Company to be within 18

to 24 months of the date of the

approval of these Audited Conso

lidated Financial Statements, but

there can be no guarantee that this

timetable will be achievable.

This Strategic Report was approv

ed by the Board of Directors o

29 September 2022 and si

gned on its

behalf by:

Brendan Hawthorne

David Copper

waite

Chairm

an Direc

tor

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENTS REPORT

Overvie

Realisations continued throughout the

year at a strong pace with negotiation

s in place as describe

d further

below. As is typical in a runoff credit scenario, mo

st of the

facilities have now been closed where a not

overly complex solution was possible.

The Company will continue to proactively work

with remaining

creditors to source funding

or restructure borro

wing companies for sale o

r refinance.

The Company has worked closely with borrowers, whil

st also o

ptimising the return of capital to

shareholders in as expeditious a man

ner as possible. This resulted in £86.

83 million being returned to

shareholders durin

g the year. All distributions were paid

as capital returns, as o

pposed to dividends, which

were suspended in March 2020. No f

oreign exchange (“FX”) hedging ha

s been undertaken during th

reporting period with non-GBP balan

ces convert

ed into GBP at the soonest opportunity.

The FX exposures in the portfolio as at 30 June 20

22 were:

FX exposures

(in millions)

Fair value

Ordinary Share

Original currency

GBP

GBP 35.49

35.49

EUR 20.10

17.31

USD 1.91

1.57

2016 C Share

GBP 11.71

11.71

EUR 7.14

6.14

USD -

Market b

ackdrop

Political instability increased signific

antly in the second half of the finan

cial year as Russia invaded Ukrain

and many countries implemented sanctions again

st Russia in response.

Interest rates have risen across Europe, the UK

and the USA increasing the co

st of debt and reducing

ability to refinance. Significant inflationary pressure

s were the primary cause of central bank a

ction

impacting busine

ss’ cost base.

Energy shortages cau

sed by the conflict are reduci

ng output and expected to be more difficult entering

European winter especiall

y for energy intensive bu

sinesses. Man

y government

s have imple

mented support

packages on energy price

s, which may mitigate some of the risk.

For the AD assets there was limited good news, though fo

r the few assets that do not have fixed price

offtakes the increased energy values were positive

. Only Borrowers 1 & 2 benef

it from this, however,

neither have shown stable gas output levels yet. For

those AD plants usi

ng waste materials, some have

been able to secure new supply chain

s, though inflationary pressure remains a risk.

The Ordinary Share Class and 2016 C Share Class Portfolios

As the portfolio is in wind down, all bo

rrowers ar

asked to repay debt were possibl

e and the Company

seeks to refinance such debt or fa

cilitate sale of

other invest

ments. The Company return

s capital to

shareholders via capital re

payments.

Dividends

No dividends were distribut

ed during the reporting pe

riod. However, it should be noted that

the Company

was able to continue capit

al distributions to sharehol

der

s as loans were refin

anced or matured. In the year,

£28.48 million was returned to Ordina

ry shareholders and £5

8.35 million returned to 2016 C sh

areholders.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENT REPORT (CONTINUED)

Ordinary Share Class

Borrower

FV at 30

June 22

£m

FV at 30

June 21

£m

Change

in FV

£m

Asset

Typ

Asset Class

Currency

Grade

Borrower 1

10.6

7.9

2.7

Finance

Lease

Anaerobic

Digestion

GBP

10 : Loss

Borrower 2

9.1

9.7

(0.6)

Finance

Lease

Anaerobic

Digestion

GBP

10 : Loss

Borrower 4

2.8

3.7

(0.9)

Finance

Lease

Anaerobic

Digestion

GBP

10 : Loss

Borrower 5

1.0

0.6

0.4

Term Loan

Manufacturing

USD

10 : Loss

Borrower 6

17.3

19.8

(2.5)

Term Loan

Manufacturing

EUR

8 : Extremely

high risk

Borrower 8

Closed

11.6

n/a

Term Loan

Shipping

USD

10 : Loss

Borrower 10

Closed

3.6

n/a

Hire

Purchase

Wholesale

Portfolios

GBP

10 : Loss

Borrower 11

Closed

4.1

n/a

Finance

Lease

Anaerobic

Digestion

EUR

7 : High risk

Borrower 16

Closed

0.7

n/a

Term Loan

IT & Telecom

USD

10 : Loss

Borrower 18

Closed

n/a

Finance

Lease

Anaerobic

Digestion

GBP

10 : Loss

Borrower 19

2.5

1.4

1.1

Finance

Lease

Manufacturing

GBP

10 : Loss

Borrower 20

1.4

1.7

(0.3)

Revolving

Loan

Wholesale

Portfolios

GBP

10 : Loss

Borrower 21

2.1

(2.1)

Term Loan

Medical

USD

9 : Doubtful

Borrower 22

2.0

2.4

(0.4)

Finance

Lease

Anaerobic

Digestion

GBP

5 : Acceptable

risk

Borrower 23

1.3

1.1

0.2

Finance

Lease

Anaerobic

Digestion

GBP

10 : Loss

Borrower 24

2.0

Finance

Lease

Anaerobic

Digestion

GBP

5 : Acceptable

risk

Borrower 26

0.9

1.2

(0.3)

Finance

Lease

Wind Turbines

GBP

7 : High risk

Borrower 28

Closed

0.1

n/a

Hire

Purchase

Infrastructure

Equipment

GBP

10 : Loss

Borrower 61

3.0

3.7

(0.7)

Deferred

Payment

CHP

GBP

8 : Extremely

high risk

Total

53.9

77.4

Property, Plant and Equipment Inv

estments

Borrower*

FV at 30

June 2022

£m

FV at 30

June 2021

£m

Change in FV

£m

Investment

Type

Asset Class

Currency

Borrower 35

Closed

0.3

n/a

Operating

Lease

Infrastructure

GBP

Borrower 36

Closed

0.9

n/a

Operating

Lease

Marine Equipment

(ex. Vessels)

GBP

Borrower 37

Closed

0.9

n/a

Operating

Lease

Equipment for

construction GBP

Total 2.1

* Used Borrower terminology to be consistent th

roughout repor

t, however these are PPE

assets.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENT REPORT (CONTINUED)

Equity Holdings and other Investments

Borrower*

FV at 30 June

2022 £m

FV at 30 June

2021 £m

Change

in FV £m

Investment

Typ

Asset

Class

Currency

Borrower 38

Equity

Medical

USD

Borrower 39

0.5

0.9

(0.4)

Equity

Helicopters

USD

Borrower 62

Equity

Technology

GBP

Total 0.5

0.9

* Used Borrower terminology to be

consistent throughout repor

t, however these are Equity assets.

Credit Assumptions - A

D Assets

The Board instructed KPMG LLP to prov

ide a fair value

valuation of seven remaining AD as

sets as at 30

June 2021. As most facilities h

ad either repaid or were

in the process of sale a

updated external val

uation

was felt unnecessary. Wh

ere a transaction was

underwa

y the expected cashflows from

this were used to

value the asset. For borrowers 23 a

nd 24, the

June 2022 value adj

usts the June 202

1 valuation by

removing the p

recedin

g 12 months o

f cash flow and

projecting the most recent 6 months

of revenues as

continuing for a further 18 months.

For AD assets that are not currently

under a formal sales pro

cess, an assumption of 1 year to complete a

sale has been used. This may or may not prove correct as each asset has its own unique chara

cteristics.

The future income stream for each pl

ant is predomi

nantly derive

d from fixed

government energy subsidies

based on production volume. Whil

e spot energy prices

have risen si

gnificantly, several plants h

ave pre-

agreed energy supply co

ntracts fixing the unit prices fo

r the project lifespan. Most a

ssets have also not

operated at full capacity as described further belo

Position

FV Discount

Rate

Risk G

rade

ecur

ity

Type

Borrower 1

7.5-9.0%

AD Asset



Secured against a 5MW AD plant lo

cated in Hartlepool.



The facility is in default (risk grade 10).



The plant is operational, and no remediat

ion work requ

ired so not deemed project finance risk.



In June 2021, KPMG’s weighted average valuation was £8.6m.



Consistent supply of feedstock rem

ains an issue wi

th efforts underway to allow additional pro

ducts.

Borrower 2

7-8.5%

AD Asset



Secured against a 5MW AD plant lo

cated in Middlesbrough.



No operational and remedi

ation work re

quired so n

ot deemed project finance risk.



In June 2021, KPMG’s weighted average valuation was £1

0.5m.



Consistent supply of feedstock remains an iss

ue. If Borro

wer 1 is able to add additional p

roducts

this will free supply it would otherwise co

nsume.



Plant suffered a material period of low output in late 2021 due to technical problems with feedsto

mix.

Borrower 4

20%

AD Asset



Secured against a 5MW AD plant lo

cated in Aberdeenshi

re.



A sale of this asset for £2.7m plus £0.2m deferred occurred in July 2022.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENT REPORT (CONTINUED)

Credit Assumptions - AD Assets (Continued

)

Position

FV Discount

Rate

Risk G

rade

ecur

ity

Type

Borrower 22

8.0-9.0%

AD Asset



Secured against 0.5MW farm scale AD

plant in Northern Ireland.



Performing AD asset with over 12 months of stable e

nergy output.



In the first half of the financial year,

the plant was acquired by new owners.



The new owners are currently seeking to refinance ma

jority (if not all) of the Company’s position,

leaving a residual amortising junio

r debt position.

Borrower 23

8.5%-9.5%

AD Asset



Secured against 0.5MW farm scale AD

plant in Northern Ireland.



The facility is in default (risk grade 10).



The Company holds a 50% share.



An exit is uncertain at this point.

Borrower 24

8.0-9.0%

AD Asset



Secured against a 0.5MW AD plant in Northe

rn Ireland.



Performing AD asset with over 12 months of stable e

nergy output.



The Company holds a 50% share.



An exit is uncertain at this point.

Borrower 61

20%

AD Asset



This exposure is the deferred consideration from

closi

ng out an AD asset in the Republic of Ireland.



The Company has offered the borro

wer until Q3 2022 to repay.



The facility is high risk reflecting the potential r

epossession of speci

fic assets held via an SPV.

Non-AD Assets

Position

FV Discount

Rate

Risk G

rade

ecur

ity

Type

Borrower 5

20%

High Risk



Former Solar Manufacturer. Potential recoveries from Chine

se guarantor, equipment, or tariff

proceeds.



Claim vs tariffs – It appears certain that no recovery will occur fro

m this.



Claim vs guarantor – The credit quality of the guarantor is un

certain.



Court process to hear the guarantor clai

m scheduled to begin in Septembe

r 2023.



An appeal ca

se was required to further pursue the

guarantor, however, the guara

ntor won. A new

court process is required, whi

will likely take over 18 months.



The Company has been i

n direct discussions

th the guarantor, and it is h

oped it can agree a

settlement with both the guarantor and SQN Asset Servicing LL

C this year.



The equipment is of uncertain value, depend

ent

on political policies and outcomes in USA.



The Company has little to no control over timing of a potential sale

of the equipment.



Highly uncertain cash flows with limited

value assigned.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENT REPORT (CONTINUED)

Non-AD Assets (Con

tinued)

Borrower 6

20%

Fixed Asset



Security includes glass manufactu

ring equipment based in France.



In Q4 2021, the management team informed

the Company tha

t due to transformational

project

issues and raw material price inflation the company was forecasting a cash flow sq

ueeze

throughout FY22 and into FY23. The

company’s key creditors, which incl

udes the Company,

agreed to support the borro

wer by restructuring their resp

ective positions.



The Company agreed to restructu

re the repayment

profile and ex

tend the maturity of the facility

from mid-2023 to mid-2024.



Management is consideri

ng refinancing the Com

any’s position, but are mindful of inflationary

headwinds and are too ea

rly in the process to

be able to provide any level of certainty.

Borrower 19

20%

Fixed Asset



Secured against paper ma

nufacturing machinery lo

cated in Aberdeen and Kent.



The offer from the borrower to acquire the equipment fell through.



The borrower is engaged in a sale process that will re

sult in the settlement of the Company’

s facility.



The FV of the facility is supported by an independe

nt valuation report of the underly

ing machinery.



It is assumed it will take until at least the end of 2022 to clo

se the transaction.

Borrower 20

20%

Realisable



Secured against a whole

sale portfolio of working capital SME loans.



Company granted extension to pay from Sept

ember 2021 until 31

December 20

21 to source new

funding. This date passed, and the borrower is

still pursuing refinan

cing opportunities.



Material amortisation has occurred in 2022 so fa

Borrower 21 &38

20%

High Risk



Non-specialist hospital equipment, with uncertain value.



Hospital closed on 30 June 2022. Attempts to sell t

he hospital failed, and owner co

uld no longer

finance ongoing losses.



A corporate recovery/speci

al situations com

pany has been appointed to manag

e the closure of the

hospital.



An auction of the company’s equipment is likely to take place in late Septembe

r/October 2022,

alongside the hospital’s o

wn equipment.

Borrower 26

20%

Fixed Asset



Two wind energy assets with two leases.



One is paying to schedule, the other was in arrears bu

t continues to pay.



The lease in arrears has had difficu

lty obtaining in

surance on the turbine.



The arrears were cleared in September 2022.



Cash flows assumed from the initial schedule.



The borrower has indicate

d an interest in refinancing.

Borrower 37

20%

High Risk



This operating lease was establishe

d following

the rescue of yellow metal earth moving vehicles

from an administration.



The contract was turned in

to a deferred paym

ent schedule, which completed in July 202

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENT REPORT (CONTINUED)

Non-AD Assets (Con

tinued)

Borrower 39

10%

Realisable



Portfolio of ageing helicopter assets.



SQN Capital Management LLC have agreed sale of helicopter a

ssets with a deferred payment

schedule to a known counterpa

rty.



Scheduled monthly payments under the

deferred

sale agreement to August 2022

have been met.



3 of the 4 helicopters were sold in Septem

ber

2022 as the buyer exercised the e

arly payment

option. The Company received US$486k (£422k)

for its share of the sale proceeds.



One helicopter remains on

the deferred sale schedule,

which ends in March 2023.

Borrower 62

20%

High Risk



Equity position from sale of hotel

technology provider facilities.



No recent cash flow or bal

ance sheet has be

en provided, therefore unabl

e to assume any cash

flows.

Closed Transactions

Facility Fair

Value

June 2021

Description

Borrower 4

£3.7m

Borrower refinanced for £

3.0m.

Borrower

£11.6m

Borrower refinanced for £12.0m. Marin

e vessels were badly

hit pre and early in Covid-19 cycle but sa

w significant

improvement into 2021.

Borrower

£3.6m

Refinance agreed for £3.8m. Facility finance

d domestic

heating systems and the main

tena

nce contracts.

Borrower 11

£4.1m

Borrower refinan

ced.

Borrower

£0.7m

Refinance agreed for £0.7m. Brazilia

n telecom assets were

held in a complex ownership structure, intertwin

ed with

another business. Our a

ssets appeare

d to produce minimal

cash flows due to ground rents

payable to a sister co

mpany.

No interes

t paid sinc

e 2015.

Borrower

£nil

Zero received from adm

inistration of plant that started in

2019. Farm scale AD plant based in NE England.

Borrower 28

£0.1m

Zero recovery - Facility was written off due to vandalism to

assets located in Sierra Leone preventing any recovery.

Borrower

£0.3m

Sale of assets for £0.3m plus refurbishm

ent costs was

achieved. Underlying assets broadly rusting proof of con

cept

containers converted into mi

cro hotel room

s. Very poor-

quality accommodation with high operational costs. Liability

to cover refurbishment, storage a

nd disposal co

sts

extinguished.

Borrower 36

£0.9m

ROV

asse

ts sold for £1m.

Very lim

ited utilisation of assets

attached to third-party vessel, lease only paid on utilisation.

Borrower 37

£0.9m

Deferred payment schedule compl

eted in July 2022. £1.1m

was received since June 2

021.



Position disposed of in July 2022. Refe

r to note 18 for further information.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENT REPORT (CONTINUED)

2016 C Share Class

Borrower

FV at 30

June 2022

£m

FV at 30

June 2021

£m

Change in

FV £m

Asset

Typ

Asset Class

CCY

Gross

Yield

Grade

Borrower 41

Closed

17.0

n/a

Term Loan

Waste

Processing

GBP

9.50%

4 : Average

Borrower 42

Closed

2.0

n/a

Term Loan

Insurance

USD

10.00%

10 : Loss

Borrower 43

Closed

7.0

n/a

Term Loan

Wholesale

USD

10.80%

10 : Loss

Borrower 44

2.3

4.2

(1.9)

Revolving

Loan

Wholesale

GBP

9.50%

10 : Loss

Borrower 45

0.9

0.5

0.4

Finance

Lease

Manufacturing

EUR

9.20%

10 : Loss

Borrower 46

5.3

3.9

1.4

Term Loan

Aviation

EUR

9.60%

10 : Loss

Borrower 47

Closed

4.7

n/a

Term Loan

Shipping

USD

10.40%

10 : Loss

Borrower 48

Closed

4.7

n/a

Term Loan

Shipping

USD

10.40%

10 : Loss

Borrower 49

Closed

4.9

n/a

Term Loan

Infrastructure

Equipment

GBP

9.00%

6 : Borderline risk

Borrower 50

3.8

4.5

(0.7)

Finance

Lease

Waste

Processing

GBP

10.00%

5 : Acceptable risk

Borrower 51

Closed

4.1

n/a

Term Loan

Shipping

USD

10.40%

10 : Loss

Borrower 52

3.0

3.8

(0.8)

Finance

Lease

Waste

Processing

GBP

9.80%

5 : Acceptable risk

Borrower 53

2.5

3.4

(0.9)

Term Loan

Construction

GBP

8.80%

5 : Acceptable risk

Borrower 54

Closed

2.4

n/a

Receivables

Purchase

Infrastructure

Equipment

GBP

9.90%

8 : Extremely high

risk

Borrower 55

Closed

1.2

n/a

Term Loan

Material

Handling

USD

10.00%

5 : Acceptable

Borrower 57

Closed

1.2

n/a

Term Loan

Aviation

EUR

8.80%

5 : Acceptable risk

Borrower 58

Closed

0.7

n/a

Term Loan

Insurance

USD

10.00%

10 : Loss

Borrower 59

0.1

0.4

(0.3)

Finance

Lease

Marine

GBP

10.30%

6 : Borderline ris

Total

17.9

70.6

Position

FV Discount

Rate

Risk G

rade

ecur

ity

Type

Borrower 44

20%

Realisable



Secured against a whole

sale portfolio of working capital SME loans.



The Company granted extension to pay

from September 2021 until 31 December 2021 to source

new funding. This passed, however, the Company is still pursu

ing refinancing opportunities.



Material amortisation has occurred in 2022 so fa

Borrower 45

20%

High Risk



Secured against car engi

ne manufacturing equipment

. Currently in liquidation.



Protracted insolvency process ha

s prevented sale to date.



Assets of obligor will be sold by public auction, likely in Q3 202



Fund’s assets do not have to be sold by public a

uction.



Some difficulty obtaining access to the site for potential buyers, but we believe this will be possible

and happen in Q3 2022.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENT REPORT (CONTINUED)

2016 C Share Class (Continued

)

Position

FV Discount

Rate

Risk G

rade

ecur

ity

Type

Borrower 46

10%

Realisable



Exposure secured against a modern AW169 Helicopter via a Germa

n mortgage.



Valuation of helicopter is taken

from third party valuation report.



The Company worked with the borrower to secu

a long term lease contract for the helicopter.



The borrower is aiming to refinance or sell the helicop

ter within the next 12 months.

Borrower 50

10.93%

Fixed Asset



Secured against a fridge re

cycling plant located in Gat

eshead.



Performing asset. No arrears.

Borrower 52

11.39%

Fixed Asset



Secured against a waste recycli

ng plant.



Performing asset. No arrears.

Borrower 53

9.72%

Realisable



Secured against seven juni

or participations in

public-private partnership (“PPP”)

contracts.



Performing asset with good cash flow visibility,

underpinned by PPP contracts in Northern Ireland.



Assume the facility will run to matu

rity as per the original schedule.

Borrower 59

11.81%

Realisable



Marine Equipment. Performing asset.



No indication from the business that the

y int

end to refinance. Therefore, assume

d facility will

mature as scheduled.

Facilities Closed

Facility Fair

Value

June 2021

Description

Borrower 41

£17.0m

Borrower refinanced in full

including a prepayment fee.

Monthly amortisation paid until close. Facility recycled

garden and food waste into compost in

Northern Ireland.

Borrower 42 & 58

£2.7m

Position sold for £2.7m to a third party. Transaction f

unded

the start-up costs and regulatory

capital for a US insurance

business.

Borrower 43

£7.0m

Borrower refinan

ced for US$6.4m (£5.3m) in June 20

22, in

addition, the Company received US$3.05m (£2.2

6m) in

regular interest and princi

pal payments during the year

ended 30 June 2022.

Borrower 47, 48 & 51

£13.5m

Borrower refinanced for £1

3.3m. Marine vessels were badly

hit pre and early in the Covid-19 cycle bu

t saw significant

improvement into 2021.

Borrower 54

£2.4m

Borrower agreed settlement in full of £2.4m in Dece

mber

2021.

Borrower 55

£1.2m

Borrower agreed settlem

ent in full, final payment of £0.42m

received in December 2021.

Borrower 57

£1.2m

Borrower repaid in full agai

nst revised schedule.

Borrower 49

£4.9m

Borrower refinanced in full

, including a prepayment fee.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INVESTMENT REPORT (CONTINUED)

Outlook

At the time of writing, the economic

effects of the Co

vid-19 pandemic seem

likely to continue combi

ned with

rising inflation and interest rates. We will therefo

re keep the facilities under regular review.

Brett Miller

Director

29 September 2022

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

DIRECTORS’ REPORT

The Directors present the Annual Report and Audited

Consolidated Finan

cial Statements of the Group for

the year ended 30 June 2022.

Statement as to Disclos

ure of Information to the Auditor

The Directors who held office at the date of approval o

f th

is Directors’ Report confirm that, so far as they are

each aware, there is no relevant audi

t information of which the Company’

s auditors are unawa

re and that

they have taken the steps that they

ought to have

taken as Directors

to ma

ke themselves aware of any

relevant audit information and to establish that the Company’s audi

tors are aware of that information.

Fair, Balanced and Understandable

In assessing the overall fairness, balance and

understa

ndability of the Annual Report and Audited

Consolidated Financial

Statement

s the Board has perfo

rmed a comprehensive revi

ew to ensure

consistency and overall balance.

Board of Directors

The Directors of the Company as

at the year-end and up to the date of this repo

rt were:

Brendan Hawthorne (Chairman)

Brett Miller

David Copperwaite

The biographical details of the Directo

rs in

office at the year-end are provided on page 38.

Directors’ Interests

The Directors of the Company as

at the year-end and up to the date of

approval of this report held the

following interests in the Company’s sha

re capital:

Director

Number of Ordinary Shares

Number of 2016 C Shares

Brendan Hawthorne

Brett Miller

David Copperwaite

410,000

Notifications of Sharehol

dings

In accordance with Chapter 5 of the Disclo

sure

Guidance a

nd Transparency Rules

(which covers the

acquisition and disposal of major sha

reholdings a

nd voting rights), the Company did not receive a

notifications during the year ended 30

June 2022 from shareholde

rs that had an interest of greate

r than 5%

in the Company’s issued share capital.

The Company received th

e following notification during the period

1 July 2022 to 29 September 2022:

Percentage

total

voting rights

Morgan Stanley & CO. International PLC

5.07%

Philip J Milton & Company Plc

5.01%

Ordinary Share Buybacks

At the AGM held on 29 November 2021, the Direct

s were gra

nted authority to repurchase 53,3

60,753

Ordinary Shares and 20,8

24,741 2016 C Shares (being equ

al to 14.99% of the number of Ordinary Share

and 2016 C Shares in issue) for cancellation. This

authority will expire upon

the date of the next AGM

unless previously renewed

, varied or revoke

d by the Company in a general me

eting.

The Directors inten

d to seek annual renewal of thi

authority from the shareholders. Pursu

ant to this

authority, and subject to the Companies (Guern

sey) Law, 2008, as amended

(“Companies Law”) and the

discretion of the Directors, the Company

may purchase

Ordinary Shares and 2016 C

Shares in the market if

they believe it to be in sha

reholders’ interests.

Ordinary Shares or 2016 C Shares were repurcha

sed by

the Company during the year end

ed 30 June 2022.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

DIRECTORS’ REPORT (CONTINUED)

Indemnities

To the extent permitted by Companie

Law, the Company’s Articles p

rovide an indemnity for the Directo

against any liability except such (if any)

as they shall incur by or through t

heir own breach of trust, brea

ch of

duty or negligence.

During the year ended 30

June 2022 and up to th

e date of this Annual Re

port, the Group has maintaine

insurance cover for its Director

s under a Directors a

nd Officers’ liability insurance policy.

2021 AGM

The AGM was held in Guern

sey on 29 November 2021. Th

e notice for the AGM

set out the ordinary

resolutions to be proposed at the meeting. Separate re

solution

s were proposed for each sub

stantive issue.

Voting on all resolutions at the AGM was by poll. The

proxy votes cast, including details of votes withheld

were disclosed to those in attendance at the meet

ing and the results were published on t

he website and

announced via the RNS on 29 Novemb

er 2021. All resolutions were passe

The Directors welcome communicatio

n with all shar

eholders and can be contacted in writing at the

Company’s registered office, whi

ch can be found on page 109.

One-Off Bonus and Incentive Plan

Refer to the Strategic Report for details on

the one

-off bonus payment and incen

tive plan.

Borrowing

The Group does not have any external borrowing

Events after the Reportin

g Period

Refer to page 18 of the Strategic Report

and note 18 for

further details on eve

nts after the reporting period.

Statement of Directors’ Responsibilities

The Directors a

re responsibl

e for preparing the

Annual Report and Audit

ed Consolidated Financial

Statements in accordance with appli

cable law and regulations.

Company law requires the

Directors to p

repare financial

statements for ea

ch financial year. Under that law,

they have elected to prepare the financial statements in accordan

ce with

International Financial Reportin

Standards as adopted by the European Union and a

pplicable law.

The financial statements are required by

law to give a true and fair view of the state of affairs of the

Company and of its profit or loss for that period.

In preparing these Audited Consoli

dated Financial Statements, the Directo

rs are required to:



select suitable accounting

policies and apply them consi

stently;



make judgements and esti

mates that

are reasonable, relevant and reliabl



state whether applicable acco

unting standards ha

ve been followed, subject to any material

departures disclosed an

d explained in

the financial statements;



assess the Company’s ability to continue as a go

g concern, discl

osing, as applicable, m

atters

related to going concern; and



use the going concern basis of accounti

ng unless th

ey either intend to liquidate the Comp

any or to

cease operations, or have no realistic alt

ernative but to do so.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

DIRECTORS’ REPORT (CONTINUED)

Statement of Directors’ R

esponsibilities (Continued)

The Directors are resp

onsible for keepin

g proper account

ing records that are

sufficient to show and explain

the Group’s transa

ctions and disclose with rea

sonable

accuracy at any time the financial positio

n of the

Group and enable them to ensu

re that its Audited Co

nsolidated Financi

al Statements comply with the

Companies (Guernsey) Law, 2008. They

are

responsible for

such internal control as they determine

necessary to enable the preparation

of financial statements that are

free from material misstateme

nt,

whether due to fraud or error, and have general responsi

bility for taking such steps as are re

asonably open

to them to safeguard the assets of the Group an

d to prevent and detect fraud and other irregularities.

The Directors are respon

sible for the maintena

nce and

integrity of the corp

orate and financial information

included on the website and for the p

reparation and di

ssemination of the Au

dited Consolidated Finan

cial

Statements. Legislation in Guernsey governing the prep

aration and disseminati

on of financial statement

may differ from legislation in other jurisdictions.

Responsibility statement of the Dire

ctors in respect of the Annual

Report and Audited Consolidated

Financial Statements

We confirm that to the best of our knowledge:



the Audited Consolidated Financia

l Statements, prepared in accordan

with the applicable set of

accounting standard

s, give a true and fair view of the

assets, liabilities, financi

al position and profit or

loss of the Group; and



the Directors’ Report

includes a fair review of the developm

ent and performan

ce of the business and

the position of the issuer, together wi

h a description of the princip

risks and unce

rtai

nties that they

face.

We consider the Annual Report and Audited Consolidated

Financi

al Statements, taken as a whole, are fair,

balanced and understand

able and provides the informat

ion necessary for share

holders to assess the

Group’s position and perfo

rmance, business model an

d strategy.

By order of the Board

Brendan Hawthorne

David Copper

waite

Chairm

an Direc

tor

29 September 2022

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

DIRECTORS’ BIOGRAPHIES

David Copper

waite (Non-Executive Director) -

Appointed 31 December 20

David Copperwaite, a resi

dent of Guernsey, is on the boa

rd of director

s of a number of in

vestment funds

operated by various financial groups. These invest

ment

funds include multi-functio

nal investment, venture

capital, direct lending, distressed a

nd non-perform

ing debt togethe

r with su

bstantial private equity

investment entities, involving financial service com

panie

s, insurance broking, banking and real estate

development.

Mr Copperwaite has over 50 years' experience in th

e financial service

s sector working for Standard Bank

between 1965 and 1973 f

ollowed by Lloyds Bank Internat

ional Limited between 1973 and

1997. In that time,

Mr Copperwaite held a number of position

s including Principal Manage

r (Sterling European Region

)

between 1988 and 1997. In that role he

was responsibl

e for all international priv

ate banking operations in

Guernsey, Jersey, Gibraltar and Londo

n (Mayfair) and these covered t

he are

as of banking, investment

funds (open-ended, split capital and clo

sed),

cash and money management, secured and un

secured

lending, offshore trusts and compan

y management. Mr Copperwaite is a former

Chairman of The

International Bankers Association.

Brendan Hawthorne (Non-Exec

utive Chairman) -

Appointed 24 Februa

ry 2021

Mr Hawthorne is an experienced no

n-ex

ecutive director and chai

rman with

significant work-out experienc

in the listed and private equity environments.

He ha

s been invol

ved in the running off and

realisation of

numerous listed funds

across a wide ra

nge of asset

classes. He has m

ore than 25 years’ ex

perience as an

asset recovery specialist and is frequent

ly invited to join or chair boards where a form of orderly wind down

is indicated.

Brett Miller (Director) -

Appointed 16 September 2020

Brett presently serves as a director of the fo

llowing publicly liste

d companies: Mancheste

r and London

Investment Trust plc and Secu

red Income Fund pl

c. He is also a dire

ctor of a number of u

nlisted and/or

private companies.

Brett has wide ranging clo

sed end fund and investm

ent

trust/investment company experien

ce both as an

investor and in managing or se

rving on boards of

closed ended funds. He has

been involved (as executive

and non-executive director) in the managem

ent and in

some cases, the running off and realisation, of

numerous LSE and AIM listed clo

sed end funds across a

wide range of asset classe

s including (but n

limited to) HWSI Realisation Fund Limited, The Local

Shopping REIT plc, China Growth Opportunitie

s Fund,

Loudwater Trust plc, Rapid Reali

sations Fund Limited,

Ranger Dire

ct Lending Fund plc, and EIH plc. He

has considerable expertise in restru

cturing a

nd re-aligning manag

ement incentives and aligning

shareholder and mana

gerial interest

s fo

r both ongoing and realisation situation

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CORPORATE GOVERNANCE REPORT

Introduction

The Board is committed to high standard

s of corporat

e gove

rnance and has put in pla

ce a framework for

corporate governance, which it believes,

is appropriat

e for an investment company.

Compliance with Corporate Gov

ernance Codes

For the period from 1 July 2021 to 1 O

ctober 2021,

the Company

was a member of the AIC and followed

the AIC Code of Corporate Governan

ce. During

this period, the Co

mpany complied with the

recommendations of the AIC Co

de and as such also

t the requirements of the UK Code a

nd by default

the Guernsey Code

With effect from 1 October 2021, the Company is no

longer a member of the AIC as the

Directors de

cided

not to renew the Company’s membershi

p and the Directors decided to follow the UK Code.

The Guernsey Financial Service

s Commission ha

s conf

irmed that companies that report against the UK

Code are deemed to meet the Guern

sey Code of Co

rporate Governance (the

“Guernsey Code”). The UK

Code is available from the Financial

Reporting Council

(the “FRC”) website (

www.frc.co.uk

Throughout the year ended 30 June 2022, the Comp

any has complied with the recommendat

ions of the UK

Code and by default the Guernsey Code, except to the extent highlighted b

elow:



Appointment of a Senior Independent Di

rector (provision 12).



Chairman is chairman of the Audit and Risk Committe

e (provision 24).



Going concern basi

s for accounting (pro

vision 30).

Provision 12: No Senior Independent Di

rector has been

appointed. The Board does not therefore maintain a

document setting out the responsibilit

ies of the Senior Independent Dire

ctor. All Directors

have different

qualities and areas of expertise on which they lead,

and concerns can be conv

eyed to the Chairman, or

another Director if shareholders do not wish

to rai

se concerns with the Chairman

Provision 24: The Chairman is also Ch

airman of t

he Audit and Risk Committee. In view of the Company

being in managed wind down, the Board consider th

is appropriate given the Board’s size and Mr

Hawthorne’s significant financi

al expertise and ind

ependence from

executive management of the Compan

Provision 30: These Audited Consolida

ted Financial St

atements have been prepared on a basi

s other than

going concern as the Com

pany is in managed wind down.

The Group complies with the corporate govern

ance

statement requirements pur

suant to the UK FCA

Disclosure and Transpa

rency Rules by virtue of the

info

rmation included in

the Corporate Governan

section of the Annual Report.

The Board believes that this Annual Rep

ort and Audi

ted Con

solidated Financial Statements presents

a fair,

balanced and understa

ndable assessment of the Grou

p’s position an

d prospects, and provides

the

information necessary for sha

reholders to asse

ss the Group’s perfo

rmance, busine

ss model, st

rategy,

principal risks and uncertainties.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CORPORATE GOVERNANCE REPORT (CONTINUED)

Board Independence, Composition a

nd Diversity

Brett Miller was appointed as a Directo

r on 16 Sept

ember 202

0. David Copperwaite was a

ppointed as a

Director on 31 December 202

0. Brendan Hawthorne was a

ppointed as Chairman

of the Board on 24

February 2021. The biographical details

of the Direct

ors are listed on page 38 a

nd demonstrate a breadth of

investment, accounting, banking and pro

fessional experience.

Brendan Hawthorne and

David Copperwaite are consi

dered indepe

ndent. Brett Miller is not consi

dered

independent by virtue of his role in managing the portfo

lio and disposal of the asse

ts of the fund in the wind

down period.

Given the Company has entered th

e wind-up phase i

n its

life cycle

, the Directors conside

r that there are no

factors, as set out in Provision

10 of the UK Code, which compromise the Chairma

n’s or the other Non-

Executive Director’s independence and

that all Directors co

ntribute to the affairs of the Company in an

adequate manner. The Board reviews the independ

ence of all Directors periodi

cally.

The Board values the importance of diversity to the effective functioning of the Board.

Directors’ Duties and Responsibilities

The Directors have adopted a set of reserve

d powers,

which establish the

key purpose

of the Board and

detail its major duties. Thes

e duties cover the following

areas of res

ponsibility:



statutory obligations and public disclo

sure;



approval of key investment and disposal decision



strategic matters and finan

cial reporting;



Board composition and accountability to shareh

olders;



risk assessment and management, incl

uding repo

rting, compliance, monitori

ng, governance and

control; and



other matters having material effects on the Group.

These reserved powers of

the Board have been adopted by the Dire

ctors to demonstrat

e clearly the

importance with which the Board takes i

ts fiduciary

responsi

bilities and as an on

going means of measurin

and monitoring the effectiveness of its actions.

The Board meets at least four time

s each year, monitors the Gro

up’s share price an

d NAV, and regularly

considers ways in which to enhance the return of capita

l to investors du

ring the winding up of the Grou

The Board is responsible for the sa

fegu

arding of the assets of the Group and taking rea

sonable steps for

the prevention and detection of fraud and other irregulari

ties. The Company Secretary also

ensure that all

Directors receive, in a timely manne

r, all relevant managem

ent, regulatory and finan

cial information relating

to the Group. Directors unable to atte

nd a Board m

eeting are

provided with the Board papers a

nd can

discuss issues arising in the meeting wit

h the Chairman or anothe

r Director.

Individual Directors may, at the

expense of the

Group, seek independent

professio

nal advice on any

matters that concerns them in

the furtherance of their duties.

Board and Committees

The Board has established three committees:



the Audit and Risk Committee;



the Management Engagement Committe

e, and



the Remuneration and Nomination Co

mmittee.

The responsibilities of these Committees are describ

ed below. Each Committee report

s to and is subject to

the oversight of the Board. Term

s of reference for each Committ

ee have been approved by the Board and

are available in full on the website.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CORPORATE GOVERNANCE REPORT (CONTINUED)

Board and Committees (Continued)

Board

Responsibilities:



Statutory obligations and public disclosure.



Approval of key investment decisions.



Strategic matters and financial reporting.



Board composition and accountabilit

y to shareholders.



Risk assessment and management, inclu

ding reporting,

compliance, monitoring, gove

rnance and control.



Responsi

ble for consolidat

ed financial statements.



Other matters having material effects on the Group.

Audit and Risk Committee

Management Engagement Committee

Delegated Responsibi

lities:



Review the conso

lidated financial stateme

nts,

including review of the accountin

g policies and

methods utilised.



Review the effectiveness and intern

al control

policies and procedures over

financial reporting

and identification, assessment and rep

orting of

risk.



Make recommend

ations to the Board in relatio

to appointment, re-appointment and remova

l of

external audit

ors, approving remuner

ation and

terms of engagement of external auditors an

assess the effectiveness of the audit process.



To monitor risk management and interna

l control

systems on an ongoing basis, performing a

review of their effectiveness, and recommending

actions to remedy any failings or

weaknesses

identified.

Delegated Responsibi

lities:



Revie

w on a regular basis the performance of

the Group’s key advisers

and major serv

ice

suppliers (other than the ext

ernal auditor) to

ensure that performance is

atisfactory and in

accordance with the terms and conditions

the respective appointments.

Remuneration and Nomination Committe

Delegated Responsibi

lities:



Revie

w the structure, size and composition of

the Board.



Give full cons

ideration

to succession

planning



Identify suitable Board ca

ndidates to fill Boar

vacancies.



Undertake per

formance evaluations of the

Board and the Chairman.



Determine the framework and policy for the

level of remuneration of the Chairman and

Directors

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CORPORATE GOVERNANCE REPORT (CONTINUED)

Board and Committees (Continued)

Due to the size and nature of the Company, as at

30 June 2022, all Directors have been appointed to all

Committees.

Audit and Risk Committee

Brendan Hawthorne is

Chairman of the Audit a

nd Ri

sk Committee. The Board is

satisfied that Mr

Hawthorne has recent and relevant

financial experience, as required unde

r the UK Code. The qualifications

of the members of the Audit and Risk Committee are

outlined in

the Directors’

Biographi

es section. The

duties of the Audit and Risk Committee in discha

rging

its responsibilities are ou

tlined in the chart on page

41. The report on the role and activities of the

Audit and Risk Committee and its relationship with the

external auditors is contained in the Audit and Risk Committee Rep

ort.

Management Engagement Committee

Brett Miller is Chairman of the Management Eng

agement Committee. The duties of the Manageme

Engagement Committee in discharging it

s responsi

bilities are o

utlined in the chart on page 41.

The Management Engagement Commit

tee carries out it

s review of the Group’s key adviser

s and service

providers through conside

ration of a number of objective

and subjective crite

ria and through a review of the

terms and conditions of their appoint

ments with t

he aim of evaluating performance, identifying any

weaknesses and ensu

ring value for money for the Company’s

shareholders.

The Management Engagement Committ

ee reviewed the

performance of its key se

rvice providers on 20

May 2022. During this review,

no material weakne

sses were identified. Overall, the Managem

ent

Engagement Committee confirmed its satisfaction

with the services and a

dvice received.

Remuneration and Nomination Committe

David Copperwaite is Chairman of the Remu

ration and No

mination Committee. The duties of the

Remuneration and Nomination Com

mittee in discharging its resp

onsibilities are outlined in the chart on

page 41.

The Remuneration and Nomination Committee undertake

an annual internal

evaluation of the Board and

its committees. The performance of each Director is

consider

ed as part of a formal review by the

Remuneration and Nomination Commit

tee. The Remuneration and Nomin

ation Committee may also meet

without the Chairman of the B

oard present in order to review hi

s performance.

Performance Evaluation

The performance of the Board an

d the Directors

was reviewed by the Remuneration a

nd Nomination

Committee on 20 May 2022.

The Committee discusse

d various areas, incl

uding the

rocess and style of m

eetings, investment matters,

strategy, governance and sha

reholder value.

It was concluded that the Board hav

e a good and

complementary range of skills, competency and that

Boar

d meetings were effective, and all relevant topics

were fully discussed. The Directors

confirm that they have devoted sufficient time, as considered n

ecessary,

to the matters of the Company. All Directors felt well pre

pared and able to particip

ate fully at Board

meetings and had a good understanding

of the investments and markets in which the Compa

ny operates.

As a result of the performance evaluation, the

mmittee was able to recommend to the Board

each

director for re-election to the

Board at th

e forthcoming AGM.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CORPORATE GOVERNANCE REPORT (CONTINUED)

Directors’ Remuneration Report

The following report meets the relevant Listing Rule

s of the FCA and the UK Code and describes how the

Board has applied the prin

ciples relati

ng to Directors’ remu

neration.

Annual Report on Remuneration

The Group paid the following fees to the Di

rectors for

the year ended 30 June 20

22:

Director

Brett Miller

87,500

David Copperwaite

117,500

Brendan Hawthorne

90,000

Total Director fees

295,000

Extra services provided by the Direc

tors and bonus payments

Brett Miller – consultancy fees

300,000

Brett Miller - bonus payment

188,000

David Copperwaite - bonus payment

46,000

Brendan Hawthorne - bonus payment

46,000

Total amount paid to Directors including extr

a services and bonus paym

ents

875,000

Brett Miller was entitled to a fee of £70,000 per annum

, he also received an additional £5,000 per annum as

Chairman of the Management Engagement Co

mmittee and £12,500 per

annum as a Director of

the

Company’s five Guernsey subsidiaries. He also re

ceiv

ed a consultancy fee of

£25,000 per month, payable

monthly in arrears, for his additi

onal duties assigne

d by the Board.

David Copperwaite was entitled to a fee of £70,000

per annum, he also received an additional £5,000 per

annum as Chairman of the Remuneratio

n and Nomina

tion Commit

tee and £12,500 per annum as a Dire

ctor

of the Company’s five Guernsey subsidiaries.

Effective 1 December 2021, David Copperwaite’

annual fee increased by £30,000 pe

r annum, as he was

appointed as the independ

ent Director in regard to the

Incentive Plan and will not be eligible to benefit from

the Incentive Plan. Refer to note 3 for further information.

Brendan Hawthorne is entitled to a fee of £80,000 p

r annum as Chairman of th

e Board and an additional

£10,000 per annum as Chairman of the Audit and Ri

sk Committee.

The Company’s Articles limit the aggregation of fee

s payable to the Directors to a total of £300,000 per

annum. Extra services are not included i

n the definit

ion of fees as per the Company’s Articles.

Bonus payments

Refer to the Strategic Report fo

r details on the bonus payments.

During the year, a £140,000 bonus was

paid to the Direct

ors, with an accrual pa

yable of £140,000 as at 30

June 2022. £140,000 was

paid to the Directors po

st year

end, refer to note 18 for further information.

Other than as shown above, no other remuneratio

or compensation was pai

d or payable by the Company

during the year to any of the Directors.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CORPORATE GOVERNANCE REPORT (CONTINUED)

Directors’ Appointment, Retirement and Policy on Payment of Loss of Offic

The Articles of the Company require th

at all Directors

submit themselves for election by shareh

olders at the

first opportunity following their appointment. The Dire

ctor

s have elected to agency

for re-election on a yearly

basis, so will all retire at each AGM and be eligible for reapp

ointment.

Any Director may resign in writing to the Board at any time. Directors are not entit

led to payment for loss of

office.

No Director has a

service contract

with the Company. Dire

ctors have agr

eed l

etters of appointment with the

Company, copies of which are availab

le for review

by shareholders at the registered offi

ce and will be

available at the AGM. The dates of their letters

of appoi

ntment and where app

licable the date of their

resignation, are shown bel

ow:

Director

Date Appointed

Date Resigned

Brett Miller

16 September 2020

David Copperwaite

31 December 2020

Brendan Hawthorne

24 Feb

ruary 2021

Tenure of Non-Executive Directors

The Board has adopted a policy on tenure that is co

nsi

dered appropriate for an investment co

mpany.

The Board’s tenure and succe

ssion policy seeks to ensu

re that the Board is well bal

anced and will be

refreshed from time to time by the appointment of new

Directors with the skills and experience neces

sary to

replace those lost by Directors’

retire

ments and meet future requi

ments. Dire

ctors must be able to

demonstrate their commitment and fiduciary re

sponsib

ility to the Company. The

Board seeks to encompa

relevant past and current experience of variou

areas relevant to the Company’s busine

ss.

The current composition of the Board reflects the wind down natu

re of the business and the skills that are

needed to manage that ongoing process.

Conflict of Interests

The Directors have a duty to avoid situ

ations where they have, or could hav

e, a direct or indirect intere

that conflicts, or possibly could conflict, with the Com

pany’s interests. Only Dire

ctors who have no material

interest in the matter being considered

will be able to

participate i

n the Board appr

oval process. Di

rectors

are required to disclose all actual and potential conflicts of interest to the Chairman in advance of any

proposed external appointment.

In deciding whether to approve an indi

vidual Director’s

parti

cipation, the other Dire

ctors will act in a way

they consider to be in good faith in assessing the ma

teriality of the conflict in accordance with the

Company’s Articles of Incorporation.

The Board believes that its procedure

s regarding co

nflic

ts of interest have operated effectively. The Board

also confirms that its pr

ocedure for the approval of c

onfli

cts of interest, if any, has bee

n followed by the

Directors. None of the Direct

ors ha

d a material interest in any cont

ract, whi

ch is significant to the Group’

business. Directors’ hol

dings in the Company’s sh

ares can be found within the

Directors’ Report.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CORPORATE GOVERNANCE REPORT (CONTINUED)

Induction/Information and Professional Dev

elopment

Directors are provided, on a reg

ular basis, with key

information on the Co

mpany’s policies, regulat

ory

requirements and its internal controls. Re

gulator

y and legislative changes affect

ing Directors’

responsibilities are advised to the Board as they ar

ise along with

changes to best practice from, amongst

others, the Company Secretary and Deloitte. Advisers to

the Group also prepare rep

orts for the Board fro

time to time on relevant topics and issues.

The Directors attend relevant semi

nars and events to allow them to c

ontinually refresh their skills and

knowledge and keep up with chan

ges within the investment management industry.

When a new Directo

r is appointed to

the Board, they are provided with a

ll relevant information regarding the

Group and their duties and resp

onsibilities as a Direct

or.

Attendance at scheduled meetings of the Bo

ard and its committees for the y

ear ended 30 June 2022

Quarterly

Board

Audit &

Risk

Committee

Remuneration

& Nomination

Committee

Management

Engagement

Committee

Number of

meetings during

the year

Brett Miller

4/4

2/2

1/1

David Copperwaite

4/4

2/2

1/1

Brendan Hawthorne

4/4

2/2

1/1

In addition to these meetings, there

were 10 ad-hoc board an

d committee meeting

s held during the year

covering various Group m

atters.

Relationship with the AIFM, Company Secretary,

Administrator, Consultants and the Employee

The Board has delegated variou

s duties to external

arties, the custodial se

rvices (including t

safeguarding of assets), the regist

ration services and the d

ay-to-day company secretarial,

administration

and accounting services. Each of these contract

s were entered into a

fter full and proper consi

deration by

the Board of the quality and cost of services offered, in

cluding the control systems

in operation in so far as

they relate to the affairs of the Group.

The Board receives and considers rep

orts regularly

from the AIFM, with ad hoc reports and inform

ation

supplied to the Board as required. The Board meet

s with the AIFM on an ad-ho

c basis to discuss and

approve investment decisions as ne

cessary.

The Administrator and AIF

M ensure that all Directors re

ceive, in a timely manne

r, all relevant management,

regulatory and financial inf

ormation. Representatives

of the Administrator and the AIFM attend each Bo

ard

meeting as required, enabling the Di

rectors to probe furthe

r on matters

of concern. The Dire

ctors have

access to the advice and service of

the Company Secretary who

is responsible to the Board for ensu

ring

that Board procedures are

followed and that applicable

rules and regulatio

ns are complied wi

th. The Board,

the AIFM, the Consultants, the employee and the Admini

strator

operate in a supportive, co-operative and

open environment.

AIFMD

The Company is classed

as an externally managed

Alternative Investment

Fund under the Alternative

Investment Fund Managers Directive (“AIFMD”).

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CORPORATE GOVERNANCE REPORT (CONTINUED)

AIFM

The AIFM is responsible fo

r managing the Company’

s investments and the risks it faces in accordance with

AIFMD, subject to the overall scrutiny of the B

oard. Sanne has ci

rca US$9 billion of assets under

management with experience across all major asse

t cl

asses, including credit, and provides se

rvices to

multiple investment trust and investment company c

lients listed

on the main market of the London Stock

Exchange. The AIFM, is responsible to

the Company for risk ma

nagement and portfolio m

anagement and

has delegated the provisio

n of portfolio management services to the Board.

AIFM Remuneration

The fees associated with the appointment of t

he AIFM for the Company

for the quarter ended 30

September 2021 were met by the Portfolio M

anager. An Amended and Re

stated AIFM Agreement was

entered into between the Company and Sanne, whi

ch was dated 6 December 20

21 (the “AIFM Agreement”).

As part of the AIFM Agreement, the Company is liable fo

r the fees associ

ated with the appointment of the

AIFM.

For the period 1 October 2021 to 30 June 2022, fee

s due to the AIFM amounted to £85,393.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

AUDIT AND RISK COMMITTEE REPORT

As at 30 June 2022, the Audit and Risk Committee compri

d all of the Directors, ea

ch of whom has recent

and relevant financial experience. Bren

dan Hawthorn

e is Ch

airman of the Audit and Risk Co

mmittee.

Committee Meetings

In the year ended 30 June 2022, the Audit and

Risk Co

mmittee convened formally

on four occasions. The

members’ attendance reco

rd can be found on page 4

The Audit and Risk Committee usually meets at least

three tim

es a year. Only members of the Audit and

Risk Committee have the right to attend Audit and Risk

Committee meeting

s. Representatives of the AIFM

and the Administrator are invited to attend Audit and

Risk Committee meetings on a regular basis and othe

non-members, including the Consulta

nts and the Company’s employee, may be invited to attend all or part

of the meeting as and when appropriate and ne

cess

ary. The auditor is a

lso invited whenever it is

appropriate. The Audit and Ri

sk Committee is also able

to m

eet separately with the au

ditor without the

others being present.

Main Activities

The Audit and Risk Committee assists the Board

in ca

rrying out its overall

responsibility in relation to

financial reporting require

ments, risk management and t

he assessment of internal financial and ope

rating

controls. It also manages the Group’

s relationship wi

th the auditor. Meetings of

the Committee generally

take place prior to a Company Board meeting. The

Audit and Risk Committee reports to the Board as part

of a separate agenda item, on the a

ctivity of the

Audit and Risk Committ

ee and matters of particular

relevance to the Board in the conduct of their work.

The Audit and Risk Com

mittee reviews and monito

rs re

ports on the internal control and risk management

systems on which the Com

pany is reliant.

Financial Reporting

The primary role of the Audit and Risk Committee in relati

on to financial reporting is to revie

w in conjunction

with the AIFM and the Administrator, together with

any req

uired input from

the Consultants and the

Company’s employee, the appropriate

ness of the A

nnual Report and Audited Co

nsolidated Financial

Statements and the Interim Report a

nd Consolidated

Finan

cial Statements concentrating on,

amongst other

matters:



the quality and acceptability of a

ccounting policies and practices;



the clarity of the disclosure

s and compliance wi

th finan

cial reporting standards and relevant

financial and governance reportin

g requirements;



material areas in which significant judgements hav

e been applied o

r there has been discu

ssion with

the auditor;



in relation to the UK Corpo

rate Governance

Code, whether the Annual

Report and Audited

Consolidated Financial Statements, ta

ken as a whole, is fair, balanced and unde

rstandable and

provides the information necessary for shareh

olders to assess the Group’s perf

ormance, business

model and strategy; and



any correspondence from regul

ators in relation to

the quality of the Group’s financial reporting.

To aid its review, the Audit and Risk Committee se

eks the appropriate input from the AIFM and the

Administrator, together with any

required input from the Consu

ltant

s and the Company’

s employee, and

also reports from the auditor.

These Audited Consolidated Financial Statements hav

e been prepared on a basis other than g

oing concern

as the Company is in managed wind do

wn.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

AUDIT AND RISK COMMITT

EE REPORT (CONTINUED)

Significant Risks

For the year ended 30 Ju

ne 2022, the following signi

ficant issues were consid

ered by the Audit and Risk

Committee:

(i) Revenue Recognition

The risk that revenue (classified a

s ‘income’ in the

Audited Consolidated Financi

al Statements and primarily

comprising interest income or finance charge

s receivable under loans, leases and hire purchase

agreements) may be materially misstated.

The Committee has reviewed and is satisfied that a robust

transaction re

porting system i

s in place between

the AIFM and Administrator to ensure that transacti

ons and the revenue received are reflecte

d correctly.

(ii) Investment Portfolio

The investment portfolio primarily com

prises loans,

hire purcha

se contracts and finance lease

As the Company is in managed wind d

own, the business mo

del is

to actively realise assets in line with th

investment policy. The measurement basis of the po

rtfolio is fair value.

The valuation of the debt portfolio reflect

s the fair

value together with the exp

ected future cash flows after

being discounted back to the reporting date using the ma

rket yield to maturity as a discount rate, which

represents the require

d rate of return for a similar inst

rument.

Where a valuation model is utilised, such a mod

el re

lies upon on a number of inputs, such as un

derlying

assumptions and estimates, and inherent within any such

matter of judgement

is t

he risk that the eventual

outcome will differ from that contained within th

ese Audited Consolidated Financial Statements.

The Audit and Risk Co

mmittee reviews the valu

ation of

the investment

s and the NAV of the G

roup on a

regular basis.

(iii) Fraud Risk

The risk of fraud due to managem

ent override of controls.

The Audit and Risk Committee also reviews the repo

rts

from the Administrator on the system of checks in

place to combat fraud.

Risk Management and Internal Controls

The Board is responsible for ensur

g that suitable systems of risk

management and internal cont

rol are

implemented by third-party service provi

ders and have carried out a robust assessment as outlined belo

The Directors have reviewed BNP Paribas Securities

Services’ ISAE 3402 report

(report on the description

of controls placed in operation,

their design and op

erating effectiveness for the period from 1 April 2021 to

31 March 2022) on Fund Administration

and are pleased to

note that

no significant issues were identified.

The Company continues

to review and develop a compreh

ensive risk management fra

mework, with

implementation outsourced to the AIFM, with a risk r

egister that is reviewed and updated a

s necessary by

the Board and Audit and Risk Committee. The Audi

t and Risk Committee considers the ri

sks facing the

Group and the controls and other me

asures in pl

ace to mitigate the impact of those risks.

The work of the Audit and Risk Committee is primarily

driven by the Company’s assessment

of the principal

risks and uncertainties as set out in

the Strategic

Report and in note 17,

the reports received from the AIFM,

and the Company’s risk evaluation process.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

AUDIT AND RISK COMMITT

EE REPORT (CONTINUED)

Risk Framework and Systems of Internal Con

trol

The Board recognises the importance of identifying, ac

tively monito

ring and, where possible,

mitigating the

financial and non-financial

risks facing the busine

ss. Whil

st responsibility for ri

sk management rest

s with the

Board, the management of risk is e

mbedded as part

of the everyday business and

culture of the Company

and its principal advisers.

The Board has considere

d the need for an interna

l audit function but because

of the internal control

systems in place at the key servi

e providers and the inde

pendent cont

rol

s process performed, it has

decided instead to place reliance on tho

e controls and assurance processe

Risk Identification

The Board, Audit, and Risk Committee

identify risks with input from the AIFM and the

Administrator. The

Board also receives detailed quarte

rly asset manage

ment reports highlighting

performance

and potential

risk issues on an investment-by-investment basi

Risk Assessment

Each identified risk is as

sessed in terms of probability of occu

rrence, potential impact on financial

performance and moveme

nts in the relative significance of each ri

sk from period to period.

Action Plans to Mitigate Risk

Where new risks a

re identified or existing risks in

crease in terms of likeliho

od or impact, the Audit and

Risk

Committee assists the Group in develop

ing, whe

re possible, an action plan

to mitigate the risk and put in

place enhanced monitoring and rep

orting.

Re-assessment and Rep

orting of Risk

Such risk mitigation plans are re

assessed by the Audi

t and Risk Committee with the relevant key service

providers where appli

cable, and reported to the Bo

d on a quarterly basis. The direct

communication

between the Group and the AIFM is re

garded as a key

element in the effective manageme

nt of risk (and

performance) at the underly

ing investment level.

Emerging Risks

Refer to the Emerging Risks se

ction on page 21 for details on em

erging risks.

External

Audit

The effectiveness of the external audit process is dependent on appro

priate audit risk identification at the

start of the audit cycle. The Audit and Risk Committee received a detailed audit plan fro

m the auditor

identifying its assessment of the significant au

dit ris

ks. For the year ended 30 June 202

2, the significant

audit risks identified are shown on page 48. The signific

ant risks were tracke

d through the year, the Audit

and Risk Committee challenge

d the work performed by t

he auditor to test management override of cont

rols,

and in addition the audit work undertake

n in respect of valuations of unlisted investments.

The Audit and Risk Committee assesse

s the effectivene

ss of the

audit process in addressing these matters

through the reporting received from the

Auditor in re

lation to the

year-end. In addition, the Audit and Risk

Committee seeks feedback from the AIFM and the

Admi

nistrator on the effectiveness of the audit pro

cess.

For the year ended 30 June 2022, the Audit and Risk

Commit

tee was satisfied that there h

ad been

appropriate focus, challe

nge on the significant a

nd other

key areas of au

dit risk, and assessed the quality of

the audit process to be good.

Appointment and Independence

In its assessment of the independence of the au

ditor, t

he Audit and Risk

Committee receiv

es details of any

relationships between the

Group and the auditor that may hav

e a bearing on their inde

pendence and

receives confirmation that they

are independent of the Group.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

AUDIT AND RISK COMMITT

EE REPORT (CONTINUED)

Appointment and Independence (Con

tinued)

Deloitte LLP was appointe

d as the external auditor of

the Company at the AGM held on 21 November 2019.

The Audit and Risk Committee consi

ders the reappoi

ntment

of the auditor, includi

ng the rotation of the audit

engagement partner, and assesses the

ir independence on an annual ba

sis. The auditor is required to

consider rotation of the engageme

nt partner responsi

ble for

the audit every five years. This is the third year

that the current audit engagement partner, David Becker, has over

seen the audit of the Company.

Audit Tender

The Audit and Risk Committee reviews the objectivity

and effectiveness of the a

udit process

on an annual

basis and considers the a

udit tendering provisions of the UK Code in dete

rmining whether the Company

should put the audit engagement out to tender. There

are no cont

ractual obligation

s restricting the

Committee’s choice of external a

uditor and the ex

ternal auditor is not indemnified by the Gro

up.

Non-Audit Services

To safeguard the objectivity and indepe

ndence of the auditor from becoming comp

romised, the Committee

has a formal policy govern

ing the engagement of t

he auditor to

provide non-audi

t services. The audito

r and

the Directors have agreed that all non-au

dit servic

es require the pre-approv

al of the Audit and Risk

Committee prior to commencin

g any work. The auditor

will only be appointed to provide no

n-audit services

if it is in the best interests of the Comp

any with

out compromising the related indepe

ndence requirem

ents.

Fees for non-audit services will be ta

bled annually so

that the Audit and Ri

sk Committee can consider t

impact on the auditor’s objectivity.

Deloitte LLP is remunerated as follo

ws for their servic

es rendered during the year end

ed 30 June 2022:

Audit of the Group’s Consolidat

ed Financial Statements

126,790

Total audit fee

126,790

No non-audit services were

provided by Delo

itte LLP during the year ended 30 June 20

22.

Bren

dan Haw

thorne

Chairman of the Audit and Risk Committee

29 September 2022

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

Statement of Compliance with the

UK Code of Corporate Governance

The Directors place a large degre

e of importance on

ensuring that high standards

of corporate governance

are maintained and have therefore chose

n to comp

ly with the provisions of the UK Code.

The Board has considered the prin

ciples

and provisions of the UK

Code.

The Board considers that reporting against the princi

ples and provis

ions of the UK Code provides

information that is more relev

ant to stakehol

ders. The UK Code is

available on the FRC websit

www.frc.org.uk

The Company has complied with

all the principles

nd provisions of the UK

Code during the

year ended 30

June 2022 except as set out below, further details c

an be found in the Corporate Governance Repo

rt on

page 39:



Appointment of a Senior Independent Di

rector (provision 12).



Chairman is chairman of the Audit and Risk Committe

e (provision 24).



Going concern basi

s for accounting (pro

vision 30).

Set out below is where stakehold

ers can find furthe

r information within the An

nual Report about h

ow the

Company has complied wi

th the various prin

ciples and provisions of the UK Co

de.

1. Board Leadership and Company

Purpose

Purpose as at 30 June 202

On page 17

Future strategy

On page 25

Culture of the Company

On page 25

Stakeholder Engagement

Section 172 statement on pages 22 and 23

2. Division of responsibilities

Director Independen

On page 40

Board

meetings

Board an

d Committee Meetings with Director

Attendance on page 45

Management Engagement Committee

On page 42

3. Composition, Succession and Ev

aluation

Remuneration and Nomination Com

mittee

On page 42

Director re-election

On page 44

Board evaluation

On page 42

4. Audit, Risk and Internal Control

Audit and Risk Committee

On page 42

Principal and emerging risks

On pages 19 to 21

Risk management and internal control systems

On page 48 to 49

Going concern statement

On page 21

Viability statement

On page 21

5. Remuneration

Directors’ Remune

ration Report on page 43

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

INDEPENDENT AUDITOR’S

REPORT TO THE MEMBERS OF SLF REALISATION

FUND LIMITED

Opinion



our



opinion



the



financial



sta

tements



SLF



Realis

ation



Fund



Limited



(the



‘company’)



and



its



subsidiar

ies



(the



‘group’):







give



true



and



fair



view



the



state



the



grou

p’s



affairs



June



2022



and



the



group’s



prof



for



the



year



then



ended;





have



been



proper



prepared



accordance



with



International



Financial



portin



Standards



(IFRSs)



adopted



the



Europe



Union;



and





have



been



prepared



accordance



with



the



requirem

ents



the



Companies



(Guernsey)



Law,



08.



have



audited



the



financi



statem

ents



which



comprise:





the



consolidated



stat

ement



comprehensive



income;





the



consolidated



stat

ement



financial



position;





the



consolidated



stat

ement



changes



equity

;





the



consolidated



stat

ement



cash



flows;



and





the



notes



19.



The



financial



reporting



framework



has



been



applied



their



preparation



plicable



law



and



IFRSs



ado

pted



the



European



Union.



Basis



for



opinion



conducted



our



dit



accord

ance



with



International



Standards



Auditing



(UK)



(ISAs



(UK))



and



applicable



law.



Our



respon

sibiliti



under



those



standards



are



further



described



the



auditor’s



responsibilities



for



the



audit



the



financial



statement



section



our



report.





are



independent



the



group



accordance



with



the



ethical



requ

irements



that



are



releva



our



audit



the



financial



statement



the



UK,



including



the



Financial



Rep

orting



Council’s



(the



‘FRC’s’)



Ethi

cal



Standa



applied



listed



public



interest



entities,



and



have



lfilled



our



other



ethical



respo

nsibilities



accord

ance



with



these



requirements.



confirm



that



have



not



provided



any



non

‐

audit



servic



prohibited



the



C’s



Ethical



Standard



the



group



the



company.



believe



that



the



audit



evidenc



have



obtained



sufficient



and



app

ropriate



pro

vide



basis



for



our



opinion.



Emphasis



matter



–



Consolidated



financial



statements



prepared



other



than



going



concern



basis





draw



attention



note



2.1



)



the



consolidated



financial



statements,



which



indic

ates



that



the



financial



statements



have



been



prepared



basis



other



than



that



going



concern.



Our



inion



not



modified



respect



this



matter.



SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

Summary



our



audit



approach



Key



audit



matters



The



key



audit



matter



that



identified



the



current



year



was:





Valuation



the



debt



port

folio



Materiality



The



materiality



that



used



for



the



group



fina

ncial



statements



the



current



year



was



£1.79m



which



was



determined



the



basis



the



net



asset



lue



Scoping



Audit



work



respond



the



risks



material



misstatement



was



per

forme



directly



the



group



audit



engagement



team.



Significant



chang es



our



approach



There



have



been



significant



changes



our



approach



from



the



prior



year.



Key



audit



matters



Key



audit



matters



are



those



matters



that,



our



professional



judgement,



were



most



significance



our



audit



the



financial



statement



the



curren



period



and



include



most



significan



assessed



risks



mater

ial



misstatement



(whether



not



due



fraud)



that



identified.



These



matters



included



those



which



the



greatest



effect



on:



the



overall



audit



rategy,



the



allocation



resources



the



audit;



and



directing



the



efforts



the



engageme



team.



These



matte



were



addressed



the



con

text



our



audit



the



fina

ncial



state

ments



whole,



and



forming



our



opinion



thereon,



and



not



provide



separa



opinion



these



matters.



5.1.

Valuation



the



debt



portfolio



Key



audit



matter



description



The



group’s



pri

ncipal



business



used



make



debt



investments,



rectly



indirectly,



business

‐

essential,



revenue

‐

producing



(or



cost



saving)



equipment



other



physical



assets.



Due



the



wind



process,



the



business



changed



realise



all



remaining



assets



the



portfolio



and



return



cash



sharehold

ers



orderly



manner.



June



2022,



the



aggregate



value



the



debt



portfolio



amount



£72.1



million



021:



£148.



million)



representing



80%



total



assets



(2021:



84%).



The



decrease



the



balance



mainly



due



the



disposal



investm

ents



during



the



year.



The



debt



portfolio



measured



fair



value



post



the



change



the



company’s



business



model



which



was



approved



July



2020



the



2016



shareholders



and



December



2020



the



ordinary



shareholde

rs.





Management



applied



discounted



cash



flow



appro

ach



determining



the



fair



value



the



debt



portfolio



forecasting



future



cash



flo



expected



generated



from



each



investment



discounted



back



the



reporting



date



using



discount



rat



reflective



the



market



yield



similar



investment.





part



our



assessment,



observed



the



calc

ulation



fair



values



for



individual



loans



requires



management



make



significant



estimates,



particular,



the



determinatio



estimated



future



cash



flows.



This



includes



the



timing



collection,



valuat

ion



underlying



collateral



including



costs



realisation,



well



market



yields



maturity;



all



estimates



that



are



particularly



uncertain



given



the



volatile



market



conditions.





pinpointed



the



key



audit



matter



the



valuation



and



accuracy



forec

ast



cash



flows



within



the



loan



valuations



these



repr

esent



most



sensitive



put



the



valuations.



This



includes



assumptions



rela

ting



the



quantum,



timing



and



the



cost



collect



these



cash



SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

flows.



There



the



risk



that



any



material



movemen



the



fut

ure



cash



flows



could



have



significant



impact



the



fair



value



assumptions



applied.



Judgement



over



each



investment’s



exit



strat

egy,



which



impact



fair



value



estimates



could



significa

ntly



affect



key



performance



indicators.





This



matter



explaine



further



the



audit



and



risk



comm

ittee



report



page



48.



Note



2.1



(f)



and



note



2.3



set



out



the



ssociated



accounting



policy



and



disclosure



respect



critical



judgements



and



key



sources



estimation



uncertainty,



note



set



out



the



composition



the



debt



portfolio,



with



setting



out



details



the



assoc

iated



ris



factor



including



credit



risk



and



pric



risk.



How



the



scop



our



audit



respond



the



key



audit



matter



have:



•

Obtained



understanding



the



relevant



controls



debt



portfolio



valuation



process;



•

Assessed



the



gro

up’s



accounting



policy



with



IFRS



requirements



involving



industry



specialists



and



obtained



understanding



the



fair



lue



methodology



used



management

;



•

Challenged



the



accuracy



the



forecast



cash



flows,



includi



consideration



the



impact



Covid

‐



and



the



Ukraine



conflict,



well



the



timing



those



cash



flows,



obtainin



supportin



documentat

ion



for



the



accura



these



forecasts;



•

Challenged



whether



the



assigned



forec

ast



cash



flows



for



the



underlying



collateral



are



considered



appropri

ate



and



suppo



fair



values,



including



challenge



assumptio



relating



required



time



and



costs



realise



the



collateral.



done



obtaining



supporting



documentation



the



valuation



the



underlying



collateral



which



have



been



assess



for



credibility;



•



sample



basis,



recalculated



the



fair



value



independ

ently



base



available



data;



•

Assessed



bias



timing



and



value



cash



ows



assumptions



performin



back



testing



via



comparing



proceed



received



investments



repayment,



bot



durin



the



year



and



subsequent



June



2022,



against



their



fair



value



prior



reali

sation;



and



•

Evaluated



the



app

ropriaten

ess



disclosures



made



the



financial



statements



light



relevant



IFRS



requirements.



Key



observations



Based



audit



work,



are



sat

isfied



that



the



valuation



the



debt



por

tfolio



appropriat



and



therefore



the



debt



portfolio



appropriately



ated.



Our



applic

atio



mate ria lity



6.1.

Materiality



define



materialit



the



magnitude



misstatement



the



financial



statemen



that



makes



pro

bable



that



the



economic



deci

sions



reasonably



knowledgeabl



person



would



changed



fluenced



use



materiality



both



planning



the



scop



our



audit



work



and



evaluati



the



results



our



work.



Based



professional



judgement,



determined



materiality



for



the



financial



statem

ents



ole



follows:



Group



Mate

riality



£1.79



million



(

2021:



£3.59



million).



SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

Basis



for



determining



materiality



net



asset



value



(2021:



net



asset



value).



Rationale



for



the



benchmark



applied



believe



net



asset



value



the



most



appropriate



benchma



considered



principal



consideration



for



shareholde



the



group



assessing



financial



perfo

rmance.



rthermore,



given



the



group



managed



wind



down,



the



residual



assets



are



the



key



focus



the



shareholder



The



decrease



the



grou



materiality



between



the



current



year



and



the



prior



year



due



the



decrease



net



asset



value



which



was



inly



due



capital



distribution



following



the



realisation



debt



investments.



6.2.

Per

formance



ma teriality



set



performance



materiality



level



lower



than



materiality



reduce



the



proba

bility



at,



aggregate,



uncorrected



and



und

etected



misstatements



exce



the



materiality



for



the



financial



stat

ements



whole.



Group



performance



materiality



was



set



70%



group



materiality



for



the



2022



audit



(2021:



70%



the



group



mate

rialit

y).



determining



performance



materiality,



consid

ered



the



following



factors:



‐

Our



risk



assessment,



cluding



our



assess

ment



the



group’s



overall



con

trol



environment



and



that



consider



appropriate



rely



controls



the



revenue



recognition



process;



and



‐

Our



past



experienc



the



audit



and



develop

ments



the



control



environme



from



prior



year.



6.3.

ror



reportin g



threshold



agreed



with



the



udit



and



Committee



that



would



report



the



Committee



all



audit



differences



excess



£88,000



021:



£180,000),



well



differences



below



that



threshold



that,



our



view,



warranted



reporting



qualitative



grounds.



report



the



Audit



and



Risk



ommittee



disclosu



matters



that



identified



when



assessing



the



overall



presentation



the



financial



statem

ents.



overview



the



scope



our



audit



7.1.

Identification



and



scoping



Our



audit



was



scoped



obtaining



unders

tandin



grou



and



its



environment,



including



interna



control,



and



assessing



the



risks



material



misstatement



for



the



company



and



its



subsidiaries.



Audit



work



respond



the



risks



material



misstatement



was



performed



directly



the



group



dit



engagement



team.



7.2.

Our



consideratio



the



control



environment





assessing



the



control



environment,



also



considered



the



control



environmen



the



key



service



providers,



including



the



administrators



the



group,



whom



the



board



have



delegated



certain



functions



for



the



comp

any



and



its



subsidia



entities.



adopted



contro



reliance



approach



respect



revenue



recognition



controls



testing



the



relevant



controls



performed



the



rvice



provid

ers.



SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

7.3.

Our



consideratio



climate



risks



part



our



audit



made



enquiri



management



understand



the



process



they



have



adopted



assess



the



potential



impact



clim

ate



change



the



financial



statement



Manage

ment



considers



that



the



impact



climate



change



does



not



give



rise



mater

ial



financial



statemen



impact



described



page



25.



used



our



knowledge



the



group



evaluate



management’s



assessment.



particularly



considered



how



clim

ate



change



risks



could



impact



the



assumptions



considered



the



valuation



the



debt



portfolio.



also



read



the



Annual



Report



cons

ider



whether



the



disclosure



relation



clim

ate



change



made



the



other



infor

mation



within



Annual



Rep

ort



are



materially



consistent



with



consolidated



financial



statements



our



knowledge



obt

ained



our



audit.



Other



inform

atio n



The



other



information



comprises



the



information



included



the



annual



report,



other



than



financial



stat

ements



and



our



auditor’s



report



thereon.



The



directors



are



responsible



for



the



other



information



contained



within



the



annual



report.



Our



opinion



the



financi



statements



does



not



cover



the



other



informatio



and



not



express



form



assurance



conclusion



ereon.



Our



respon

sibilit



read



other



infor

mation



and,



doing



so,



consider



whether



the



other



info

rmation



materially



incons

istent



with



the



financial



statem

ents



our



knowledge



obtained



the



cou

rse



audit,



otherwise



appears



materially



miss

tated



identify



such



material



inconsistencies



apparent



teri



misstateme

nts,



are



required



determine



whether



this



gives



rise



material



misstate

ment



the



financial



stat

ements



themselves.



If,



based



the



work



have



performed,



conclude



that



there



material



misstatement



this



other



informat

ion,



are



required



report



that



fact.



have



nothing



port



this



regard.



Respon

sibilitie s



directors



explained



fully



the



sta

tement



directors’



responsibilities,



directors



are



responsible



for



the



preparation



the



financ

ial



statements



and



for



being



satisfied



that



they



give



true



and



fair



view,



and



for



such



internal



control



the



directors



determine



necessary



enable



the



preparation



financ

ial



statem

ents



that



are



free



from



material



misstatement,



wheth



due



fraud



error.



preparin



the



financial



statement



the



directors



are



responsible



for



assessing



the



gro

up’s



ability



continue



going



concern,



disclosing



applicable,



matters



goin



concern



and



using



the



going



concern



basis



accounting



unless



the



directors



eith



intend



liq

uidate



the



group



cease



operations,



have



alistic



alternative



but



so.



10.

Auditor’s



responsibilities



for



the



audit



the



financial



statements



Our



objectives



are



obtain



reasonable



assurance



about



whether



the



financial



statements



whole



are



free



from



material



misstatement,



whet

her



due



fraud



error,



and



issue



auditor’s



port



that



includes



our



opinion.



Reasonable



assurance



high



level



assuranc



but



not



guarantee



tha



audit



conducted



accordance



with



ISAs



(UK)



will



ways



detect



material



misstatement



when



exists.



sstatements



can



arise



from



fraud



error



and



are



consid

ered



material



if,



individually



the



aggregate,



they



could



reasonably



expected



influen



the



economic



deci

sions



users



taken



the



basis



these



financial



statements.



SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022



further



description



our



responsibilities



for



the



audit



the



financial



sta

tements



located



the



FRC’s



web

site



at:



www.frc.

org.uk/aud

itorsr

esponsibi

lities



This



description



for



part



auditor’s



report.



11.

Extent



which



the



audit



was



considered



capable



detecting



irregularities,



includi



fraud



Irregularities,



including



fraud,



are



instanc



non

‐

compliance



with



laws



and



regulations.



design



procedures



line



with



our



responsibilities,



outlined



above,



detect



material



misstateme

nts



res

pect



regulari

ties,



including



fraud.



The



extent



which



our



procedur



are



capable



detecting



irre

gularities,



incl

uding



fraud



detailed



low.





11.1.

Identifying



and



assessing



potential



risks



irregularities



identify

ing



and



assessing



risk



material



misstatement



respect



regularit

ies,



including



fraud



and



non

‐

compliance



with



laws



and



regulations,



considered



the



following:





the



nature



the



industry



and



sector,



control



environment



and



business



performance



including



the



design



the



group’s



muneration



licies,



key



drivers



for



directors’



remuneration,



bonus



levels



and



performance



targets;





results



our



enquiries



management



and



the



audit



and



risk



committee



about



their



own



identification



assessment



the



risks



irregularities;





any



matters



identified



having



obtained



and



reviewed



the



group

’s



documentation



their



policies



and



procedures



relating



to:



identifying,



evaluating



complying



with



laws



and



regulations



and



wheth



they



were



aware



any



instances



non

‐

compliance;



detecting



and



responding



the



risks



frau



and



whether



they



have



knowledge



any



actual,



suspected



allege



fraud;



the



internal



controls



established



mitigate



risks



fraud



non

‐

compliance



with



laws



and



regulations;





the



matters



discussed



among



the



audit



engagement



team



and



levant



internal



special

ists,



including



tax



and



valuations



specialist



regar

ding



and



where



fraud



might



occur



the



financial



statem

ents



and



any



potential



indicators



fraud.



result



these



procedure



considered



the



opportunities



and



incentives



that



may



exist



withi



the



organisatio



for



fraud



and



identified



the



greatest



potential



for



fraud



the



following



areas:





‐

Valuation



the



debt



port

folio



which



mentioned



under



section



this



report.



‐

Revenue



recognition:



portfolios’



exp

ected



realisation



maturi



profile



and



expected



cash



flows



are



key



inputs



arriv

ing



the



effective



interest



rate



used



recognise



financ



income



over



the



expected



life



the



portfolio,



and



these



judgements



may



have



significant



imp

act



the



vel



finan



income



recorded



during



the



relevant



per

iod.





common



with



all



audits



under



ISAs



(UK),



are



also



required



perform



specific



procedures



respond



the



risk



management



override.



also



obtained



nderstanding



the



legal



and



regulatory



frameworks



that



the



group



operates



in,



focusing



provisions



those



laws



and



regulations



that



had



direct



effect



the



determination



material



amou

nts



and



disclosures



the



financial



statem

ents.



The



key



laws



and



regulations



consid

ered



this



context



included



Listing



Rules



and



the



Companies



(Guernsey)



2008.



addition,



considered



provisions



other



laws



and



regulations



that



not



have



direct



effect



the



financial



statements



but



compliance



with



which



may



fundamental



the



group’



ability



operate



avoid



material



penalty.





SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

11.2.

A udit



response



risks



ide

ntified



result



perfor

ming



the



above,



identified



valuation



the



deb



portfolio



key



audit



matter



potential



risk



fraud.



The



key



audit



matters



section



our



report



explains



the



matter



detail



and



also



describes



the



specific



procedures



performed



response



that



key



audit



matter.



addition



above,



our



procedures



respond



risks



identified



included



the



following:





reviewing



the



financial



statement



disclosure



and



testing



supporting



documentation



assess



compliance



with



provisions



rele

vant



laws



and



regulations



described



having



direct



eff

ect



the



financial



statements;





enquiring



manage

ment



and



the



audit



and



committee



concerning



actual



and



pote

ntial



litigation



and



claims;





performing



analytica



proced

ures



identify



any



unusual



expected



relationships



that



may



indicate



ris



material



misstatement



due



fraud;





reading



nutes



meetings



those



charged



with



governance



review

ing



correspondenc



with



regulators;







addressing



the



risk



fraud



through



management



override



controls,



testing



the



appropriatenes



journal



entries



and



other



adjustm

ents;



assessing



whether



the



judgements



made



making



accounting



estimates



are



ndicative



potential



bias;



and



evaluating



the



business



rationale



any



significant



transactions



that



are



unusual



outside



the



normal



course



business.







addressing



the



risk



fraud



revenue



recognitio



obtained



understanding



the



relevant



control



enviornment



and



tested



the



levant



controls



relation



the



finance



income



recognition.



Furthermore,



recalculate



the



finance



income



independent



usin



the



effective



interest



rate



thod



accordance



with



IFRS



requirements.



also



communicated



relevant



identified



laws



and



regulations



and



potential



fraud



risks



all



engagement



team



members



including



internal



specialists,



remai

ned



alert



any



dications



fraud



non

‐

compliance



with



laws



and



regulations



throughout



the



audit.



Report



other



legal



and



regulatory



requirements



12.

Corporate



Governance



Statement



The



Listing



Rules



require



review



directors’



atement



relation



going



concern,



long

‐

term



viability



and



that



part



the



Corporate



Governance



Statement



relating



the



group’s



compliance



with



the



provisio



the



Corporate



Governance



Code



specified



our



review.



Based



work



undertaken



part



our



audit,



have



concluded



that



each



following



ele

ments



the



Corporate



Governance



Statem

ent



mater

ially



consistent



with



the



financial



statement



and



our



knowl

edge



obtained



during



the



audit:





the



directors’



sta

tement



with



rega

rds



the



appropri

ateness



adopting



the



going



concern



basis



accounting



and



any



material



uncert

ainties



identified



out



page



21;





the



directors’



explanation



its



assessme



the



group’s



prospects,



the



period



this



assessm

ent



cove



and



why



the



period



appropri

ate



set



out



page



21;





the



directors'



statement



fair,



balanced



and



understa

ndable



set



out



page



37;





the



ard’s



confirmation



has



carried



out



robust



assessment



the



emerging



and



principal



risks



set



out



page



21;





the



section



the



annual



port



that



describes



the



review



effectiveness



risk



management



and



internal



control



syst

ems



set



out



page



48;



and





the



section



describing



the



wor



the



audit



and



risk



committee



set



out



page



47.



SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

13.

Mat



which



are



required



report



exception



13.1.

Adequacy



explanations



re ce

ived



and



accou nting



record s



Under



the



Companies



(Guernsey)



Law,



2008



are



required



report



you



if,



our



opinion:







have



not



received



all



the



informat

ion



and



explan

ations



require



for



our



audit;





proper



accounting



record



have



not



been



kept



the



company;







the



financial



statements



are



not



agreem

ent



with



accounting



records.



have



nothing



port



respect



these



mat

ters



14.

Other



matters



which



are



required



address



14.1.

Auditor



tenure



Following



the



recommendation



the



Audit



and



Risk



Committee,



were



appointed



the



board



directors



September



2019



aud



the



financial



stat

ements



for



year



ending



June



2020



and



subsequent



nancial



periods.



The



period



total



uninterrupted



engagement



including



previo



renewals



and



reappointments



the



fir



years,



covering



the



years



ending



June



2020



June



2022



14.2.

Consistency



the



audit



repor



with



th e



additional



repo



the



Audit



and



Risk



Committe



Our



audit



opinion



consistent



with



the



additional



report



the



Audit



and



Risk



Committee



are



required



provide



accordance



with



ISAs



(UK).



15.

Use



our



report



This



report



made



solely



the



company’s



members,



body,



accordance



with



Section



262



the



Companies



(Guernsey)



Law,



2008.



Our



audit



work



has



been



undert

aken



that



might



state



the



company’s



members



those



matters



are



quired



state



them



auditor’s



report



and



for



other



pur

pose.



the



fullest



extent



permitted



law,



not



assume



responsibili



anyon



other



than



the



comp

any



and



the



company’s



members



body,



for



our



audit



work,



for



this



report,



for



the



opinions



have



formed.



required



the



Financial



Conduct



Authority



CA)



Disclosure



Guid

ance



and



Transparency



Rule



(DTR)



4.1.14R,



these



consolidated



financial



statements



form



part



the



ropean



Single



Electronic



Format



(ESEF)



repared



Annual



Financ

ial



Report



filed



the



National



Storage



Mechanis



FCA



accordance



with



the



ESEF



Regulatory



Technical



Standard



((‘ESEF



S’).



This



auditor’s



report



provides



assurance



over



wheth



the



annual



financial



report



has



been



prepared



using



the



single



electron



format



specified



the



ESEF



RTS.



David



Becker



(Seni



Statutory



Auditor)



For



and



behalf



Deloitte



LLP



Recognised



Auditor



Guernsey,



Channel



Islands



September



2022

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2022

Notes

Year ended

30 June 2022

Year ended

30 June 2021

Income

Finance income

9,435,954

20,431,391

Other income

252,664

637,249

Total income

2.6

9,688,618 21,068,640

Net unrealised gain on recl

assification of financial assets from

amortised cost to fair value through profit or loss

2,987,406

Net movement on investments

3 (3,830,533)

(24,160,057)

Foreign exchange gain/(loss)

on other

monetary items

2.2

789,257

(89,510)

Net realised and unrealised lo

(3,041,276) (21,262,161)

Expenses

Investment management fees

3(a) (1,736,229)

(1,978,999)

Directors’ fees

(862,606)

(496,465)

Other operating expenses

(2,979,702) (2,362,775)

Incentive plan expense

(2,266,001)

Impairment release

1,101,100

Expected credit loss provision

9.1

18,987,050

Total operating (expen

se)/income

(7,844,538) 15,249,911

(Loss)/profit before tax

(1,197,196) 15,056,390

Taxation 2.10

(Loss)/profit after tax

(1,197,196)

15,056,390

Total comprehensi

ve (loss)

income fo

the year analysed

as follows:

Attributable to Ordinary share

holders

(2,615,318)

1,803,783

Attributable to 2016 C shareh

olders

1,418,122

13,252,607

Total comprehensi

ve (loss)/income for the year

(1,197,196) 15,056,390

Basic and diluted (loss)/income per Ordi

nary Share

5 (0.73)p

0.51p

Basic and diluted income p

er 2016 C Share

5 1.02p

9.54p

The year ended 30 Ju

ne 2022 has been presente

d on a basis ot

her than

going concern. No operati

ons were acquired

or discontinued during the yea

The Group has no items of other comprehensive incom

e, and

therefore the loss for the

year is also the total

comprehensive loss.

The accompanying notes form an integral part of these Audited Consolidated Finan

cial Statements.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2022

Notes

30 June 2

022

30 June 2021

Current assets

Residual value of finance lease

investments 2.4,9.1

111,979

101,859

Property, plant and equipment

2,068,609

Investments designated at fair value through profit or

loss 9.1,9.2

72,108,608

148,763,747

Cash and cash equivalents

2.9

18,674,833

25,350,943

Other receivables and prepayments

62,595

414,448

Investment receivable

164,332

91,122,347

176,699,606

Total assets

91,122,347 176,699,606

Current liabilities

Other payables and accrued ex

pen

ses 11

(688,355)

(508,192)

Incentive plan payable

(2,266,001)

(2,954,356)

(508,192)

Net assets

88,167,991 176,191,414

Equity

Share capital

339,445,912

426,272,139

Retained deficit

(251,277,921)

(250,080,725)

88,167,991 176,191,414

NAV per Share

Ordinary

17.44p

26.19p

2016

18.79p

59.71p

These consolidated financial statements were ap

proved

and authorised for i

ssue by the Board of Directo

on 29 September 2022 and signed o

n its behalf by:

Brendan Hawthorne

David Copperwaite

The accompanying notes form an integral part of

these Audited Consolidat

ed Financial Statements.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2022

Notes

Capital

Retained

Deficit

Total

As at 1 July 2021

426,272,139

(250,080,725)

176,191,414

Total comprehensive profit

for the year

- (1,197,196) (1,197,196)

Transactions with shareholders

Capital distributions

(86,826,227)

Total transactions

with shareholders

(86,826,227)

As at 30 June 2022

339,445,912 (251,277,921)

88,167,991

For the year ended 30 June 2021

Notes

Capital

Retained

Deficit

Total

As at 1 July 2020

488,655,945

(265,137,115)

223,518,830

Total comprehensive profit

for the year

- 15,056,390 15,056,390

Transactions with shareholders

Capital distributions

(62,383,806)

Total transactions

with shareholders

(62,383,806)

As at 30 June 2021

426,272,139 (250,080,725)

176,191,414

The accompanying notes form an integral part of

these Audited Consolidat

ed Financial Statements.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2022

Notes

Year ended

30 June 2022

Year ended

30 June 2021

Cash flow from operating activities:

Total comprehensive (loss)/incom

e for the year

(1,197,196)

15,056,390

Adjustments for:

Finance income

(9,435,954)

(20,431,391)

Net unrealised gain on reclassification of financial assets from

amortised cost to fair value through pro

fit or loss

(2,987,406)

Net movement on investments

3,830,533

24,160,057

Foreign exchange (gain)/loss on other m

onetary items

(789,257)

89,510

Impairment 8

(1,101,100)

Incentive plan expense

2,266,001

Decrease in other receivables and prepayments

351,853

331,109

Increase in investment receivable

(164,332)

Increase in other payables and accrued expen

ses

180,163

47,843

Acquisition of investments

(100,000)

(9,497,433)

Amortisation of investment principal

11,995,506

Sale of investments designated at fair value through profit or

loss

9.1

72,963,900

65,266,348

Disposal of PPE

2,019,195

Expected credit loss provision

9.1

(18,987,050)

Collective interest income

received

9,435,954

14,883,970

Net cash movement in operating acti

vities

79,360,860

78,826,353

Cash flow from financing activities

Capital distributions

(86,826,227)

(62,383,806)

Net cash used in financing activities

(86,826,227)

(62,383,806)

Net movement in cash and cash equivalents

(7,465,367) 16,442,547

Cash and cash equivalents at star

t of the year

25,350,943

8,997,906

Effect of exchange rate changes on cash and ca

equivalents

789,257

(89,510)

Cash and cash equivalents at end of the y

ear

18,674,833

25,350,943

The accompanying notes form an integral part of

these Audited Consolidat

ed Financial Statements.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FINANCIAL STATEM

ENTS

1. General

Information

The Company

The Company was in

corporated on 28 May 2014 and regi

stered in Guernsey as

a Closed-ended

Collective

Investment Scheme. The Company’s registered office

is BNP Paribas Hou

se, St Julian’s Avenue, St Peter

Port, Guernsey, GY1 1WA. The Company’s Ordinary Shar

es we

re admitted to the FCA’s Official List and to

trading on the Main Market of the London

Stock Exchange on 14 July 2014.

The 2016 C Shares are listed separately on the

Main Market of the London Stock Exchange and were

admitted on 12 December 2016. Th

e investments hel

d by the 2016 C Shares

are accounted for and

managed as a separate pool of assets in accorda

nce

with the Company’s investment policy. Shared

expenses are split between

Ordinary Shares and 2016 C

Shares in propo

rtion to their respective NAV.

On 1 December 2021, the name of the Company

was changed from KKV Secur

ed Loan Fund Limited to

SLF Realisation Fund Limited.

During the year, as pa

rt of the managed wind

down, the Company made

a return of capital on four sepa

rate

occasions, returning a t

otal of £28,478,054 to Or

din

ary shareholders

and £58,348,173 to 2016

shareholders. Refe

r to note 14 for full details

of the Company’s return of

capital and note 18 for return of

capital made post year-end.

During the year, no Ordina

ry Shares or 2016 C Shar

were repurchased durin

g the years ended 30 June

2022 and 30 June 2021. On 1 September 2021, the 1,

731,83

8 Ordinary Shares held in treasury were

cancelled. Nil (30 June 20

21: 1,731,83

8) Ordinary Shares and nil (30

June 2021: nil) 2016 C Share

s are

held in treasury.

Subsidiaries

The Company’s subsidi

aries, SLF (Guernsey) Limit

ed,

SLF (Amber) Limited, SLF (Bro

nze) Limited, SLF

(Cobalt) Limited and SLF (Diamond

) Limited (the “Subsidiaries”) are wholly owned su

bsidiaries incorporated

in Guernsey and establish

ed for the primary purpos

e of

acting as investment holdin

g companies (refer to

note 2.1(e) for further de

tails). The Subsidiaries’

egistered office is BNP Pariba

s House, St Julian’s

Avenue, St Peter Port, Guernsey, GY1 1WA.

The names of the Subsidiaries were changed

2 December 2021 and were

previously called KKV

(Guernsey) Limited, KKV (Amber) Li

mited, KKV (Bronze) Limited, KKV

(Cobalt) Limited and KKV (Diamond)

Limited.

Effective 1 January 2022, the Company meets the def

inition of control under IFRS 10 – “Consolidate

Financial Statements” in respect to its investment

holdin

g in SQN Asset Finance (Ireland) Desi

gnated

Activity Company (“SQN Ireland”). As

such, the

results for SQN Ireland

have been consolidated with th

Group’s Audited Consolida

ted Financial Statements from

this effective date. The Board of SQN Ireland are

employees of its administrator, Cafico

International.

Refer to Note2.1(f) for

further information. The

registered office for SQN Ireland is 2

Floor Palmerston House,

Fenian Street, Dublin 2. SQN Ireland i

administered by Cafico International.

2. Accounting Policies

The principal accounting p

olicies applied in the prepar

ation of these consolidat

ed financial statements are

set out below. These policie

s have been consistent

applied throughout all the years presented, unless

otherwise stated.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.1 Basis of Preparation

(a) Statement of Compliance

The Audited Consolidated Financial Statements fo

r the year ended 30 Jun

e 2022 have been prepared in

accordance with IFRS as adopted by

he European Union. They

give a true and fair view of the Group’s

affairs and comply with the Company (Guern

sey) Law 2008.

Standards and amendments to existing standards that

bec

ame effective during the year are detailed below.

Interest Rate Benchmark Reform

– Phase 2: Amendments

to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

The amendments to th

e above standards are

effective for period

beginning on or after 1

January 2021 and

provide temporary reliefs, whi

ch address the financi

al reporting effects when

an interbank offered rate is

replaced with an alternative nearly risk-free intere

rate. As the Company does not hold any instrument

that reference interbank offered rates, these ame

ndments had no impact on the Annual Re

port and Audited

Consolidated Financial Statements.

During the year, a numb

er of other amendments

and interpretations became applicabl

e for the current

reporting period, which are

not rele

vant to the Company’s operations.

(b) Going Concern

As the Company is in managed wind down, these Audited Consolidated Fina

ncial Statements have been

prepared on a basis other than goin

g concern.

The Board are not aware of any addi

tional impact on the Audited Cons

olidated Financial Statements in

regard to the Company being in managed wind down.

These Audited Consolidated Financi

al Statements do

not include provisions for the wind down of the Co

mpany that have not been cont

ractually committed. The

Board expects the wind do

wn of the Co

mpany to be within 18 to 24 months.

ents and interpretati

ons issu

ed but not yet effective

Detailed below are new standards, amendments a

nd inte

rpretations to existing standa

rds that become

effective in future accounting periods, which have not

been early adopted by the Group:

Effective for periods

beginning on or after

IFRS 17 – Insurance contracts

January

2023

(effective

1 July 2023 for the Group)

IAS 8 - Accounting Policies, Changes in Accounting Estimates and

Errors - amendments regarding the

definition of accounting estimates

1 January 2023 (effective

1 July 2023 for the Group)

The Board has undertaken an asse

ssment of the impact

of IFRS 17 on the Audited Consolidated Financial

Statements and concluded t

hat there will be no material impact as

the Group does not have any insurance

contracts.

The IAS 8 amendments introduce a new definition for

acco

unting estimates: clarifying that they are

monetary amounts in the financial

statements that are subject to measurement

uncertainty. The

amendments also clarify the relationship bet

ween

accounting policies and accounting estimates b

specifying that a Company develops an accounting esti

mate to achieve the objective set out by an

accounting policy. The definition of accounting polic

ies rem

ains unchanged. The Dire

ctors do not believe

that the application of this amendm

ent will have

a material impact on the Au

dited Consolidated Financia

Statements.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.1 Basis of Preparation (Continued)

(d) Functional and Present

ation Currency

Items included in the Audited Consoli

dated Financ

ial Statements are measu

red using Sterling as the

currency of the primary e

conomic environment in

ich the Group operates (the “Functio

nal Currency”).

The Audited Consolidated Financial St

atements are presented in Sterling,

which is the Group’s presentatio

currency.

(e) Consolidation

In accordance with IFRS 10 -

Consolidated Financia

l Statements (“IFRS 10”), if

the Company meets the

definition of an investment entity (“IE

”) it qualifies for a con

solidation exem

ption. The relevant provisions for

an IE under IFRS 10 are set out below:

IFRS 10.27 – An IE is an entity that:

obtains funds from one or more investors for the pu

rpose of p

roviding those in

vestor(s) with investment

management services;

commits to its investor(s) that it

s business pu

rpose is to invest funds solely for return

s from capital

appreciation, investment income, or both; and

measures and evaluate

s the perfo

rmance of substantially all of its investments on a fair valu

e basis.

IFRS 10.28 – An entity shall consider whether it

has the following characteristics of an IE:

it has more than one investment;

it has more than one investor;

it has investors that are not

related parties of the entity; and

it has ownership interests in the

form of equity or similar interests.

The Board considered all the above fa

ctors and not

ed that the Company do

es not provide investors with

investment management services a

nd that the Company’s busin

ess model is no longer to invest but to

realise remaining a

ssets in the portfolio in a

prudent manner to retu

rn cash to share

holders in an orderly

manner. The Board have conclude

d that the Company does not meet the definit

ion of an IE and does not

qualify for the IFRS 10 consolidat

ion exemption. The Subsidiaries

and SQN Ireland have

therefore been

consolidated into these Audited Co

nsolidated Fina

ncial Statements.

(f) Critical Accounting Judgements and

Key Sources of Estimation Uncertai

nty

The preparation of the Audited Consolidated Fin

ancial Statements in accordan

ce with IFRS require

management to make

judgements, estimates and assumptions th

affect the application of policies and the

reported amounts of assets and liabilities, income and expenses. It also requi

res management to exercise

its judgement in the process of applyi

ng the Com

pany’s accou

nting policies. Uncertainty about the

assumptions and estimates could re

sult in outcomes t

hat

require a material adjustment t

o the carrying

amount of assets and liabilities affected in future perio

ds.

The estimates and asso

ciated assumpti

ons are based on

rious factors that are believe

d to be reasonable

under the circumstance

s, the results

of whi

ch form the basis of making judge

ments about carrying values

assets and liabilities that are not readily apparent from

other sou

rces. Actual results may differ from these

estimates.

Estimates and underlying assumptio

ns are reviewed

on an o

ngoing basis. Revisions to accou

nting

estimates are recognised i

n the period in which the estimate

is revised if the revision

affects only that period,

or in the period of the revision and future period

s, if

the revision affects both current and future periods.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.1 Basis of Preparation (Continued)

(f) Critical Accounting Judgements and

Key Sources of Estimation Uncertai

nty (Continued)

Key Sources of Estimation Uncertai

nty

Fair value

For the fair value of all financi

al instruments held, t

he Company determines fair value

s using appropriate

techniques.

Refer to note 2.3(c) and note 9.1 for further d

etails

on the significant estimates applied in the valuation

the Company’s financial i

nstruments m

easured at fair

value. Refer to note 17.

1 Credit Risk for sensitivity

analysis.

As at 30 June 2022, the Group does not believe that

dividend distribution

s paid to the Group by SQN

Ireland are subject to withholding tax in the Republi

c of Ireland.

Refer to note 17.4 for Price Risk sensitivity analysis. T

he fair value of investments is monitored by the

Board to ensure that judgement

s, estimates

and assumptions made and methodologies applied ar

appropriate and in accordance

with IFRS 9 and 13 respectively.

Critical Accounting Judgements

Consolidation of the Subsidiaries and SQ

N Ireland

The Subsidiaries and SQ

N Ireland are all entities (i

ncluding spe

cial purpose entities) which the Compa

controls as it is exposed, or has rights, to variable

return

s from its involvement with the Subsidiaries and

SQN Ireland and has the ability to affect those return

s through its power over

the Subsidiaries and SQN

Ireland.

The Board has determined that due to

the transfer of in

vestment

advisor responsibilities fro

m the Portfolio

Manager to the Board on 1 Jan

uary 2022, the Group meet

s all t

hree elements of control a

s prescribed by

IFRS 10 – ‘Consolidated Finan

cial

Statements’ over SQN Ireland and ther

efore is required t

o consolidate

SQN Ireland into these Audited Consolidated Fina

ial Statements with effect from 1 January 2022.

In the prior year ended 30 June

2021, the investment

s held by S

QN Ireland were di

sclosed in the Group

’s

Audited Consolidated Financial Statemen

ts as p

art of the Group’s investm

ent

s held at FVTPL. For the year

ended 30 June 2022, SQN Ireland ha

s been consolidated in

to the Group’s Audited Co

nsolidated Financial

Statements There is no sig

nificant impa

ct on the re

sults of the

Grou

p as the sole busine

ss of SQN Ireland is

to hold investments for the Group as an SPV.

2.2 Foreign Currency Translation

Transactions in curre

ncies other than the Functio

nal Currency are recorde

d using the exchange rate

prevailing at the transaction date. Forei

gn exchange gai

ns and losses re

sulting from the settlement of such

transactions and those from the translation at y

ear-end

exchange rates of moneta

ry and non-monet

ary

assets and liabilities denominated in fo

reign currencies are

recognised in

profit or loss in the Consolidated

Statement of Comprehensive Income.

Foreign operations transl

ation

The trading results of Group und

ertakings in cu

rrencies other than the Fun

ctional Currency are recorde

using the average excha

nge rates for the year. The assets and liabilities

of overseas undertakings a

translated at the exchange rate

s ruling at the y

ear-end. Exchange gains and lo

sses arising from the

translation are recognise

d in profit or loss in t

he Consolidated Statement of Comprehensive Income.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.3 Financial Assets

(a) Classificat

ion and Measurement

Financial assets are classi

fied into the following spe

cif

ied categories: finan

cial assets at fair value through

profit or loss and amortised cost.

Classification and measurement of financi

al assets

depends on the results of the ‘solely payments of

principal and interest’ an

d the business model test. The G

roup determines the bu

siness model at a level

that reflects how groups of financi

al assets are manag

ed together t

o achieve a part

icul

ar business objective.

This assessment includes judgement reflectin

g all re

levant evidence including how the performance of the

assets is evaluated and their performance

measured, the risks that affect

the performance of the assets and

how these are managed and how the managers of the asse

ts are compensated. Monitoring is part of th

Group’s continuou

s assessment of whether the bu

siness

model for which the remaining finan

cial assets are

held continues to be appropriate and if it is not appr

opriate wh

ether there has been a chang

e in business

model and so a prospective change to the cla

ssification of those assets.

With the Audited Consolidated Finan

cial Statement

s being prep

ared on a basis other than

going concern,

IFRS 9 requires financial assets to be measured at

fair value through profit or lo

ss (“FVTPL”).

The classification of financial assets an

d financial li

abilities between non-current and current is base

d on the

contractual maturity or in reference to investment

s, t

he earlier of the contractual

maturity or realisation of

the financial asset. There is no guaran

tee that financial assets classified

as current will be repaid within the

12 months period post the date of

the statement of financial position.

Financial assets designated at fair valu

e through profit or loss at inceptio

Financial assets designate

d at fair value, can

be de

signated at FVTPL or thro

ugh other compre

hensive

income. The Group’s fair value financial

assets are

designated at FVTPL at inc

eption. These include le

ase

participation, loans, construction fina

nce, finance

lease, hire purchase and equity holding

The Group’s policy requires the AIFM and the Dire

ctor

s to evaluate the inform

ation about these financi

assets on a fair value basis together with other relat

ed financia

l information. Changes in fair value

financial assets at FVTPL are recorded in profit or

loss in the Consolidated Statement of Comprehensive

Income.

As at 30 June 2022, loans and

other investments,

finan

ce lease and hire purchase inve

stments have been

designated as financial as

sets designated at fair value throug

h profit or loss

Amortised cost

Cash and cash equivalent

s, investment receivables and

other receivable

s are classified at amortised co

st.

These financial assets are initially recog

nised at fa

ir value plus tran

saction costs and

subsequently

measured at amortised cost

Income is recognised o

n an effective interest basi

s for

debt instrument

s m

easured subseque

ntly at

amortised cost or FVTPL. Gain

s and losses are recogni

sed in profit or loss in the Consolidat

ed Statement

of Comprehensive In

come when they a

re derecognised

or impaired, as well a

s through the amortisation

proces

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.3 Financial Assets (Continued)

(b) Recognition and De-Recognition

Financial assets are initially recognised on the tr

ade date, when the Compan

y becomes a party to the

arrangement.

The Group derecog

nises a financial asset when th

e cont

ractual rights to the cash flows from the a

sset

expire, or it transfers the rights to receive the contractual cash flows in a transaction in whi

ch substantially

all the risk and re

wards of ownership

the financial asset are transferre

or it neither transfers n

or retains

substantially all the risk and rewards of ownership a

does not retain control ov

er the transferred asset.

Any interest in such derecogni

sed financial assets th

at is created or retai

ned by the Group is reco

gnised as

a separate asset or liability.

Financial assets are offset and the net amount pres

ented in the Consolidated Statement of Financial

Position when, and only when, the Group has a legal right

to offset the amounts and intends either to settle

them on a net basis or to realise the as

set.

The Group derecog

nises a financial liability when it

s contractual obligations are di

scharged, cancelled

expired.

Fair value is the price that would be received to sell

an asset or paid to transfer a liability in an orderly

transaction between market participant

s at the measurement date.

The fair value measurement is based on the presumption

that the transactio

n to sell the asset or transfer

the liability is conducted in either:

• the principal market for the asset or liability; or

• in the absence of a principal market, the most

advantageous market for the asset or liability.

The fair value of an asset or liability is measured usi

ng the assumption that market

partici

pants would use

when pricing the asset or liability, assuming that mark

et participants act in thei

r economic best interest.

A fair value measurement of a non-financial asset ta

kes into a

ccount a market participa

nt’s ability to

generate economic benefit

s by using the asset in its hi

ghe

st and best use capacity

or by selling it to another

market participant that would use the a

sse

t in its highest and best use capacity.

Fair value methodology

The Company typically invested in

private debt financing in SME’s and

SPVs with loans and leases. These

facilities are typically structured as loan

s or leases.

The Company has also invested in equity particip

ation

in the form of warrants on some transactions to ben

efit from company growth or sharehold

ers typically

taken from restru

cturing events. Th

e facilities are predominantly based i

n the UK, with some E

uropean and

global exposures.

The fair value of financial assets designated at fair

value through profit or loss is determined usi

ng the

discounted cash flow method. The app

roach also takes into con

sideration of the impact of Covid-19

and the

Ukraine conflict on valuations

as applicable. Th

e fair

value methodology consi

ders the following two key

inputs:

1. The expected cash flows from the facility including any appropr

iate adjustment in timing to

realise these cash flows.

2. Discount

rate.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.3 Financial Assets (Continued)

Overview

The Company designates each financi

al asset designated at fair value through profit or loss into a common

risk category, which allows exposures to be categori

ed on a similar basis. Future cash flo

ws are estimated

and an appropriate discount rate is appl

ied to determine the fair value.

Where an appropriate market

comparable is available,

the Company will apply such

scount at that rate

and for performing loans with no credi

t deterioration

the Company will assume the rate at originatio

adjusted for the change in the risk free rate between

the reporting

date and the facility origination date and

any appropriate macro-economic fa

ctors that impact the rate.

The Fair Value Discount Matrix, as outli

ned on page 71,

is based on the Ri

sk Grade and asset type, taki

into consideration typical market rates for each allo

cated sector.

For some exposures, external as

set values have been in

structed to provide v

aluations using a fair value

approach. Where external asset values

were instru

cted due to expectation of enforcem

ent, the Company

has used these as the basis of the cash flows li

kely for the facility using t

he likel

y time to realise the assets

Where valuation ranges h

ave been provided, the Co

mpany ha

s assumed the mid-point, assumin

g all

valuations have the same

probability weighting.

A discounted cash flow model is th

en used as the basis for each va

luation within the portfolio. The pu

rpose

of this model is to appropriately value the assets in a wind d

own scenario.

There are specified describing characte

ristics and attributes for each indi

vidual

loan. Certain of those loan

characteristics will be used to allocate th

e Risk Grade and the asset type.

Risk Grade

The approach for monitoring credit ri

sk remained unchange

d with the Risk Grades being maintained

(

detailed in note 17.1).

The Risk Grade is assigne

d by the credit team based

on emb

edded risks asso

ciated with the loan p

rovided

and therefore the probability of a default which allo

for a nominal rating equi

valent to be allocated. The

credit team monitor incoming informa

tion on a monthly and quarterly basi

s adjusting the Risk Grade

appropriate, should credit risk

change over time. Factors li

kely to influence a change in

internal rating

include changes in financial performan

ce of position e.g. turnover and debt

to EBITDA or a change in

security quality e.g. LTV or recovery value. Other qu

alitative factors are also co

nsidered, which include key

staff departures, strength of financial

management and se

ctor cyclicality.

Discount rate

To calculate the FV discount rate the

Company consi

ders the following waterfall:

A direct comparable from a market observabl

e transaction interest rate where possible.

If performing position with no materia

l credit change, the Company will adj

ust the rate by the

change in the relevant risk-free rate and any app

priate macro-economi

c fa

ctors that impact the

rate.

The corresponding

rate from the FV Discount Matrix (as outlined b

elow) based on generi

c funding

rates for the v

arious secto

rs.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.3 Financial Assets (Continued)

Discount rate (continued)

When determining market observabl

e rates, the Company will review re

cent transactions, where availabl

for performing debt, examine the

relevant risk-free ra

in the currency/jurisdi

ction of the facility against the

relevant 5-year risk free rate; and review refinan

cing

rates used in compara

ble transactions

observed.

Where the Company has identified a di

rect comparable market ra

te, this rate is used in pref

erence to the

matrix rates presented below.

Fair Value Discount Matrix

Risk

Grade

Realisable -

Assets

collectable and

saleable within a 1-3

month window with a

transparent

marketplace

Fixed Asset -

Assets

movable and saleable

within a 4-12 month

window with some

marketability

Project Finance -

Fixed assets with

limited resale

opportunity

High Risk -

Non-

typical facility either no

assets or limited

enforcement

opportunities

Discount rate (%)

6.0%

7.0%

8.0%

n/a

7.0% 8.0% 9.0% n/a

8.0%

10.0%

n/a

10.0% 12.0% 15.0% 20.0%

E.g., Helicopter,

Vessel etc.

E.g. Printing Press,

removable machinery

E.g. Facility under

construction

Non-typical facility –

subordinated debt,

insurance capital

Cash flow

The Company makes assumption

s on the expected future

cash flows, taking

consideration of

the expected

time to realise these expected cash flows for ea

ch position as pa

rt of the valuation process.

Discounted projected cash flow models are carried ou

t, adjusted f

or any likely delay in payment, based on

credit reviews carried out (in line with Risk Grade

s) and probability based

outco

mes based on historic

evidence and other market data inputs, as deem

ed appli

cable. Where more than one possibility is

reasonably likely, the Company

will assign probabi

litie

s to these outcomes to create a wei

ghted average

value.

Each quarter, expected projected ca

sh flows are updated to take into con

sideration latest available

information.

The fair value process is carried out on a quarterly

basis to update the valuation of each position held,

taking into consideration the Risk G

rades, amortisation, time passed and

changes in expect

ed cash flow

expectations, if any.

Refer to note 9.1 for further details on the significant estimates applied in the valuation of the Comp

any’s

financial instruments measured at fair value.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.4 Finance Lease and Hire Purchase Inv

estments

The Group, as lessor, categorise

s finance leases

and hire purchase investment

s as lease arrang

ements

where the terms of the lease transfe

r substantially all risks and reward

s of ownership to the lessee (in

accordance with the requirements of IFRS 16 - Le

es). Hire purchase inve

stments include a purchas

option exercisable by the lessee

upon

fulfilment of specified cond

itions.

Under such arrang

ements, at the

commencement of the lease term, the Grou

p records

finance lea

se and hire purchase investment

s in the

Statement of Financial Position as a receivable, at an

amount equal to the net investment in the lease.

The net investment in the lease is equal to the gr

oss i

nvestment in the lease

(minimum lease payment

receivable by the Group

under finance lease an

hire purchase investments plu

s any unguarante

residual value accruing to the Gro

up) discounted by

the interest rate implicit in the lease.

On subsequent measurement, the Grou

p splits the

minimum p

ayments received under the l

ease between

finance income and reduction of the lease receivable.

The Group applies the principles of IFRS 9 to

lease receivable

s with respect to FVTPL.

Residual Value on Finance Lease

The unguaranteed residua

l value on finance leases is calc

ulated

by estimating the fair market value of the

leased assets less the lease

payments from the lessee.

Estimates of market value are based on a number of as

sumptions including, but not limited to, the in-place

value of the equipment or assets to

the end-user, the se

condary market value of similar a

ssets and

equipment, the replacement co

st of the asset or equi

pment includi

ng the cost of de-installation and re-

delivery, and the Company’s and AIFM’

s own assu

mptions based on historical ex

perience.

2.5 Property, Plant and Equipment

Property, Plant and Equipment comprises op

erating

leases, which the

Group categori

ses as a lease

arrangement in which a significant por

tion of the risks and reward

s of owne

rship are retain

ed by the lessor

(in accordance with the requirem

ents of IFRS 16 - Leases).

Property, Plant and Equipment was me

asured at net r

eali

sable value given that the Audited Con

solidated

Financial Statements were prepared on

a basis other than going co

ncern. Net realisable value represented

the estimated selling price less all

estimated costs of

disposal. An impairm

ent loss is recognised if

the

carrying amount of an asset exceeds its recovera

ble amount.

All Property, Plant and Equipment was sold during the

year, refer to note 8 for further information.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.6 Income

Income is recognised to the extent that it is probabl

that economic benefits will flow to the G

roup and can

be reliably measured.

For financial assets measured at FVTPL, interest income is re

cognis

ed by applying the effective interest

rate to the fair value.

For financial assets meas

ured at amortised cost, intere

st income is calcul

ated by applying the effective

interest rate to the gross carrying amou

nt of a financial asset.

2.7 Expenses

Expenses are recognised i

n profit or loss in the Co

nsolidated Statement of Comprehensive Income on an

accruals basi

2.8 Dividends Payable

The Group pays dividends to shareholders subj

ect to t

he solvency test prescribed by Guernsey Law. The

Company recognises a liability for dividend

s payable a

fter a dividend h

as been approved b

y the Directors

and there is an obligation on the Company to make th

e payment.

2.9 Cash and Cash Equiv

alents

Cash and cash equivalent

s comprise cash at bank,

and dep

osits held at call with banks. Cash equival

ents

are short-term, highly liquid investments that are r

eadily convertible to known amount

s of cash and are

subject to insignificant risk of change

s in value.

2.10 Taxation

Profits arising in the Company and the

Subsidiaries are

subje

ct to tax in Guernsey at the standard rate of

0%.

SQN Ireland is a qualifying Company wit

hin the meani

ng of Section 110 of the TCA (Taxes Consolidation

Act 1997). As such, the profits are

chargeable to corporation tax under Case III of Schedule D at a rate of

25%, but are computed in accordance

with the provisions applicable to Case I of Schedule D of the TCA.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

2. Accounting Policies (Continued)

2.11 Equity Holdings

Equity holdings are measured at fair

value which is the same as the

net realisable value given that the

Audited Consolidated Financial Statements are

now

prepared on a basis othe

r than going concern.

For the year ended 30 June 2022, In accordan

ce with

IFRS 9, investment in the shares was me

asured

initially at cost and subsequently at fair value through profit or loss, taking into account all information

available including possible future cash

flows, progress

of the projects a

nd any call options available to the

developer.

Refer to note 9.1 for further information.

3. Material Agreements and Related Party Transactions

(a) Investment Managemen

t Agreement (the “IMA”

)

The Company’s investment

s were managed by the P

ortfolio Manager up to 31 De

cember 2021. Un

der the

terms of the IMA dated 6 June 2020, the Comp

any appoint

ed the Portfolio Mana

ger to provide discretionary

investment management services to the Compan

y, subject to the oversight of the AIFM.

Ordinary Shares

For the period 1 July 2020 to 31 Decem

ber 2020, t

he Portfolio Manager was entitled to a management fee

of 1% of NAV (as the Company’s NAV was below £3

00 million). From 1 Janua

ry 2021 to 30 June 2021, the

Portfolio Manager was entitled to 0.96% of the Ordina

ry Share NAV.

2016 C Shares

For the period 1 July 20

20 to 16 July 2020, the Po

rtfolio Manager was entitled

to a management fee of

of NAV (as the Company’s

NAV was below £300 million).

From 17 July 2020 to 30 June 2021, the Portfolio Manag

er fee for the 2016 C Shares was calculate

d by

segregating the portfolio into performing

and non-performing assets. The split b

etween performing and non-

performing assets wa

s based on the position as at 31 March 2020.

The performing assets were subj

ect to a managemen

t fee of 1.0% of NAV per annum. The non-performing

assets were subject to a lower management fee

of 0.75% of NAV per annu

m plus a performance fee

calculated on the realised capital value of the non-

rforming assets. No performance fee has bee

n paid or

is payable to the Portfolio Manager.

Portfolio Manager Fee Cla

back

For the period 1 July 2020 to 31 December 2

020,

the Portfolio Manager received their fee based on the

published NAV as at 30 Ju

ne 2020. The Audited Consolid

ated Financial Statements for the year e

nded 30

June 2020, which were signed off in January 2021, incl

uded additi

onal ECL provisions, which resulted in an

overpayment being mad

e to the Portfolio Manager.

at 30 June 2022, the remaining

clawback was £nil

(30 June 2021:

£313,733).

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

3. Material Agreements and Related Party Transactions (Con

tinued)

Amendment and Termination of the IMA

The IMA between the Co

mpany, the Portfolio Manager a

nd the AIFM was ame

nded and the IMA terminat

with effect from midnight on 31 Decemb

er 2021.

The key terms of the amended IMA are set out below



Management fees payable by the Company to the

Portfolio Manager of: (i) £2

30,000 for the month

of July 2021; and (ii) £218,500 per mont

h from 1 August 2021 to 31 Decemb

er 2021;



A payment of £100,000 in total payable by the Com

pany to the Portfolio Manager conditional on the

publication of the Company's Annual Report and A

udited Consolidated Financial Statements for the

year ended 30 June 202

1 and the continued prov

ion of certain employees' services to the

Company to 31 December

2021;



The clawback arrangement being cancelled with

effect from 1 July 2021. The amount outstanding

of £313,733 was cancelled on 1 July 2

021; and



The Company will not be required to make any payment to the Portfolio Manager for the termination

of the IMA within the first 36 months of the

Portfolio Manager's appointment (where the IMA

currently states that the Company would be requ

ired to reimburse KKV for certain costs that the

Company would otherwis

e have incurred in co

nnect

ion with the transfer

of the management

contract to the Portfolio Manager in June 2020).

During the year ended 3

0 June 2022, a com

pensati

on payment of £100,000 was paid

to the Portfolio

Manager because the conditions detaile

d above were met.

The Portfolio Manager fee was payable monthly in

arrears and allocated bet

ween the Ordinary and 2016 C

share classes based on the

previous quarters NAV.

Fees Paid to the Portfolio Manager

During the year ended 30 June 2022

, fees paid to

the Portfolio Manager amounted to £1,422,496,

excluding the clawback of £313,733, which was

cancelled during

the period (year ended 30 June 2021:

£1,978,999). At 30 June 2022, no

management fees were

payabl

e to the Portfolio Manager

(30 June 2021:

198,494).

The Portfolio Manager did not receive any ot

her fees

during the year ended 30 June 2022.

(b) Administration Agreement

The Company has engaged the se

rvices of the design

ated Administrator to provide ad

ministration and

custodian services. The Administrator is

entitled to receive:



an annual administration fee based on the Group’

s gross issue p

roceeds on a tiered perce

ntage

basis for the period 1 July 2020 and 28

February 2021. The administration fee wa

s amended with

effect from 1 March 2021 to a fixed annual fee of £300,000;



an annual fee of £36,000 for performing the function of Company Secreta

ry plus fees for ad-hoc

Board meetings;



an annual fee of £10,000 for the provision of complia

nce services; and



an annual fixed fee of £5,000 for each Guern

sey Su

bsidiary (

up to seven Gu

ernsey subs

idiaries)

Link Market Services (Guern

sey) Limited and the

Company entered into a Regi

strar Agreement on 30

November 2020, with a fixed fee of

£23,750 per annu

m for the period 1 Ja

nuary 2021 to 31

December 2023.

Link is also entitled to a fee of £12,0

00 for each capit

al return and the issuance and imm

ediate redemption

and cancellation of B and D shares.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

3. Material Agreements and Related Party Transactions (Con

tinued)

(d) Broker Agreements

Winterflood Securities Limited are e

ntitled to

an annual brokerage and a

dvisory fee of £45,000 and

commission fees of 1% and 0.1% of the gross value

of any share issues and re

purchases respectively.

(e) AIFM

The Company has engaged the services of the AIFM, t

he AIFM is responsible for managing the Compa

ny’s

investments and the risks it faces in a

ccordance with AI

FMD, subject to the overall

scrutiny of the Board.

The AIFM is entitled to receive a minimum annu

al managem

ent fee of £85,000.

The Group may also

reimburse the AIFM for documented expenses in

the proper p

erformance of its duties.

The Group has paid the AIFM fees with effect from 1

October 2021

, the fees having previously been paid by

the Portfolio Manager.

In addition, the AIFM will also provid

e Key Informati

on Document Services and re

ceives an annual fee of

£12,000.

Share Interest

The table below details the Ordinary Share

s and 2016 C Shares held by the Di

rectors in the Company:

30 June 2022

30 June 2021

Director Number

Ordinary Shares

Number of 2016

C Shares

Number of

Ordinary Shares

Number of 2016

C Shares

David Copperwaite

410,000

Brendan

Hawthorne

- - -

Brett

Miller

- - -

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

3. Material Agreements and Related Party Transactions (Con

tinued)

SQN Irelan

Certain investments in the loans and construction finan

ce investment categories as disclosed in note 9.

have been invested through SQN Ireland. SQN Irel

and purchased investmen

ts by issuing bonds to the

Group. As at 1 January 2022, SQN Ireland ha

s been deemed to

be under the control of the Group an

results of SQN Ireland consolidated as part of the Audi

ted Consolidated Financial Statemen

ts for the year

ended 30 June 2022 (refer to Note 2.1(f)).

The Group had the following amounts i

nvested through SQN Ireland as at 30 June 20

21:

Maturity date of

Investment as at

30 June 2021

Fair value as at

30 June 2021

31/12/2021 521,628

30/07/2022 16,956,122

31/12/2021 1,982,885

n/a

3,891,315

31/12/2021 1,206,873

23/02/2021 19,798,249

25/05/2023 4,192,339

31/12/2021 11,557,557

31/12/2021 4,678,419

31/12/2021 4,072,732

31/12/2021 4,737,690

31/12/2022 3,435,615

30/04/2029 4,931,232

81,962,656

Matured during the year ended 30 June 2021.

From 6 June 2020 to 31 December 2

021, the Portfolio Manager acted as investment manager to SQN

Ireland. From 1 January 2022, the Com

pany has acted as the investment

advi

sor to SQN Ireland. Refer to

note 2.1 (e) and 2.1 (f) for furthe

r information on t

he consolidation of SQN Ireland into t

hese Audited

Consolidated Financial Statements

with effect from 1 January 2022.

Incentive plan

Shareholders at the AGM held on 29 November 202

1 approved an incentive plan (the “Ince

ntive Plan”).

The structure of the Ince

ntive Plan is for a bonus pool to be cre

ated for the Board (excluding David

Copperwaite as the indep

endent Dire

ctor), employe

es and consultants

of the Company (both pre

sent and

future) comprising cash

equivalent to 1.4% of the ag

gregate funds di

stributed to sharehold

ers since 1 Jul

2021 for a period up to 31 Decemb

er 2023, following whi

h the amount shall fall to

1.0% of aggregate funds

distributed to shareholders

for the period from 1 January 2024 to 30

June 2024 and will thereafter re

duce by

a further 0.2% every 3 months (the

"Bonus Pool"). The preci

se allocation of the Bonus Pool will be at the

discretion of the Board, subject

to the approval of the independent Di

rector. The Board wi

ll not distribute

more than 50% of the Bonus Pool

until the net assets

of the Co

mpany fall below £20 million a

nd no part of

the Bonus Pool will be paid out until a minimu

m of £80 million has been

returned to shareholders

cumulatively since 1 July 2021. The Bonu

s Pool has been capped a

t £2.3 million.

For the year ended 30 Ju

ne 2022, an incentive fee expen

se of £2,266,001 (30 Jun

e 2021: £nil) ha

s been

accrued.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

3. Material Agreements and Related Party Transactions (Con

tinued)

Transactions with the Directors

Bonus payments

At the AGM held on 29 November 2021, shareholders

approved

a one-off cash bonus of £280,000 to the

Directors, payable in such

proporti

ons as the Di

rectors

determine to

recognise their a

chievements to 30

June 2021, in achieving the aims of the Comp

any’s

investment objective of a managed wind down.

The Board voluntarily agreed to split

the bonus into two part

s, with the first half paid immediately and the

second half deferred until the earlier of 1 January 20

23 or the date at which a further £30 million has been

returned to shareholders. This has bee

n pai

d after the year end (refer to note 18).

Directors’ rem

uneration

During the year ended 30

June 2022, total Directors’

remu

neration, including e

xtra services wa

s £862,606

(30 June 2021: £496,465) and include

d consultancy

fees of £300,000 (30 June 2021: £195,000) paid to

Brett Miller and a £280,000 (31 June 2021: £nil) bonus

payment due to the Directors, of which £140,000

was paid to the Directors during the year (see ab

ove)

. Directors’ fees accrue

d but unpaid as at 30 June

2022 were £140,000 (30 June 2021: £

nil), which relates to the second half of the bonus payment. Refer to

note 18 for details of the bonus payment paid post ye

ar-end.

Effective 1 December 2021, David Copperwaite’

annual fee increased by £30,000 pe

r annum, as he was

appointed as the independ

ent Director in regard to the

Incentive Plan and will not be eligible to benefit from

the Incentive Plan.

4. Other Operating Expenses

Year ended

30 June 2022

Year ended

30 June 2021

Administration and secretarial fees (refer to note 3(b))

419,082 525,005

Audit fees

173,790 183,000

Non audit related services

fee

- 25,000

Brokerage fees (refer to note 3(d))

109,664 48,620

Public relation fees

- 32,039

Registrar fees (refer to note 3(c))

73,819 24,426

Legal fees

498,122 585,708

Professional fees

162,894 216,701

Transaction fees

50,000 114,395

Other expenses

177,979 91,934

Investment valuation fees

196,856 515,947

Employee remuneration

245,490 -

Consultancy fees

682,781 -

AIFM fees

85,393 -

Irrecoverable withholding tax

103,832 -

Total

2,979,702

2,362,775

Audit fees of £173,790, include £47,

000 of overrun fees on the

audit

of the Annual Report and Audited

Consolidated Financial Statements for

the year

ended 30 June 2021 (3

0 June 2021: £183,000, inclu

ding

£95,000 of overrun fees). There we

no non-audit related services provide

by the Auditor during the year

ended 30 June 2022. In the year ended 30 Jun

e 2021, non-

audit related se

rvices of £25,000 related to the

review of the Half-Yearly Report and Unaudited

Cond

ensed Consolidated Financial Statements.

Legal fees in the sum of £150,036 (30 June 2021: £94,

416) relate to the Suniva investment.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

4. Other Operating Expenses (Contin

ued)

Employee remuneration is relating to

an employee providing operational

support and Dawn

Kendall

(whose

employment ended on 21 April 2022)

who transferred from

the Portfolio Manag

er to the Company by virtue

of the TUPE on 1 January 2022. The

employee remune

ration expense in

cludes wage

s, payroll taxes,

contributions to defined contribution

pension pl

ans, termination of employment expenses and

reimbursement of expenses approved b

y the Board.

Consultancy fees relate

to the fees paid to th

e four Consultants from 1 Janua

ry 2022, including

reimbursement of expenses approved

by the Board.

Consultancy fees al

so include a project commi

ssion,

due on the consultants upon meetin

g ce

rtain criteria in assisting

with

the wind down of the Comp

any. For

the year ended 30 June 2022, a p

roject commission

provision of £309,16

0 (30 June 20

21: £nil) was

accrued for.

5. Basic and Diluted (Loss)/Earnings per Share

30 June 2022

Ordinary Shares

2016 C Share

Total comprehensive (loss)/incom

e for the year

£(2,615,318)

£1,418,122

Weighted average number of shares in i

ssue during

the year

355,975,669

138,924,222

Basic and diluted (loss)/earning

s per share

(0.73)p

1.02p

30 June 2021

Ordinary Shares

2016 C Share

Total comprehensive income for the year

£1,803,783

£13,252,607

Weighted average number of shares in i

ssue during

the year

355,975,669

138,924,222

Basic and diluted loss per share

0.51p

9.54p

6. NAV per Share

30 June 2022

Ordinary Shares

2016 C Shares

NAV £62,067,375

£26,100,616

Number of shares in issue

at year end

355,975,669

138,924,222

NAV per share

17.44p

18.79p

30 June 2021

Ordinary Shares

2016 C Shares

NAV £93,238,382

£82,953,032

Number of shares in issue

at year end

355,975,669

138,924,222

NAV per share

26.19p

59.71p

On 1 September 2021, the 1,731,838 Or

dinary Shares held in

treasury were cancell

ed. No Ordinary Shares

or 2016 C Shares were held in treasu

ry as at 30 June

2022. The number of Ordinary Shares

in issue as at

30 June 2021 is presented after dedu

ction of 1,731,838 treasury share

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

7. Segmental Reporting

There are two reportable segments as at 30 June 2

022: Ordinary Shares a

nd 2016 C Shares. Each Share

Class has its

own portfolio, is listed se

parately on

the Main Market of the Lon

don Stock Exchange and the

Directors review the investment held in each segmen

t separately.

The Directors view the operations

the two reportable segme

nts as one operating segment, being

investment business and both segmen

ts have the same

investment objectives as at 30 June 2022. All

significant operating de

cisions are base

d upon analys

is of the Gr

oup’s investments as on

e segment. The

financial results from this segment are e

quivalent to

the financial results of the Group as a whole.

The tables below provide a breakdo

wn of the condens

ed consolidat

ed statement of comprehe

nsive income

between the reportable segments:

For the year ended 30 June 2022

Ordinary Shares

2016 C Shares

Total

£ £ £

Total income

6,064,371

3,624,247

9,688,618

Net realised and unrealised loss

(4,076,6

61)

1,035,385

(3,041,276)

Total operating expenses a

nd incentive

plan expense

(4,603,028)

(3,241,510)

(7,844,538)

Total comprehensive income for the

year

(2,615,318)

1,418,122

(1,197,196)

For the year ended 30 June 2021

Ordinary Shares

2016 C Shares

Total

£ £ £

Total income

13,076,138

7,992,502

21,068,640

Net realised and unrealised loss

(24,66

7,596)

3,405,435

(21,262,161

)

Total operating expenses (excludi

ng ECL)

(2,007,9

00) (1,729,239) (3,737,1

39)

Total comprehensive income for the

year

1,803,783

13,252,607

15,056,390

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

7. Segmental Reporting (Continued)

The tables below provide a breakdo

wn of the con

densed

consolidated statement of financi

al position

between the reportable segments:

30 June 2022

Ordinary Share

2016 C Share

Total

£ £ £

Investments and other receivable

s and

prepayments

55,928,528

16,518,986

72,447,514

Cash and cash equivalents

7,717,975

10,956,858

18,674,833

Total current assets

63,646,503

27,475,844

91,122,3

Current liabilities

(1,579,129)

(1,375,227)

(2,954,356)

Net

assets

62,067,374 26,100,617 88,167,991

Equity

62,067,374 26,100,617 88,167,991

30 June 2021

Ordinary Share

2016 C Share

Total

£ £ £

Investments and other receivable

s and

prepayments

81,024,192

70,324,471

151,348,663

Cash and cash equivalents

12,569,057

12,781,886

25,350,943

Total current assets

93,593,249

83,106,357

176,699,606

Current liabilities

(354,867)

(153,325)

(508,192)

Net assets

93,238,382

82,953,032

176,191,414

Equity 93,238,382

82,953,032

176,191,414

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

8. Property, Plant and Equipment

The carrying amount is detailed in the table below:

30 June 2022

30 June 202

Cost

£ £

Opening balance

15,775,272

Disposals during the year

(15,775,272)

Closing balance

15,775,272

Accumulated depreciation

and impairment

Opening balance

(13,706,663)

(14,807,763)

Disposals during the year

13,706,663 -

Impairment release during the year

1,101,100

Closing balance

(13,706,663)

Net realisable value

2,068,609

All PPE investments were sold during the year, £2,

019,

195 was received which resu

lted in a realised loss

on disposals of £49,414.

9. Financial Instruments

9.1 Fair Value Investments

The Group’s accounting policy on fair value mea

surements is discussed in note 2.3(c).

The Group measures fair values using the following fair

value hierarchy that reflects the si

gnificance of the

inputs used in making the measurements:

Level 1: Inputs that reflect unadjuste

d price quotes in acti

ve markets for id

entical asse

ts or liabilities that th

Group has the ability to acce

ss at the measurement date;

Level 2: Inputs that reflect

price quotes of similar assets and liabilities

in active

markets, and price quotes of

identical assets and liabilities in ma

rkets that are con

sidered to be less than a

ctive as well as inputs other

than price quotes that are observ

able for the asset or liability eit

her directly or ind

irectly; and

Level 3: Inputs that are unobserv

able for the a

sset or liability and refl

ect the Company’s own assumptions

based upon experience of similar assets and/or on th

ird party appraised values. This category in

cludes

instruments that are value

d based on price quote

s for

which the inputs a

re unobservable

or price quotes for

similar instruments fo

r which significant unob

servable

adjustment

s or assumptions are req

uired to reflect

differences between the instrum

ents.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.1 Fair Value Investments (Continued)

For financial assets not carried at a

mortised cos

t, the Company determines fair value

using valuation

techniques approved by the Dire

ctors.

An assessment is made at each repo

rting date for any

events or cha

nges in circumst

ances that cause

d a

transfer. Transfers betwe

en levels are deemed to have

occurre

d at the reporti

ng date. There were

transfers of investments between the Le

vels during the year.

The following table details the Group’s f

air value hierarchy.

30 June 2022

Level 1

Level 2

Level 3

Total

Financial assets

Investments designated at FVTPL

Lease

participation

Loans and other investments

Finance lease and hire purchase

investments

497,445

47,354,490

24,256,673

497,445

47,354,490

24,256,673

Finance lease residual val

111,979

Total financial assets

72,220,587

30 June 2021

Level 1

Level 2

Level 3

Total

Financial assets

Investments designated at FVTPL

Lease

participation

Loans and other investments

Finance lease and hire purchase

investments

860,833

111,759,233

36,143,681

860,833

111,759,233

36,143,681

Finance lease residual val

101,859

Total financial assets

148,865,606

Investments designated at FVTPL

Loans and other investm

ents

The Group holds construction finance investment

s, which comprise initial dra

wings or advances made

under loan agreement

s, finance leases or hire pu

rchase agreements during a per

iod of procu

rement or

construction of underlying assets (the “Const

ruction

Period”). Du

ring the Construction Peri

od, interest or

similar service payments o

n the advances may be paid or (m

ore usually) rolled-up and ca

pitalised on expiry

of the Construction Perio

d, typically when t

he assets have b

een commissioned a

nd (if applicable)

commercial operations have com

menced. Followin

g t

he expiry of the Construction Peri

od, construction

finance investments are converted into

either loans, finance lea

ses or hire purchase an

d reclassified in the

Audited Consolidated Financial Statements to the

loan

s, finance lease and hire

purchase investm

ent

categor

ies.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.1 Fair Value Investments (Continued)

Investments designated at FVTPL (Continued

)

Loans and other investm

ents (Continued)

The amortisation period (in the case of

a loan) or leas

e/hire term (in the case of a finance lease or hire

purchase) commences at the end of the Constructi

on Period and the servi

ce payments or lease/hire

payments rentals are calculated by re

ference to the total advance

s during the Construction Period

plus

interest accrued (if not paid). In the case of a fi

nance lease, the advances (

and accrued interest) are

repayable in full if a default or insolvency event o

ccurs or if the Construction

Period has not ended by a

specified longstop date.

Included in loans and other investments,

is a debtor-i

n-possession financing prov

ded by the Group for a US

solar manufacturing co

mpany, in order to protect the Grou

s interest in the equipment that secures its loa

US$2.44 million remained outstan

ding as at 30 June 2022 (e

quivalent to £2.01

million). A fair value of £nil

has been applied to this amount given the materi

uncertain timing and quantum of outcome

s possible.

Finance lease and hire purch

ase investments

The Group’s investments inclu

de a portfolio of leases of plant and machinery leased unde

r finance lease

agreements that transfer substa

ntially

all the risks and rewards incidental to o

wnership to the lessee and i

hire purchase agreements that incl

ude a purchase option exercisabl

by the lessee upon fulfilment of

specified conditions. Under these agre

ements, the lessee p

ays periodic rent

for the use

of the assets for a

fixed or minimum initial term of typically 3 to 10 y

ears. At the

end of the fixed or minimum term, the lessee

can typically elect to:



return the asset to the Group;



in the case of hire purchase, exercise an option to

purchase the assets, typically at a ‘bargain’ price;



extend the lease for a further minimum

term or from year to year on paym

ent of a pre-agreed rent

(which is typically substantially lower than

the rent paid during the initial term); or



arrange a sale of the asset to a third party and (typ

ically) receive all or the majority of the proceeds

of sale. Legal title to the leased assets remains with the Gro

up at all times prior to such sale.

Up to 31 December 2020, the Group applied the Expec

ted

Credit Loss (“ECL”) requirem

ents in IFRS 9 and

utilised the ECL model. During the y

ear ended 30 Jun

e 2022, no ECL (y

ear ended 30 Jun

e 2021:

£18,987,050) has been provided fo

r in the Audited Cons

olidated

Financial Statements as investment

s are

designated at FVTPL.

Lease Participation

The Lease Participation investment repr

esents a single

participation investment in a portfolio of leases. The

investment is held in a special purpose vehicle (“

SPV”) company that owns a numbe

r of aging helicopter

assets.

The investment has a fair value of £49

7,445 as at 30 June 2022 (30 June 202

1: £860,833).

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.1 Fair Value Investments (Continued)

Investments designated at FVTPL (Continued

)

Finance lease residual value

Assets leased to third parties under fin

ance leases had an ung

uaranteed residual value

at the end of the

year of £111,979 (30 June

2021: £101,859).

During the year ended 30 June 2022

, no residual inve

stments were sold (30 June 2021: two resid

ual

investments were sold for £36,61

0).

Equity Holdings

Refer below for the Company’s sh

areholding in each

equity holding held:

30 June 2022

30 June 2021

Equity

Holding

15%

25.5%

20% 20%

45%

51%

100%

The Board have reviewed each equity holding position

and do n

ot believe that any of the equity holding

positons held by the Group qualify for equity method ac

counting under IAS 28 – Investment

s in Associates

and Joint Ventures (“IAS 28”). The Board have judged t

hat the Group does not have significant influen

ce,

being where the Company has the power to participat

e in

the financial and operating policy decisions of the

equity holdings, but not control them. Details

of each equity holding are outlined below.

The Company and the AIFM monitor the fair value

of the equity holdings and

review the relevant

information available. As at 30 June 2022, the companie

s the Group holds equity in are not meeting

expected operating or financial

performance levels and t

he Board

believe that the net realisa

ble value of all

the above detailed equity holdings throu

ghout the year and as at 30 June 2022 is

£nil (30 June 2021: £nil).

Equity Holding 1

Following a review of the capital positio

n in one of it

s investment

s held by the Group, it received an e

quity

holding in the underlying company. Th

e Group holds

junior equity, based on the sale price of t

he underlying

asset and after senior debt has be

en repaid, any remaining value wi

ll go to senior equity.

The Group has not accounted for this equity holding us

ing IAS 28 as it holds less than 20% of the equity

and does not have significant influence.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.1 Fair Value Investments (Continued)

Equity Holding 2

The Group holds a minority shareholdi

ng in an investee

company

in consideration for a facility increase.

The Group has not accounted for this equity holding us

ing IAS 28 as it holds less than 20% of the equity

and does not have significant influence. The shares

were disposed of for £1 in April 2021.

Equity Holding 3, 4 and 8

The Group has provided asset finance fa

cilities in the form of constr

uctio

n finance and hire purchase

investments to three AD plants.

In addition to these finance arrangements, the Group

acquire

d an equity holding in each investee company.

The terms of the shareholder agre

ement included

an option

(the “Call Option”

), exercisable by the

developer upon or following full repaym

ent of the asse

t finance/loan, to purchase the Group

’s shares at a

price that will produce a maximum 12%

per annum retu

rn on capital to the Group, taking a

ccount of both

interest paid under the debt facilities

and (if applicabl

e) any dividends, assu

ming each project is fully

delivered.

The equity holdings do not qualify for equity meth

od accounting

under IAS 28, although t

he Group holds

greater than 20% of the voting po

wer in each

of th

e investees, the Board judg

e that the Group does not

have significant influence due to the following factors for each inve

stment:



The equity holdings can be bought back at the

developer’

s discretion once conditions per the

shareholder agree

ment are satisfied.



The return is fixed at a maximum of 12% per annum acro

ss the entire investment (loan and

shares). If the investment performs better than ex

pected, the developer

will

exercise the option to

purchase the shares at the agreed p

rice and ther

efore the Group has no realisti

c chance of

participating in residual val

ue.

During the year, no Call

Option was exercised by

the developers (30 June

2021: no Call Option was

exercised by the developers).

Equity holding 8 was disposed of during the year.

Equity Holding 5

The Group holds an effe

ctive 20% (30 June 2

021: 20%)

shareholding in a holdi

ng company. The G

roup has

not accounted for these equities using IAS 28

as the Board have judged the Group doe

s not have

significant influence.

Equity Holding 6 and 7

The Group holds an effective 45% shareholdi

ng in two holding companies. T

he Group has not accounted

for these equities using IAS 28 as the Board have ju

dged the Group

does not have signifi

cant influence.

Equity Holding 9

The Group holds an effective 100% sha

reholding in

a holding company. The Group ha

s not accounted for

these equities using IAS 28 as does not have benefic

ial ownership of the shares and they are held for

security only. In addition, the Board have j

udged the Group does not have signifi

cant influence.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.1 Fair Value Investments (Continued)

Level 3 reconciliation

The following table summarise

s the changes in the fair value of the Group’s Level 3 investme

nts designated

at fair value through profit or loss:

30 June 2022

30 June 2021

£ £

Opening balance

148,865,606

127,557

Transfer in arising from reclassification o

n 1 January 2021

217,727,709

Fair value adjustment as at 1 Janu

ary 2021 due to reclassification

2,987,406

Purchases during the year

100,000

6,468,934

Sales during the year

(72,963,900)

(65,266,348)

Unrealised loss on revalua

tion of

investments (4,529,380)

41,949,036

Realised gain on investments

748,261

(55,128,688)

Closing balance

72,220,587

148,86

5,606

Information about the Secondary

Market for Level 3 Investments

Lease participation, loans,

construction finance,

finance lea

se and hire purchase

investments

The fair value of “loans and other invest

ments” and “f

inance lease

and hire purchas

e” investments is based

on two key inputs being the expecte

d cash flows from

the facility including any appropri

ate adjustment in

timing to realise these ca

sh flows and an appro

priate di

scount rate. Refer to note

2.3(c) for further detail

and FV discount matrix and below for sensitivity anal

ysis to significant changes in

unobservable inputs

within Level 3 hierarchy.

When examining target returns sought

by privat

e debt funds, the Company has examined a number of

public data sources. By nature, Priv

ate Debt is not publi

cly disclosed

, however, a numbe

r of consultants

and market participants share typical

ranges within sect

ors that ties into the Company’s experience from

market studies completed histori

cally.

Finance lease residual

value

The Company makes a

ssumptions about the residu

al value of certain assets and equipme

nt. This assumed

cash flow is typically a minor part of the assumed ca

sh flows from

the investment. In determining the cash

flow, we will review contra

ctual terms that may limit

any payment and con

sider market observable inpu

relating to percentages of value retained.

As determined by the Company, the resi

dual value is a f

unction of

the in-place value and/or the second

ary

market value of the equipment or asset

The in-place value is an assessment of the value of

the equipment or assets if

the equipment or assets

were to continue to operate and provide

value to the end-

user. This takes into a

ccount the marginal cost of

keeping the asset in place as

well as the cost to the end-u

ser of decommissionin

g, redelivering, and

replacing the equipment. In som

e cases, this amount (or a maxim

um value) is negotiated in

advance with

the end-user.

The secondary market value is determined utilisin

the Company’s historic

al experience, quotes f

rom

dealers, third party apprai

sals and recent sales. Th

secondary

market value also takes i

nto account the

geography of the equipment or assets, the timeframe requi

red to conduct a sale, and the associated cost

that are not passed on to the end-use

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.2 Valuation Process

The following table provides information

about fair

value measurements and key

unobservable inputs with

respect to each category of financial assets desi

gnated at fair value through profit or loss:

30 June 2022

Description

Fair Value

Valuation Techniques

Unobservable Inputs

Lease participation

497,445

Discounted cash flow

Expected cash flows and

discount rate

Loans 33,875,154

Discounted

cash

flow

Expected cash flows and

discount rate

Construction finance

13,479,336

Discounted cash flow

Expected cash flows and

discount rate

Finance lease

18,645,391

Discounted cash flow

Expected cash flows and

discount rate

Hire purchase

5,611,282

Discounted cash flow

Expected cash flows and

discount rate

Finance lease residual

value 111,979

Discounted cash flow

Future cash flow

s resulted from

leases modifications and

discount rate

Equity holdings

Discounted cash flow

Discount rate and EBITDA

growth rate

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.2 Valuation Process (Continued)

30 June 2021

Description

Fair Value

Valuation Techniques

Unobservable Inputs

Lease participation

860,833

Discounted cash flow

Expected cash flows and

discount rate

Loans

97,379,790

Discounted cash flow

Expected cash flows and

discount rate

Construction finance

14,379,443

Discounted cash flow

Expected cash flows and

discount rate

Finance lease

28,369,614

Discounted cash flow

Expected cash flows and

discount rate

Hire purchase

7,774,067

Discounted cash flow

Expected cash flows and

discount rate

Finance lease residual

value

101,859

Discounted cash flow

Future cash flow

s resulted from

leases modifications and

discount rate

Equity holdings

Discounted cash flow

Discount rate and EBITDA

growth rate

Sensitivity Analysis

The table below provides the valuation basis of financi

al assets designated at fair value through profit or

loss, being the summation of contractual future

cash flows, offer/settlement agree

ment and expert

valuations:

30 June 2022

30 June 2021

£ £

Contractual future cash flows

33,744,119

78,231,803

Offer/settlement agreement

6,358,005

32,137,002

Expert valuations

32,118,463

38,394,942

Total 72,220,587

148,763,747

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.2 Valuation Process (Continued)

Sensitivity Analysis (Continued)

The tables below detail sensitivity analysis on the

key unobservable inputs considering the disco

unt rate

and the expected cash flows from the facility including

any appro

priate adjustment in timing to realise these

cash flows with respect to the fair

value measurement of financial assets designated at fair

value through

profit or loss.

Discount rate

The Company has reviewed the current discount rates

compared with

the rates charged

at issue on the

transactions. After removing non-sta

ndard positions

rom the analysis, it was ascertai

ned that +1.75%/-

1.75% is a suitable sensitivity range for the discount rate

s. Refer b

elow for discount rate sensitivity analysis:

30 June 2022

30 June 2021

£ £ £ £

Increase

1.75%

Decrease of

1.75%

Increase of

0.5%

Decrease of

0.5%

Contractual future cash flows

(257,297)

720,874

(253,034)

332,084

Offer/settlement agreement

11,401

(13,689)

22,938

Expert valuations

(307,841)

409,372

(140,408)

189,182

Total (565,138)

1,141,647

(407,131)

544,204

Expected cash flow adjustment

For the purposes of determining the se

sitivity, the Company has reviewed

expected cash flow transactio

over the prior 12 months, against actual cash flow t

ran

sactions and identified that ca

sh flows achieved were

in line with cash flows expecte

d within an approximat

e 10% thre

shold. From this analysi

s, the Company

believes that a +10%/-10%

represents the majority o

f changes in

cash flows ex

perienced.

Refer below for

discount rate sensitivity analysis:

30 June 2022

30 June 2021

£ £ £ £

Increase

10%

Decrease of

10%

Increase of

10%

Decrease of

10%

Contractual future cash flows

3,993

(3,374,412)

698,122

(6,127,567)

Offer/settlement

agreement

n/a n/a n/a n/a

Expert valuations

715,56

(3,

211,846) 3,474,37

(3,839,494)

Total

719,558 (6,586,258)

4,172,492 (9,967,061)

Timings to realise expected cash flows

The Company has analys

ed historic transactions and i

dentified that settleme

nts are often delayed by 3-9

months. On this basis, the below sensitivity details

the impact on bringin

g forward settlements by 6 months

and extending by 6 months.

30 June 2022

30 June 2021

£ £ £ £

Increase

182 da

Decrease of

182 da

Increase of

182 da

Decrease of

182 da

Contractual future cash flows

(314,036)

313,938

Offer/settlement

agreement

n/a n/a n/a n/a

Expert valuations

(1,179,653)

1,245,033 (1,552,835)

1,643,579

Total

(1,179,653)

1,245,033

(1,866,871) 1,957,517

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

9. Financial Instruments (Continued)

9.2 Valuation Process (Continued)

Sensitivity Analysis (Continued)

No sensitivity analysis is provided o

n the finance lease

sidual value and eq

uity holdings as these amo

unts

are not material.

9.3 Net movement on investments

30 June 2022

30 June 2021

Net unrealised loss on revaluation of investment

(4,529,380)

31,368,641

Net realised gain on investments

748,261

(55,528,698)

Net realised loss on PPE (note 8)

(49,414)

Net movement on investments

(3,830,533)

(24,160,057)

10. Receivables

Other Receivables and Prepay

ments

30 June 2022

30 June 2021

Other receivables

37,611

Prepaid transaction fees

24,984

100,715

Portfolio Manager fee clawback

313,733

62,595 414,448

During the year, the Portfolio Manager f

ee clawback in the sum of

£313,733 was cancelled. Refer to not

e 3

for further information.

Investment Receivable

Investment receivable of £164,332 (30 June 2021: £

nil)

represent an amount due on the sale of a PPE asset

that remains outstanding at the reportin

g dat

e and was subsequently received post year-e

nd.

11. Other Payables and Accrued Expenses

30 June 2022

30 June 2021

Investment management fees

198,494

Administration and secretarial fees

30,085

Audit fees

88,290

47,500

Brokerage fees

8,382

8,068

Other payables

50,188

224,045

Director fees (bonus ac

crual, refer to note 3)

140,000

Consultancy fees

371,410

688,355 508,192

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

11. Other Payables and Accrued Expenses

(continued)

The Group has financial risk ma

nagement policies i

n plac

e to ensure that all payables are paid within the

credit time frame.

The Directors consider that the carrying amount of

all payables app

roximates to their fair value.

As at 30 June 2022, Consultancy fees included a pr

oject co

mmission accrual of £309,160 (30 June 2021:

£nil) has been recognise

d. Refer to note 4 for further details.

12. Commitments and Provisions

The Group had not committed to invest any furt

her amounts a

s at 30 June 2022 and 30 June

2021.

As at 30 June 2022, the Group had provisions in re

gard to the following:



The incentive plan in the sum of £2,266,001 (30 June

2021: £nil). Refer to note 3 for further det

ails.



A project commission payable to each consultant

of 50% of their annual

fee for meeting certain

criteria in assisting with the wind d

own of the Company. Refer to note 4 for furthe

r details.

13. Share Capital

The authorised share cap

ital of the Company is re

presented by an unlimited numbe

r of shares of no par

value which may be designated a

s Ordinary Shares, C Shar

es or otherwise as the Directo

rs may from time

to time determine. All shares hold equal rights with

no restrictio

ns and no shares carry special right

s with

regard to the control of the Com

pany. There are no sp

ecial right

s attached to the shares i

n the event that

the Company is wound d

own. In accordance with t

he Company’s articles, the Co

mpany holds separate

share class meetings, for both the Ordinary Shares and

the 2016

C Shares, at which shareholde

rs vote on

resolutions specific to each share class.

The 2016 C Share investments are accounted for and man

aged as a separate pool of assets in

accordance with the Company’s invest

ment policy. Shared expense

s, which relate to both classes are

split

between Ordinary Shares and 2016 C S

hares based on their respe

ctive NAV.

The Company’s share capi

tal is denominated in Sterling.

30 June 2022

30 June 2021

Number of Shares

in Issue

Stated Capital

Number of Shares

in Issue

Stated Capital

Ordinary Shares

355,975,669

286,

296,373 355,975,669

314,774,427

2016 C Shares

138,924,222

53,149,

539 138,924,222

111,497,712

Total 494,899,891

339,445,912

494,899,891

426,272,139

On 1 September 2021, the 1,731,838 Or

dinary Shares held

in trea

sury were cancelled. As at 30 June 2

022,

there were no Ordina

ry Shares or 2016 C Share

s held in treasury. The number of shares i

n issue for the

year ended 30 June 2021 did not incl

ude the 1,

731,838 Ordinary Share

s held in treasury.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

13. Share Capital (continued)

Share Buybacks

At the AGM held on 29 November 2021, the Direct

s were gra

nted authority to repurchase 53,3

60,753

Ordinary Shares and 20,8

24,741 2016 C Shares (being equ

al to 14.99% of the number of Ordinary Share

and 2016 C Shares in issue) for cancell

ation. This

authority will expire at the forthcoming AGM. The

Directors intend to seek annual rene

wal of this authori

ty from sha

reholders. Pursuant to this authority, and

subject to Companies Law and the discretion of the Di

rectors, the Company may purchase O

rdinary Shares

and 2016 C Shares in the market if they belie

ve it to be in shareholders’ interest

The Group did not repurchase any Ordinary Shares

or 2016 C

Shares during the years ende

d 30 June

2022 and 30 June 2021.

Issued Share Movements

30 June 2022

30 June 2021

Number Stated

Capital

Number

Stated

Capital

Balance at the start of the y

ear

494,899,891

426,272,139

494,899,891 488,655,945

Redemption of B and D shares –

capital return (refer to note 14)

(86,826,227)

- (62,383,806)

Balance at the end of the y

ear

494,899,891

339,445,912

494,899,891 426,272,139

14.

Return of Capital

As part of the managed wind down of

the Company,

the Board returned cash to sharehol

ders using a B

Share Mechanism and a D Share Me

chanism.

The B Share Mechanism i

nvolves the issue of new redeema

ble shares of no par value (“B

Shares”), paid

out of the Company’s assets to existing Ordinary sharehold

ers pro rata to their holdings of Ordinary Shares

at the time of such issue. The D Share Mechanism

involves the issue of new

redeem

able shares of no par

value (“D Shares”), paid out of the Company’s assets

to existing 2016 C shareholders pro rata to their

holdings of 2016 C Shares at the time

of such issue. The B Shares and

D Shares shall be non-transfera

ble

and shall be redeemable for cash

subsequent to issue

at the option of the Board on su

ch terms, as the

Board shall determine.

Rights attaching to the B and D Shares

The B Shares and D Shares do not carry any right to

any dividends, any other income distributions, or any

capital distributions of the Company oth

er than

as expressly permitted under the new Article

The B Shares and D Share

s do not entitle any hol

der thereof to any surplus a

ssets of the Company

remaining after payment of

all creditors of the Company

apart from a distri

bution

in resp

ect of any capital

paid up on the B Shares a

nd D Shares which

shall rank behin

d any amounts du

e in respect of other cla

sses

of shares (apart from any B Shares D Share

s) and

such distribution shall b

e distributed pro rata.

The B Shares and D Shares will be issued on terms t

hat each B Share and D Share sh

all be redeemable a

the option of the Board and on t

he terms the Board determine. Redemption monie

s will be paid in

accordance with the terms of the new Article

The B Shares and D Shares shall not ca

rry any right to receive notice of,

or attend, speak or vote at, any

general meeting of the Company or any right to vote on written resolutions of the Company. The B Shares

and D Shares shall

not be transferrabl

e. The Board expec

t that th

e B Shares and D Share

s will only ever be

in issue for a short period of time.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

14.

Return of Capital (Continued)

Return of Capital during the year ended

30 June 2022

On 7 July 2021, the Company announ

ced the third retu

rn of capital whi

ch was paid to sharehold

ers on 29

July 2021. This return of capital wa

s effected

by way of an issue and i

mmediate redemption an

cancellation of 355,975,669

B Shares and

138,924,222 D Shares on 21 July 2021.

On 18 August 2021, the Company anno

unced the fourth return of capita

l, whic

h was paid to shareholders

on 13 September 2021. This return of

capital was

effected by wa

y of an issue and immediate redempti

and cancellation of 355,975,669 B Share

s and 138,924,222 D Shares on 3 Sept

ember 2021.

On 24 February 2022, the Company announ

ced the fifth retu

rn of capital whi

ch was paid to sharehold

ers on

18 March 2022. This return of capital wa

s effected

by way of an issue and immediate re

demption and

cancellation of 355,975,669

B Shares and 138,924,222 D Shares on 10 March 2

022.

Return of Capital during the year ended

30 June 2022 (Continued

)

On 21 April 2022, the Com

pany announced the sixth

return of capital which was paid to

shareholders on 1

May 2022. This return of capital

was effected by way of an issue an

d immediate rede

mption and

cancellation of 355,975,669

B Shares and

138,924,222 D Shares on 11 May 2022.

During the year ended

30 June 2022, th

e Company made a

return of ca

pital on four separat

e occasions, as

detailed below, returning

a total of £28,478,054 to

Ordinary

shareholders and £5

8,348,173 to 2016 C

shareholders).

Record

date

Number of

B Shares

issued and

cancelled

Amount

per Share

Amount

returned to

Ordinary

shareholders

Number of

D Shares

issued and

cancelled

Amount

per Share

Amount

returned to

2016 C

shareholders

20 July

2021 355,975,669

£10,679,270

138,924,222

£9,724,695

2 September

2021

355,975,669 3p

£10,679,270

138,924,222 21p

£29,174,087

9 March

2022

355,975,669 1p

£3,559,757

138,924,222

10p

13,892,422

10 May

2022

355,975,669 1p

£3,559,7

138,924,222 4p

5,556,969

£28,478,054

£58,348,173

Refer to note 18 for detail of return of capital post yea

r-end.

Return of Capital during the year ended 30 Ju

ne 2021

On 8 March 2021, 355,975,669 B

shares and

138,924,222

D share

s were issued at no par to O

rdinary

shareholders and 20

16 C shareholders respectively. These B and

D shares were redeeme

d on the 8 March

2021, returning £17,798,784, being 5p

per B share and

£16,670,907, being 1

2p per D share, to Ordinary

shareholders and 20

16 C shareholders respectively.

On 22 April 2021, 355,975,669 B sha

res and 138,924,222

D shares were issued at no par to Ordin

ary

shareholders and 201

6 C shareholders respectively. T

hese B and D shares were rede

emed on the 22 April

2021, returning £19,578,662, being 5.5

p per B share

and £8,335,453, being 6

p per D share, to Ordinary

shareholders and 20

16 C shareholders respectively.

During the year ended 30 June 2021, th

e Company made a re

turn of capital on two separat

e occasions, as

detailed below, returning

a total of £37,377,446 to

Ordinary

shareholders and £2

5,006,360 to 2016 C

shareholders).

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

14.

Return of Capital (Continued)

Record date

Number of B

issued and

cancelled

Amount

per

Amount

returned to

Ordinary

shareholders

Number of D

issued and

cancelled

Amount

per

Amount

returned to

2016 C

shareholders

8 March 2021

355,975,669

£17,79

8,784 138,924,222

12p

£16,670,907

22 April 2021

355,97

5,669

5.5p

£19,

578,662 138,924,222

£8,335,453

£37,377,446

£25,006,360

15. Dividends

No dividends were declared by the

mpany to its shareholders durin

g the years ended 30 June 20

22 or

30 June 2021. With the Company in ma

naged wind down,

the Board does

not intend to declare a

ny further

dividends.

16. Capital Management Policies and Procedures

The Board defines capital as financial

resources available to the Gro

up.

The Group’s total capital a

t 30 June 2022 was

£88,167,991

(30 June 2021: £176,191,414) and comprised

equity share capital and reserve

s. The Group was ungea

red at the year-end.

The Group’s capital management obj

ective is to provide returns to shareh

olders.

As the Company is in managed wind down, the Grou

p's principal use of cash is to

return cash to

shareholders, whist maintai

ning sufficient balances to meet ongoi

ng operational expenses.

The Board monitors and reviews the bro

ad structure o

f the Group’s capital on an

ongoing basis.

The Group has no externally imposed capital require

ments.

17. Financial Risk Management

The Group’s financial assets mainly comprise inve

stments an

d cash balances. Note 2 sets out the

accounting policies, includ

ing criteria for recogniti

on and the basis for measure

ment, applied to significant

financial assets and liabilities. Note 2 also include

the basis on which income and expenses ari

sing from

financial assets and liabilities are re

cognised.

Principal risks and unce

rtainties are detailed in the St

rategic Report. The Directors and the

AIFM, with the

assistance of the Consultants and

the Company’

s employee, work toget

her to mitigate these risks by

employing the following risk mitigation strategies:

(i) Credit Management – sound credit manageme

nt is a prer

equisite for an entity's stability and profitability.

Prudent management of credit risk can

minimise both

operational and credit risks. The Board pre-emptive

begin to manage risk through the comprehen

sive underwriti

ng process to ensu

re that there is not more than

an acceptable amount of risk within

the transaction. The risk i

s continua

lly managed throughout the term of

the lease (or other finance agreeme

nt) until the ultimate

disposition of the a

sset(s). Stringent underwriting

procedures are applied to mitigate risk.

(ii) Due Diligence – the Company performs com

prehens

ive due diligen

ce on all counter parties, individuals

and businesses relevant to the inve

stment strategy of the Group.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued

)

(iii) On-going Portfolio Managem

ent – ensures that if a problem

starts to arise, it is identif

ied giving the

capability to address it and put into

action whatever remediation

steps

are necessary to h

elp mitigate a

potentially larger risk down the line.

(iv) Legal Review – the Company engag

es legal profe

ssionals in order to ensure

, on an on-going basis, that

all rights, title and interests, held as security fo

r the Company’

s investments are being protected an

preserved.

(vi) Records Manageme

nt – the Company has a compre

hen

sive electronic document

ation

system that is

subject to their internal/external backup proce

dure,

maintaining information access and retrieval 24/7 with

offsite redundant backup in case of a disast

er whe

n recovery would need to be de

ployed.

The AIFM, in close cooperation with the Direct

ors, coordin

ate the Group’s risk manag

ement.

Additional risks arising from the Group’

s activities list

ed in order of severity and likelihoo

d and the policies

for managing each of these risks are su

mmarised in

this note and have bee

n applied throughout the year.

17.1. Credit Risk

This is the risk of the failure of a le

ssee to make lease payments, the failure of

the issuer of a security or

borrower to pay interest or principal in a timely manne

r, or that the effect of negative perceptions of the

issuer’s ability to make such payments causing the v

ue of the investment to de

cline. Counter

parties with

debt securities rated below investment-g

rade (or unrated)

are especially su

sceptible to this risk. The Group

looks to sour

ce investmen

ts that

can p

rovide various credit and

stru

ctural enhanceme

nts to attempt to

mitigate credit exposure to any singl

e counterparty or asset cla

ss.

Credit co

ncentratio

n risk

As the Company is in managed wind down, the Company will not be making any new investment

s. The

Board will monitor concentration risk of

the investment

portfolio as the portfolio is liquidated as part of the

Company’s investment objective and po

licy.

BNP Paribas Securities Services S.C.A., Guernsey

Branch is the bank used by the Group to hold cash

balances and there i

s a risk that it could fail or t

hat there may be fraud or theft by employee

s and that the

Group’s assets may not be return

ed. BNP Paribas Secu

rities Services S.C.A., Guernsey Branch, is a

branch of BNP Paribas whose cre

dit

rating is A+ with Standard & Poor's.

Credit risk of cash and cu

stodian is mitigated by

the Company’s policy to only undertake significa

transactions with leading commercial co

unterparties.

Exposure to Credit Risk

The following tables detail the Company

’s financi

al assets maximu

m exposure to credit risk:

30 June 2022

Residual value of finance lease

investments

111,979

Investments designated at fair value

through profit or loss

72,108,608

Cash and cash equivalents

18,674,833

Other receivables (excludes prepayme

nts)

201,943

Total assets

91,097,363

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued

)

17.1. Credit Risk (Continued)

30 June 2021

Residual value of finance lease

investments

101,859

Investments designated at fair value

through profit or loss

148,763,747

Cash and cash equivalents

25,350,943

Other receivables (excludes prepayme

nts)

313,733

Total assets

174,530,282

Financial assets credit quality summary

The table below shows the different risk categ

ories, t

he associated PDs and the nominal rating equivalent i

relation to unsecured loans:

Company Risk Grade

Nominal Rating

Equivalent

1: Virtually no risk

AAA

2: Low risk

3: Moderate risk

4: Average risk

BBB

5: Acceptable risk

6: Borderline risk

7: High risk

CCC

8: Extremely high risk

9: Doubtful

10: Loss

Refer below for Risk Gra

des and nominal rating eq

uivalent as at 30 June 2022.

Company

Risk

Grade

Nominal

Rating

Equivalent

Investment Category

N/A

A+1

Cash an

d cash equivalents

18,674,833

Investments designated at fair value

through profit or loss

13,190,350

Residual value of finance lease

investments

85,272

Investments designated at fair value

through profit or loss

112,945

CCC

Investments designated at fair value

through profit or loss

850,654

CCC

Residual value of finance lease

investments

26,707

Investment

s designated at fair value

through profit or loss

20,280,741

Investments designated at fair value

through profit or loss

37,673,918

Total

90,895,420

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Conti

nued)

17.1. Credit Risk (Continued)

30 June 2021

Company

Risk

Grade

Nominal

Rating

Equivalent

Investment Category

N/A

A+1

Cash an

d cash equivalents

25,350,943

BBB

Investments designated at fair value

through profit or loss

16,956,122

Investments designated at fair value

through profit or loss

36,270,491

Residual value of finance lease

investments

77,634

Investments designated at fair value

through profit or loss

7,030,566

CCC

Investments designated at fair value

through profit or loss

11,400,175

CCC

Residual value of finance lease

investments

24,225

Investment

s designated at fair value

through profit or loss

6,033,820

Investments designated at fair value

through profit or loss

2,146,153

Investments designated at fair value

through profit or loss

68,926,420

Total

174,216,549

17.2. Liquidity Risk

This is the risk that the Group will encounter diffi

lty in meeting obligations associated

with financial

liabilities or funding commitments. The B

oard m

anages and monitors the Group’

s liquidity risk.

The Group’s investments (excluding

cash deposits) are asset-b

acked loan or finance transa

ctions with

commercial entities. The investment

s are substantia

lly less liquid than trade

d securities and will have a

highly limited (if any) secondary market. Some transaction

s may incorporate provisions that restrict transfe

or disposal of the investment.

As at 30 June 2022 and 30 Jun

e 2021, the Group did

not have any foreign exchange forwa

rd contracts.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued)

17.2. Liquidity Risk (Continued)

The table below shows the Company’s finan

cial liabilities as at 30 June 2022:

Less than 1

year

1 to 5 years

More than 5

years

No maturity

date

Total

Financial liabilities

Other payables and

accrued

expenses

(379,195) (2,673,500)

- (3,052,695)

Total undiscounted

financial liabilities

(379,195) (2,673,500)

- (3,052,695)

The table below shows the Company’s finan

cial liabilities as at 30 June 2021:

Less than 1

year

1 to 5 years

More than 5

years

No maturity

date

Total

Financial liabilities

Other payables and

accrued

expenses

(508,192) - - -

(508,192)

Total undiscounted

financial liabilities

(508,192) - - -

(508,192)

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

100

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued)

17.3. Operational Risk

Operational risk is the ri

sk of direct

r indirect loss ari

sing from a wide variety of cause

s associated with the

processes, technology and infrastructure supporting t

he Group’

s activities with financial instruments eith

internally within the Gro

up or extern

ally at the Gro

up’s serv

ice

providers, and from extern

al factors other

than credit, market and liquidity risks such as thos

e arisin

g from legal and regulatory require

ments and

generally accepted standards of

investment manag

ement behaviour.

The Group’s objective is to manage operational risk

as to balance limiting of financial losse

s and

damage to its reputation with achieving its investm

ent objective. The Group manag

es this risk by having

oversight of the Administrator, the Cons

ultants and the Company’s employee.

17.4. Market Risk

The fair value of future cash flows of a financi

al inst

rument held

by the Group may fluctuate. This

market

risk comprises cu

rrency risk, interest rate risk

and price risk. Th

e Board reviews and agrees policies for

managing these risks.

Currency Risk

The functional and presentation curre

ncy of the Gr

oup is Sterling and, the

refore, the Group’s pri

ncipal

exposure to foreign currency risk comprise

s investm

ents denomin

ated in other currencies, principally US

Dollars and Euros. The Company monitors the Grou

p’s exposure to foreign curre

ncies. The Board

measures the risk to the Group of the foreign curren

cy exposure by consid

ering the effect on the NAV and

income of a movement in the rates

of exchange

to which the Group’

s assets, liabilities, income and

expenses are exposed.

The table below details the ca

rrying amounts of the Com

pany’s financial assets an

d financial liabilities that

have foreign currency risk exposure:

30 June 2022

GBP

USD

EUR

Total

£ £

Investments including the residual

value of finance lease investments

47,200,403 1,572,223

23,447,961

72,220,587

Cash and cash equivalents

16,998,380

652,542

1,023,911

18,674,833

Other receivables

201,943

Investment payables, other

payables and accrued expenses

(2,954,356)

Total net foreign currency exposure

61,446,370 2,224,765

24,471,872

88,143,007

Percentage of total

69.72% 2.52%

27.76%

100.00%

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

101

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued)

17.4. Market Risk (Continued)

30 June 2021

GBP

USD

EUR

Total

£ £

Investments including the residual

value of finance lease investments

82,095,531 37,473,105

29,296,970

148,865,606

Cash and cash equivalents

24,654,143

521,757

175,043

25,350,943

Other receivables

313,733

Investment payables, other

payables and accrued expenses

(508,192)

Total net foreign currency exposure

106,555,215 37,994,862

29,472,013

174,022,090

Percentage of total

61.23% 21.83%

16.94%

100.00%

Currency sensitivity

analysis

Should the value of Sterling against the Euro and the US

Dollar increase or decrease by 5% with all other

variables held constant and excluding

the impact

of currency hedging describ

ed below, the impact on the

net assets of the Company would b

e as follows:

Currency

30 June 2022

30 June 2021

£ £

Increase of 5%

Decrease of 5%

Increase of 5%

Decrease of

USD (111,238)

111,238

(1,899,743)

1,899,743

EUR

(1,223,594) 1,223,594

(1,473,601) 1,473,601

The Board believe that a 500 basis p

oint movement in

the value of Sterling against other curren

cies is

reasonable given the average volatility in these curr

ency rates during the years e

nded 30 June 2022 and 3

June 2021.

The Group did not have a

ny open forward foreign e

xchange cont

racts as at 30 June 2

022 or the 30 June

2021.

Interest Rate Risk

Most of the Group’s investments receiv

a fixed rate of interest. The value of fixed income securitie

s usually

rise and fall in re

sponse to chang

es in market intere

rates. Declining intere

st rates generally increase the

fair value of existing instruments, and risin

g interest

rates generally decrea

se the fair value of existing

instruments. Changes in va

lue usually will not affect the amount of

interest income or final principal

repayments, but could affect the mark

et value of the investment prior to maturity. Intere

st rate risk is

generally greater for investments with longer m

aturities.

Certain income generatin

g securities p

ay interest at vari

able rates. Variable rate secu

rities reset at specified

intervals, while floating rate securities reset whenev

er there is a

change in a specified index rate. The

market prices of these securities may fluctuate signifi

cantly when interest rates

change. As at 30 June 2022

and 30 June 2021, no variable interest rate positions

were held.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

102

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued)

17.4 Market Risk (Continued)

Interest Rate Risk (Continued)

The possible effects on fair value and

cash flows that coul

d arise as a result of changes in interest rates are

taken into account when making investment decisions

. Expected cash flows are monitored as investmen

updates are provided and the Com

pany consider

s changes to cash flows on a

quarterly basis. Each facility

has a rate applied to fair value based on market

servable transaction

s, performance, credit type and risk.

The waterfall requires a ma

rket rate to be applied, if a

pplicable, if not and the facility continues to perform in

line with origination, the initial rate is a

djusted by the relevant risk free rate chang

e; where these are not

appropriate the rate is taken from the fair value rate matrix.

This fair value risk matrix is reviewed annually

to reflect changes in the market rates for se

ctors and risk. The Bo

ard reviews on a regular basi

s the values

of the financial instruments.

The following table details the Group’s exposure to in

terest rate

risks. It includes the financial asset

designated at FVTPL and at amortis

ed cost and fina

ncial liabilities at amortised co

st as at 30 June 2022

and 30 June 2021.

Interest bearing

Non

-interest

bearing

Variable

Fixed interest

Total

At 30 June 2022

Assets designated at fair value throu

gh profit or loss:

Residual value of finance

lease investments

111,979

Investments designated

at fair value through profit

or loss

72,108,608

Financial assets at amortised cost:

Cash and cas

equivalents

18,674,833

Other receivables

201,943

Total assets

18,674,833

72,

108,6

08 313,922

91,097,363

Liabilities

Financial liabilities at amortised

cost:

Other payables and

accrued expenses

(2,954,356)

Total liabilities

- -

(2,954,356)

Total interest

sensitivity gap

18,674,833

72,108,608

(2,640,434)

88,143,007

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

103

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued)

17.4 Market Risk (Continued)

Interest Rate Risk (contin

ued)

Interest bearing

Non

-interest

bearing

Variable

Fixed interest

Total

At 30 June 2021

Assets designated at fair value throu

gh profit or loss:

Residual value of finance

lease investments

101,859

Investments designated

at fair value through profit

or loss

148,763,747

Financial assets at amortised cost:

Cash and cas

equivalents

25,350,943

Other receivables

313,733

Total assets

25,350,943

148,76

3,747 415,592

174,530,282

Liabilities

Financial liabilities at amortised

cost:

Other payables and

accrued expenses

(508,192)

Total liabilities

- -

(508,192)

Total interest

sensitivity gap

25,350,943

148,76

3,747 (92,600)

174,022,090

Interest rate sensitiv

ity

An increase of 175 basis

points (30 June 20

21: 50 basis

points)

in interest rates as at the repo

rting date

would increase cash by £326,810 and decrea

se inve

stments designated at FVTP

L by £(565,138

), which

would decrease NAV by £(238,328) (30 June 20

21:

increase in cash of £126,755 and decrease of

investments designated at FVTPL of £(407,131),

whi

ch would decrease NAV by £(280,376)).

A decrease of 175 basis points (30 Jun

e 2021: 50 basis point

s) would decre

ase cash by £(308,135) an

increase Investments designated

at FVTPL by £1,141,647, whic

h would increase NAV by £833,512 (30

June 2021: decrease in cash of £(126,755) increa

se of investments designat

ed at FVTPL of £544,204,

which would increase NAV by £417,449

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

104

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued)

17.4 Market Risk (Continued)

Interest rate sensitiv

ity (Continued)

The Board believe that a 100 basis point movement in in

terest rates is reasonable

given that the Bank of

England base rate has increased from 0.25% on 16 Dece

ber 2021 to 0.5% on 3 February 2022, to 0.75%

on 17 March 2022, to 1.00% on 5 May 2022 to 1.25% on 16 June 2

022.

Price risk

Price risk is the risk that the Company’s perfo

rmance

will be adversely affected by

change

s in the markets it

invests (other than those a

rising from currency ri

sk and

interest rat

e risk) whether caused by factor

specific

to an individual investment or all factors affecting all investment

s traded in the market.

As at 30 June 2022 and 30 June 202

1, the Company is

exposed to price ri

sk on investments designated

fair value through profit or loss and on its

residual value of finance lease investments.

Refer to note 2.3(c) and note 9.1 for detail regarding fair value measurement of investment

s designated at

fair value through profit or loss.

The Company makes assumption

s about the residual value of

certain assets and equipme

nt. The residual

value is a function of the in-place value and/o

r the

secondary market value of the equip

ment or assets.

Equity holdings are valued on a market approach, taking

into consideratio

n NAV information of the investee,

call options exercisa

ble on the holdings and extern

al pr

icing of recent transaction

s (if available). Lease

participation investments a

re valued based on the princip

l balance of the participation interest adj

usted for

information provided by third party appraisals.

The Company attempts to mitigate asset pricing ri

by using comparable recent

market transactions and

other valuation/information sources, however, the

se investments may be extremely difficult to value

accurately, and the valuations provided may differ, so

metimes significantly. Third-party pricing informatio

may not be available for certain positions held.

The estimated fair values of lease parti

cipation inve

stments, equity holding

s and residual value of fina

nce

lease investments, loans and other investment

s and

finance lease and hire purchase i

nvestments are

monitored and reassessed on an ongoin

g basis by the Company.

Refer below for sensitivity analysis on the impact on

the Statement of Comprehensive Income and NAV of

the Company, if the fair value the inve

stments expos

ed to pri

ce risk increased

or decreased by 15% (3

June 2021: 15%). Refer to note 9 for de

tail on sensit

ivity analysis

on fair value measurement unobse

rvable

inputs.

30 June 2022

Increase by 15%

Decrease by 15%

Financial assets

£ £

Investments designated at FVTPL

72,108,608

10,816,291

(10,816,291)

Finance lease residual val

111,979

16,797

(16,797)

Total

72,220,587 10,833,088

(10,833,088)

30 June 2021

Increase by 15%

Decrease by 15%

Financial assets

£ £

Investments designated at FVTPL

148,763,747

22,314,562

(22,314,562)

Finance lease residual val

101,859

15,279

(15,279)

Total

148,865,606 22,329,841

(22,329,841)

Includes, loans and other investments and finance lease and hire purchase investments.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

105

NOTES TO THE CONSOLIDATED FI

NANCIAL STATEMENTS (CONTINUE

17. Financial Risk Management (Continued)

17.4 Market Risk (Continued)

Price risk (Continued)

No sensitivity analysis has been provid

ed for lease participation and e

quity holdings as these investme

nts

are not deemed material. As at 30 June 2022, they

are valued at £497,445 for lease

participation and £

nil

for equity holdings (30 June 2021: £nil f

or lease participation and

equity holdings).

The Board believe that a 15% (year en

ded 30 June 2021:

15%)

movement is reasonable

based on market

movements of the investments held duri

ng the financial year.

18. Events after the Repo

rting Period

Return of Capital

On 12 July 2022, the Company announced the seventh retu

rn of capital which was paid to share

holders on

3 August 2022. This return of capital was effected

by way of an issue and immediate redemption and

cancellation of 355,975,669

B Shares and

138,924,222 D Shares on 26 July 2022.

The table below summaries the amounts retu

rned to shareholders:

Ordinary Shares

2016 C Shares

Record date

Amount per

Amount returned to

shareholders

Amount per Share

Amount returned to

shareholders

25 July 2022

£3,559,757

£6,946,211

Asset Realisations

On 12 July 2022, the Board announce

d that within

the Ordinary Share Class portfolio, Borrower 4, an AD

plant located in Scotland was restructur

ed and sold, r

epaying the fund £2.7 million plus the potential for a

further £0.2 million of deferred consideration. It

had a fair value of £2.8 million as at 30 June 2022.

Bonus Payment

Following the seventh return of capital, the second

half of the bonus payment

in the sum of £140,000 was

paid to the Directors in August 20

22, as a further

£30 million ha

s been returned to shareh

olders since the

AGM held on 29 November 2021.

19. Ultimate Controlling Party

In the opinion of the Directors, there

is no single ultimate controlling party.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

106

Alternative Performance Measures (Unaudited)

1. Share Price Discount

The share price di

scount to NAV has b

een calculat

ed as the percentage difference bet

ween the NAV per

share and the closing share pri

ce of the Ordinary Shares and 20

16 C Shares on the same date (source

Bloomberg).

Reason for use

To provide transparency in the difference betwee

the NAV and the Ordinary Share a

nd 2016 C Share

price and to help investors identify and m

onitor the performance of the Group.

Ordinary Shares

2016 C Shares

30 June 2022

30 June 2021

30 June 2022

30 June 2021

NAV per share (A)

£0.1744

£0.2619

£0.1879

£0.5971

Closing

share pric

e per

Bloomberg

(B)

£0.0600 £0.1750

£0.1108 £0.3500

Discount to NAV per share

((B-A)/A) (65.60)%

(33.18)%

(41.03)%

(41.38)%

2. NAV Total Return

The NAV total return measures how the

NAV per Or

dinary Share and 2016 C Share has performed over a

period of time, taking into account b

oth capital di

stributions

and dividends paid to sharehol

ders. The

Company quotes NAV total return as a percentage

change from a certain point in time, such as the initial

issuance of Ordinary Shares and 201

6 C Shares or the

beginning

of the period, to the latest reporting date,

being 30 June 2021 in t

his instance. It assum

es that capital and dividends paid to

shareholders are

reinvested back into the Company.

Total return since inception is for the period 31 July

2014 to 30 June 2022 for Ordinary Shares and 31

December 2016 to 30 Ju

ne 2022 for 2016 C Shares.

Reason for use

To provide transparency in the Co

mpany’s pe

rformance and to help in

vestors identify an

d monitor the

compounded total returns o

f the Company.

Annualised return

The 3 year annualised return is calculat

ed as the geomet

ric average amount of mont

hly total return

s over

the past 3 years.

Reason for use

To provide transparency

of the Comp

any’s performan

ce and to help investors id

entify and monitor their total

return over a 3 year period if the annual return was co

mpounded.

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

107

Alternative Performance Meas

ures (Unaudited) (Continued)

2. NAV Total Return (Continued)

Ordinary Shares

Year to

30 June 2022

3 year

Since Inception

Opening NAV per share (A)

£0.261

£0.9491

£1.000

Closing NAV per share (B)

£0.1744

Dividends paid (C)

£0.000

£0.0544

£0.3716

Capital distributions (D)

£0.0800

£0.1850

NAV total return per share

(E=(B-A+C)+D/A) (2.86)%

(56.40%

)

(26.90)%

2016 C Shares

Year to

30 June 2022

3 year

Since Inception

Opening NAV per share (A)

£0.597

£0.9815

£1.0000

Closing NAV per share (B)

£0.1879

Dividends paid (C)

£0.0000

£0.0544

£0.1413

Capital distributions (D)

£0.4200

£0.6000

NAV total return per share

(E=(B-A+C+D)/A) 1.81%

(14.18)%

(7.08)%

3. Ongoing charges

Ongoing charges reflect those expense

s of a type which

are likely to recur in the foreseeable future an

which relate to the operation of the Company, excluding t

he co

sts of acquisition or

disp

osal of investments,

finance charges, gains or losse

s arising on investments and O

rdinary Shares.

Ongoing charges is a measure, expressed as a percent

age

of NAV, based on

actual costs incurred in

the

year as being the best estimate of future costs ex

cluding any non-recurring fees divided by

the average

NAV of the Company during the year.

The ongoing charges ratio for the year ended 30

June 202

2 was 2.60% (30 June 2021: 1.63%). The

methodology for calculati

ng an ongoing charge

s figure is based on annu

alised ongoing ch

arges, as

calculated overleaf, of £3,

725,431 (30 June 20

21:

£3,444,238) divided by average

NAV in the period of

£143,334,260 (30 June 20

21: £211,198,531).

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

108

Alternative Performance Meas

ures (Unaudited) (Continued)

3. Ongoing charges (Continued)

Reason for use

Ongoing Charges details the ann

ual percentage reduction in shareholde

r returns as a re

sult of recurring

operational expenses assuming market

s remain

static and the portfolio is not traded.

The ongoing charges a

re based on actual costs i

ncurr

ed in the year excluding any non

-recurring fee

Expense items have been excluded in the calculat

ion of the ongoing charges figure when they are not

deemed to meet the following definition:

“Ongoing charges are tho

se expenses of a type which are

likely to recu

r in the foreseeable future, whether

charged to capital or revenue, and

which relate to the

operation

of the investment compan

y as a collective

fund, excluding the costs of acq

uisitio

n/disposal of investment

s, financing char

ges and gains/losses a

rising

on investments. Ongoing charges are based on co

sts incu

rred in the year as being the best estimate

future costs.”

Please refer below for ongoing charge

s reconciliation

for the years ended 30 June 2022 a

nd 30 June 2021:

30 June 2022

30 June 2021

Total operating expenses for the

year (including incentive fee

expense) (7,844,538)

(4,838,239)

Expenses included in the calculation of ongoi

ng charges figures

Professional and Administration

fees (1,406,594)

(968,774)

Management fees

(1,736,229)

(1,978,999)

Directors’ fees

(582,606)

(496,465)

Total ongoing charges for the y

ear

(3,725,429)

(3,444,238)

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

109

COMPANY INFORMATION

Non-Executiv

e, Independent Directors

Brendan Hawthorne

(Chairman of the Board and Chai

rman of Audit and

Risk Committee)

David Copperwaite

(Chairman of the Remuneration and

Nomination

Committee)

Non-Independent Directo

Brett Miller

(Chairman of Management Engage

ment Committee)

Regist

ered Of

fice

BNP Paribas

Julia

n’s

Avenue

, St

Peter

Port, Guernsey, G

1WA

Alternative Fund Investment Man

ager (AIFM)

Sanne Fund Management (Guernsey

) Limited (formerly

International Fund Management Limited), Sarni

House, Le Truchot, St Peter Port, Guernsey, GY1 4

Financial Adviser and Broker

Winterflood Securities Limit

ed, The Atrium Buildi

ng, Cannon Bridge Hou

se, 25 Dowgate, Hill, London,

EC4R 2GA

Auditor

Deloitte LLP, PO Box 137, Regency Court, Glategny

Esplanade, St Peter Port, Guernsey, GY1 3HW

Registrar

Link Market Services (Guernsey) Li

mited, Mont Cr

evelt House, Bulwer Avenue,

St Sampson, Guernsey,

GY2 4LH

Principal Bankers

BNP Paribas Securities Services S.C.A., BNP Paribas

House, St Julian’s Avenue, St Peter Port, Guernsey,

GY1 1WA

Designated Administrator, Custodian and Secret

ary

BNP Paribas Securities Services S.C.A., Guernsey

Branch, BNP Paribas House, St Juli

an’s Avenue, St.

Peter Port, Guernsey, GY1 1WA

Receiving Agent

Link Market Services Limited, The Regist

, 34 Beckenham Road, Beckenham, Kent, BR3 4TU

Legal Advisers to the Group (English

Law)

CMS Cameron McKenna Nabarro Olswa

ng LLP, Cannon Place, 78 Cannon Stre

et, London, EC4N 6AF

Legal Advisers to the Group (Gu

ernsey Law)

Mourant Ozannes, Royal Chambe

rs, St Julian'

s Avenue, St Peter Port, Guernsey, GY1 4HP

Website www.slfrealisationfund.co.uk

SLF Realisation Fund Limited

Annual Report and Audited Consolid

ated Financial Statements

for the year ended 30 June 2022

110

LIST OF ACRONYMS

Terms Definition

AD Anaerobic

Digestion

AGM

Annual General Meetin

AIFM

Alternative Fund Investment Manager

AIFMD

Alternative Fund Investment Manager Directive

CLO

Collateralised Loan Obligation

CVA

Company Vol

untary Arrangement

DIP

Debtor in Possession

EBITDA

Earnings Before Interest,

Tax, Depreciation & Amortisation

EGM

Extraordinary

General Meeting

ECL

Expected Credit Loss

FCA

Financial Conduct Autho

rity

FV Fair

Value

FX Foreign

Exchange

IFRS

International Financial Rep

orting Standards

IASB

International Accounting S

tandards Board

KKVIM

KKV Investment Management Limited

SLFR Ordinary

SLFX

2016 C Class Shares

LGD Loss

Given

Default

LTV

Loan to Value

NAV

Net Asset Value

NCV

Net Carrying Value

RNS

Regulatory News Service

PD Probability

Default

SME

Small & Medium Enterprise

SPV

Special Purpose Vehicle

TUPE

Transfer of Underta

kings (Protection of Employment)

Regulations 2006