ANNUAL REPORT
& ACCOUNTS
TABLE OF CONTENTS
1. Strategic Report 4
Pollen Street at a glance 5
Chairman’s statement 6
CEO report 8
Private Equity strategy 12
Credit strategy 14
CFO report 18
Environmental, Social & Governance 30
Business review 47
Risk management & principal risks and uncertainties 55
2. Directors’ Report 64
Board of Directors 65
Statutory information 71
Corporate governance statement 78
Report of the Audit Committee 88
Report of the Risk Committee 94
Report of the Nomination Committee 96
Directors’ Remuneration Report 98
Annual report on remuneration 103
Statement of Directors’ responsibilities in respect 112
of the financial statements
Independent auditors’ report to the members of Pollen Street plc 114
Financial Statement 2022
POLLEN STREET
2
4. Shareholders’ Information 208
5. Definitions and Reconciliation to 212
Alternative Performance Measures
3. Financial Statements 126
Consolidated Statement of Comprehensive Income 127
Consolidated Statement of Financial Position 128
Company Statement of Financial Position 129
Consolidated Statement of Changes in Shareholders’ Funds 130
Company Statement of Changes in Shareholders’ Funds 131
Consolidated Statement of Cash Flows 132
Company Statement of Cash Flows 133
Notes to the Financial Statements 134
3
POLLEN STREET
Annual Report & Accounts
REPORT
01.
STRATEGIC
REPORT
5
POLLEN STREET
AT A GLANCE
5
1
See section 5, page 212, for the definition of terms and the Reconciliation to Alternative Performance Measures (“APM”). The APMs include
AuM, proforma operating profit and Net Investment Asset Return. APMs are not audited.
Statutory operating profit is the consolidated operating profit for the Group according to IFRS reporting standards. Proforma operating profit
is the EBITDA of the Group as if the combination had occurred prior to 1 January 2021. Proforma measures are not audited.
Statutory operating profit does not include profits arising in Pollen Street Capital Holdings Limited prior to 30 September 2022, being the date
of completion of the Combination.
Proforma operating profit is calculated as the operating profit of the Group’s Investment Company plus the operating profit of the Group’s
Asset Manager according to IFRS reporting standards excluding exceptional items and start-up losses of the US business, but including the
full cost of the office leases despite these costs being reported as depreciation of a right-of-use asset and financing costs under IFRS 16.
Net Investment Asset Return is defined as the ratio of the income from Investment Company to the average Net Investment Assets,
expressed as an annualised ratio.
(2021: £28 million)
Assets under
management (“AuM”)
1
(31 December 2021: £3.0 billion)
£3.4 bn
Growth in Credit AuM
1
(2021: 69%)
36%
Statutory operating profit
1
Dividends declared
1
(2021: £30.3 million)
£27.3m
£30m
Proforma operating profit
1
(2021: £37.3 million)
£36.8 m
KEY FIGURES
Net Investment
Asset Return
1
(2021: 8.5%)
8.0%
Pollen Street plc (the “Company”) is an alternative as-
set manager dedicated to investing within the financial
and business services sectors across both Private
Equity and Private Credit strategies. The business was
founded in 2013 and has consistently delivered top tier
returns alongside growing assets under management
(“AuM”). The business had £3.4 billion in AuM as at 31
December 2022, up 31 per cent per annum over the
past two years.
Pollen Street benefits from a complementary set of
asset management activities focused on managing
third-party AuM (the “Asset Manager”) together with
on-balance sheet investments (the “Investment Com-
pany”).
The Investment Company portfolio is well diversified
and focused on senior asset-based direct lending
investments. These investments target stable high-in-
come returns together with strong capital preserva-
tion. The portfolio consists of both direct investments
and investments in funds managed by Pollen Street.
The Company is an investment trust. It was formed
Strategic Report
POLLEN STREET
5
Welcome to the Annual Report and Accounts for
Pollen Street, which covers the year ending 31
December 2022.
A SUCCESSFUL YEAR OF CHANGE
2022 was a transformative year for us with Pollen
Street Capital Holdings Limited and Honeycomb
Investment Trust plc combining to form Pollen Street.
In February 2022, we announced the proposed
Combination to accelerate growth and unlock value
for shareholders by bringing together the combined
business models of income and growth to provide a
highly attractive proposition to investors.
The Combination was strongly supported by
Shareholders and completed on 30 September 2022.
Over the year, the rationale for the Combination
has been reinforced. Pollen Street continues to
deliver returns and grow AuM, despite a challenging
macro environment, and the investment portfolio
has continued to deliver robust, attractive returns
demonstrating the resilience of the strategy.
On the Asset Manager side, the focus for the year has
been on growing AuM, specifically under the Credit
strategy. Pollen Street plc has increased Credit AuM
to £1.6 billion – a 36 per cent increase on prior year –
with capital raised in flagship Credit III and separately
managed accounts (“SMAs”). The Private Equity
business was not actively fundraising in 2022 whilst
flagship Private Equity IV is being deployed, however
good progress has been made towards the launch of
flagship Private Equity V in 2023.
CHAIRMAN’S
STATEMENT
“2022 has been a transformative
year for Pollen Street with the
completion of the combination
of Pollen Street Capital Holdings
Limited and Honeycomb Investment
Trust plc to form Pollen Street.”
Robert Sharpe
Chairman
Financial Statement 2022
POLLEN STREET
6
7
The Investment Company has continued to perform
consistently, in line with its historic track record, with
Net Investment Asset Return of 8.0 per cent per
annum.
Pollen Street declared dividends of £30 million for
2022, an increase of £2 million from the prior year
(2021: £28 million). This was in line with the Board’s
dividend targets previously issued. These figures
reflect a quarterly dividend of 20.0p per share
in respect of the first half of the year prior to the
Combination, and 16.0p per share in respect of the
second half of the year.
We target dividends of £32 million for 2023, and aim
to grow dividends progressively, thereafter, reflecting
the strong earnings trajectory of the combined
business. The Group targets a dividend that is no
lower than £33 million in 2024
2
.
SHAREHOLDER PROPOSALS
In the circular published in May 2022, the Board
announced an intention to put forward a proposal to
shareholders for the establishment of B Shares prior
to the 2023 AGM. These shares would be 8% prefer-
ence shares with recourse to the capital and income
deriving from a representative proportion of the credit
portfolio, with a net asset value of up to £50 million.
Given the changed market environment, the Board
has consulted with shareholders before progressing
with the proposal and based upon that consultation,
the Board does not believe sufficient shareholders
would support it and as such the Board does not
intend to pursue this matter further.
However, the Directors intend to put forward propos-
als to shareholders to insert a Guernsey company
as a holding company for the Group and to change
the Company’s listing classification to be a commer-
cial company. As such the Company would cease
to have investment trust status. A General Meeting
will be convened to consider the proposals. The Di-
rectors believe that the new corporate structure will
better reflect the Group’s operations as a commercial
enterprise and that a classification as a commercial
company would broaden the universe of potential
investors, improve the marketability and liquidity of
Pollen Street’s shares and bring the listing classifi-
cation in line with Pollen Street’s quoted peer group.
The Board is mindful of the disconnect between the
share price and the fundamental value of the Group.
The Board continues to discuss this matter with ad-
visers and shareholders. However, the Group remains
focused on delivering substantial growth in the busi-
ness to drive further interest in Pollen Street shares.
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE (“ESG”)
ESG is core to Pollen Street’s strategy, purpose
and culture, and our ESG framework aligns to the
UN Sustainable Development Goals (“SDGs”). Over
the year progress has been made in embedding a
proprietary ESG scoring mechanism.
The data we collect and proprietary scoring
mechanism enables us to:
• measure our impact more consistently;
• track progress against targets;
• create league tables; and
• set a base level for improvement plans for portfolio
companies and investments across our strategies.
A CAUTIOUS BUT ENERGISED OUTLOOK
We closely monitor the impact of the more challenging
macroeconomic environment, however our strate-
gies continue to demonstrate strength and resilience
during volatile periods and are well-positioned for the
current climate.
We are continuously building investor relationships
and AuM across the Asset Manager in line with
our medium-term guidance. The Investment Com-
pany assets are well positioned and structured to
withstand significant macro stress. Current market
dynamics also bring compelling investment oppor-
tunities which we approach with care and selectivity.
Overall, we are pleased with the financial results and
we are excited as we move into 2023. Our compelling
combination of balance sheet capital and deep asset
management expertise positions us to deliver the
growth we have promised to the market.
I would like to thank the management team for their
hard work as part of the combined Group and look
forward to working with the team going forwards.
Robert Sharpe
Chairman
22 March 2023
2
This is a target and not a formal dividend forecast or a profit forecast. The targets stated in GBP amounts are based on the outstanding
shares at the time of publication (64,209,597) and would be scaled according to any buybacks or new issuance
Strategic Report
POLLEN STREET
7
At Pollen Street we recognise the importance of
financial services providing critical infrastructure
across the financial ecosystem. We look to work with
businesses that seek to grow by taking market share
and to build the next generation of leaders across the
sector and as stewards of capital we are conscious of
our responsibility to invest with care, one of our core
values.
Since our inception in 2013, we have built an
institutional infrastructure for Pollen Street, led by a
common purpose and values. We accelerated this
in 2022 completing the combination of Honeycomb
Investment Trust plc and Pollen Street Capital Holdings
Limited to create Pollen Street, a differentiated and
purpose-led alternative asset manager.
UNIQUE ADVANTAGES OF THE
COMBINATION
Pollen Street offers a unique combination of high-
quality, stable income and growth of long-term
recurring fee income. The Group benefits from
a complementary and synergistic set of asset
management activities focused on managing third-
party assets under management, referred to as
AuM (the “Asset Manager”) and on-balance sheet
investments (the “Investment Company”) aligned to
the Company’s investment strategies.
The Asset Manager provides exposure to high-
margin, capital light recurring revenue streams. The
Investment Company portfolio generates stable
returns through investment in high-quality, diversified,
low-risk, asset-based direct lending debt facilities.
CEO
REPORT
“Pollen Street offers a unique combination
of high quality, stable income and growth
of long term recurring fee income. The
Group benefits from a complementary
and synergistic set of asset management
activities focused on managing third party
AUM and on-balance sheet investments.”
Lindsey McMurray
Chief Executive Officer
Financial Statement 2022
POLLEN STREET
8
9
The Combination allows Pollen Street to enable
business growth by deploying our Investment
Company capital to accelerate the growth in third-
party AuM through helping to scale existing funds
and seed new strategies.
As a purpose-led asset manager, Pollen Street is
committed to delivering sustainable growth and
consistent returns for our shareholders and private
investors alongside positive impact for our people,
portfolio companies and wider society.
DELIVERING STRONG PERFORMANCE
In our first Annual Report and Accounts as a combined
business I am pleased to report that Pollen Street
delivered strong performance in 2022. The Group
continued its track record of consistent delivery,
which is particularly pleasing against a backdrop
of increasingly uncertain economic conditions;
increasing our AuM to £3.4 billion and maintaining
momentum in deployment into new investments.
Despite the more challenging macro environment,
returns across all funds managed by the Group,
including the Investment Company have been strong
and in line with targets for each strategy.
This strong overall performance confirms the rationale
for the bringing together of Pollen Street Capital
Holdings Limited and Honeycomb Investment
Trust plc, as we demonstrate the combination has
enhanced the excellent work of our teams. We
continue to grow at a steady and sustainable pace
with a strong platform for the future.
OUR ASSET MANAGER BUSINESS
Pollen Street was founded to provide capital to
businesses well-positioned to benefit from the huge
structural changes in the financial ecosystem. We
invest aligned with megatrends that drive structural
and technological change across the industry and
we have built expertise that enables us to identify and
champion businesses that can deliver consistent and
sustainable revenue and profit growth.
We work with agile and innovative firms that deliver
high quality products and services to their customers
and help enable market share gain and positive
change.
We support our businesses with The Hub. The
Hub is our powerful eco-system; a dedicated team
responsible for driving technology development,
sales performance and what we believe to be best
practice across our portfolio in both Private Equity and
Credit. The core principle of our Hub is a culture of
continuous improvement. We have a team of experts
and advisers who can support our portfolio on digital
transformation, cloud-based IT, digital marketing,
technology scalability, data-led products and ESG.
A PRIVATE EQUITY STRATEGY BUILDING
NEXT GENERATION MARKET LEADERS
In Private Equity, we seek to invest and build the
next generation of leaders across the financial
eco-system. We work closely with our portfolio
companies and their teams to implement our
established playbook to accelerate multiple routes
to growth. We build on the solid foundations of our
portfolio companies to create customer-centric,
data-driven organisations that can become market
leaders. We have seen strong performance across
the Private Equity portfolio, which has proven to
be extremely resilient and adaptive to the changing
landscape.
OUR MACRO-RESILIENT CREDIT STRATEGY
In Credit, we partner with high-quality non-bank
lenders, technology companies, and other mid-
market companies with diverse portfolios of cash
generative assets, offering something better to
their customers. Our credit facilities are typically
on a senior asset-secured basis – where we take
direct security over the cash flow producing assets
together with additional corporate security. We
believe this is an underpenetrated non-correlated
investment strategy with a huge market opportunity
and provides attractive relative value when compared
with public or private comparable transactions
alongside strong downside protection.
We recognise the challenging macro environment
and across our strategies we are seeing the
dislocation in the market presenting opportunities.
We are deploying a highly selective approach,
but moving with conviction where we see good
opportunities with attractive characteristics.
FUNDRAISING MOMENTUM
The fundraising market was more challenging over
2022 and into 2023 with many managers reporting
that fund raises were either smaller than expected
and/or taking longer to complete.
The market has been impacted by the ‘denominator
effect’ where declines in investors’ public portfolio
Strategic Report
POLLEN STREET
9
valuations have led to lower allocations of new
capital to the sector. With this backdrop, we
continue to build and deepen our engagement with
long term partners and remain confident that we
will continue our momentum in AuM growth. Pollen
Street has delivered 36 per cent growth in AuM in
the Credit business to £1.6 billion in 2022. In 2023,
we expect continued momentum for fundraising in
Credit, with the final close of Credit III expected in
Q2 2023 and further growth in the SMAs. On our
Private Equity side, our core focus in 2022 has
been in laying the foundations for a successful
launch of flagship Private Equity V. Flagship Private
Equity IV is approaching full deployment with 76 per
cent of the fund committed to investment as at 31
December 2022. The first close of flagship Private
Equity V is expected during 2023.
INVESTMENT COMPANY STABLE DELIVERY
The Investment Company has a £588 million portfolio.
We have maintained our track record of performance
throughout the year and delivered Net Investment
Asset Return of 8.0 per cent per annum, demonstrating
a consistent and robust performance despite the more
challenging macroeconomic backdrop.
We seek to use the Investment Company’s balance
sheet to seed assets or funds originated under
our Asset Manager strategies. We believe that this
approach will help to accelerate the launch of new
strategies and grow AuM. To date the Investment
Company has committed over £50 million across three
of our vehicles. We expect this to grow in the future to
help accelerate the growth of the Asset Manager.
However, we intend to maintain the historic risk profile
and the stability of the returns of the Investment
Company by limiting the non-credit investments to be
no more than 10 per cent of the investment portfolio.
A SUSTAINABLE APPROACH TO ESG
Pollen Street is committed to maintaining and
enhancing our focus on actions that generate positive
impact for our investors, people, portfolio companies
and wider society, linked to our purpose.
Sustainability is key to our investment strategy and
our goals include helping portfolio companies reach
carbon neutrality; set diversity and inclusion targets;
and promote the strongest possible governance
standards.
We are proud that our Responsible Investing
approach has been recognised as a leader by
Capital Finance International (“CFI”) for the third year
running, and our approach to Diversity, Equity and
Inclusion (“DEI”) has been recognised by awards
from FTAdviser.
We also recently signed the Social Mobility Pledge,
committing to outreach, access and recruitment.
There are currently over 700 organisations signed up
across the UK.
Alongside continuing to strengthen our ESG
programme and foundations, our focus for ESG in
2023 includes the following areas:
• Sustainable value creation: Aligning ESG criteria
to strategic business drivers to drive engagement
and performance
• Climate & Net zero: Working across the portfolio
to develop net zero commitments and strategies
and strengthen processes to better understand
the impacts of climate change, in line with the Task
Force for Climate related Financial Disclosures
(“TCFD”).
• Data & reporting excellence: Using a reporting and
scoring framework to rank and compare portfolio
investments, and to identify improvements;
continue to address evolving regulations on
sustainability disclosures.
A RESILIENT OUTLOOK:
OPPORTUNITIES AHEAD
Our business is well positioned to drive long-term
organic growth. Our core strategies are performing
well and are proving to be resilient to the changed
macroeconomic environment over 2022.
Our key priorities for 2023 are:
• continue to build AuM steadily in Credit;
• first close of flagship Private Equity V;
Financial Statement 2022
POLLEN STREET
10
• maintaining our track record of deployment and
performance across our strategies including stable
and resilient returns in the Investment Company;
• building cross product relationships with strategic
investors; and
• delivering operational leverage through our platform
as we continue to growth AuM.
Looking back over a successful and transformative
year, I thank our investors for their support; my
colleagues for all their hard work and dedication;
and the Board for its guidance. I look forward to the
opportunities and growth ahead as we work together
to deliver for our investors and shareholders.
Lindsey McMurray
Chief Executive Officer
22 March 2023
Strategic Report
POLLEN STREET
11
This section gives insight into the strategy for our
Private Equity funds. The Group earns fees from
managing these funds.
KEY HIGHLIGHTS OF THE STRATEGY ARE:
• Building next generation leaders for the Europe-
an financial ecosystem
• Strong track record with 3.0x gross returns
3
and
zero losses
4
• Sector specialist knowledge and proven opera-
tional framework to accelerate revenue and profit
growth
As a financial services specialist, we see significant
whitespace in our sector which serves as critical
infrastructure to the economy. We operate around
megatrends that drive structural and technological
change and market share gain for mid-market
innovators.
Our strategy has been in place since 2008 and
has been tested through many market cycles.
Throughout this period, we have developed a
robust and disciplined approach to investing as
evidenced by our strong track record over time.
We identify companies that can thrive in times of
structural changes in the industry by delivering high
quality products and services to their customers.
This experience has given us valuable skills and
a keen understanding of risks and opportunities
in the market. Ultimately we believe that change
creates opportunity for market share gain and our
strategy is built around capitalising on this to build
businesses that are next generation leaders.
PRIVATE EQUITY
STRATEGY
Michael England
Partner
“A successful year for our
Private Equity funds, delivering
returns and sustainable
growth for our investors and
stakeholders”
Financial Statement 2022
POLLEN STREET
12
KEY FIGURES
Strategy in place
for 17 years
£1.8bn AUM
Realised returns
since inception of
3.0x gross
3
, zero
loss ratio
4
3
Track record as of 31 December 2022.
4
No losses on realised investments and no investments valued below cost as at 31 December 2022.
Our Pollen Street portfolio is made up of busi-
nesses with sustainable growth at their core. This
encompasses our drive for both long term sustain-
able performance and to help the businesses we
work with deliver positive impact for their people,
stakeholders and wider society.
HOW IT WORKS: CLEAR OPPORTUNITY
SET AND ESTABLISHED PLAYBOOK
Our investment strategy focuses on a rich opportunity
set within five diverse sub-sectors, where we seek to
identify the key themes that drive growth:
• Payments;
• Wealth;
• Insurance;
• Technology-enabled services; and
• Lending.
Our thematic origination populates a pipeline of fast-
growing, technology-enabled businesses with solid
foundations for us to help create customer-centric,
data-driven organisations who can become market
leaders.
Within these thematic investment theses, we seek
to drive growth through our established operational
framework which his built upon three key pillars:
• Technology innovation and digital transformation;
• Buy, build and consolidation; and
• Globalisation and product development.
2022 – DRIVING GROWTH AND CHANGE
2022 was a successful year for our Private Equity
funds, delivering returns and sustainable growth
for our investors and stakeholders. The funds had
a strong year with continued growth across the
portfolio, continued deployment activity in flagship
Private Equity IV and strong exits, including Private
Equity IV’s first investment being realised within two
years of Pollen Street sourcing the investment. This
was particularly pleasing with challenging equity
markets as a backdrop and demonstrates the
continued demand for strongly growing businesses;
the market leaders that we are helping to create.
Three new platforms were added to the portfolio
in the year. PAIR Finance, the digital collections
platform operating from Berlin and focused on the
high-growth eCommerce sector was acquired in
October, Autopay the payments platform based in
Poland was acquired in July and Tandem, the UK
bank focused on financing the green transition, was
completed in January. 76 per cent of flagship Private
Equity IV has been committed to investments.
Our core focus for fundraising in 2022 has been in
laying the foundations for a successful launch of
flagship Private Equity V in 2023. AuM has remained
stable at £1.8 billion with new co-investments
offsetting our realisations and throughout the year
we have continued to develop and deepen our
relationships with investors.
Whilst we are mindful of potential economic chal-
lenges, we believe our funds remain well positioned
for continued growth. Our new deal pipeline remains
strong and potential for future exits remains attractive.
Michael England
Partner
22 March 2023
Strategic Report
POLLEN STREET
13
CREDIT
STRATEGY
This section gives insight into the strategy for our
Credit funds. The Group earns fees from managing
these funds.
KEY HIGHLIGHTS OF THE STRATEGY ARE:
• Asset-backed, senior secured lending
• Attractive returns with strong downside protec-
tion
• Potential for positive impact financing green
transition, regional growth and financial inclusion
In an uncertain world, our senior secured, asset-
based lending has a track record of attractive
returns and has demonstrated its resilience through
various economic cycles.
Following the global financial crisis, and the
subsequent retrenchment of the banks from lending
markets, Pollen Street identified opportunities to
fill the funding gap in what is a large and growing
market with a targeted and considered approach.
Our senior secured lending provides capital primarily
to non-bank lenders, technology companies and
other companies with a diverse portfolio of assets
that our debt is secured against providing a highly
resilient approach. This asset backing combined
with seniority, comprehensive covenants, bespoke
structuring negotiated bilaterally by our large
and expert team means we are able to generate
premium returns versus other public and private
debt strategies with strong downside protection.
Matthew Potter
Partner
“Portfolio performed well in the
year despite the challenging macro
environment with structuring,
prudent LTVs and seniority leading to
consistent performance”
Financial Statement 2022
POLLEN STREET
14
We are also passionate about the potential for
positive impact through the financing that we
provide whether by funding green alternatives for
homes and transport, building new mass market
homes or driving regional economic growth and
levelling up. Our capital facilitates this impact by
enabling our borrowers to build and grow their
businesses whether building homes, leasing electric
vehicles or lending to regional small businesses.
The Environmental, Social and Governance section
of the Strategic Report gives more information
about how our investments align to the United
Nations SDGs.
HOW IT WORKS: STRUCTURING FOR
PROTECTION
Pollen Street’s Credit strategy was formed following
the global financial crisis. The strategy addresses
a growing funding gap but at its core is a highly
considered approach built to withstand extreme
stresses in the economic environment.
Since inception, when making decisions about
lending, we do not judge based on current market
conditions, rather assessing on the basis of a very
stressed macro environment. We calculate the
loan amount for each deal allowing for significant
deterioration in performance, aiming to ensure
no impairments. The stresses we run are broadly
equivalent to rating agency stresses to determine
investment grade risk exposure and are more
severe than the global financial crisis and other prior
recessions.
The nature of our lending also means that we are
protected by the diversification of the underlying
assets we lend against. For example, our senior
facility to IWOCA, a leading SME lender, is secured
on more than 6,500 individual SME loans making
repayments monthly; or our senior facility to ONTO,
Europe’s largest electric car subscription provider, is
secured on over 4,500 electric cars and associated
monthly customer payments. This diversification
means that cashflows are stable with low volatility
even in a more uncertain environment where credit
defaults are predicted to rise.
The terms of our relationship with borrowers are also
critical to ensuring resilience. At Pollen Street the
comprehensive covenants that we negotiate with our
credit partners are integral to our strategy and ensure
that we have the right to step in early if there are signs
of underperformance. Covenant packages cover
not only borrower financial performance but also
asset performance and diversification with levels set
significantly inside underwriting stress tests.
In addition the terms of our facilities mean that we
are only lending against performing assets and
therefore as any underperformance emerges our
facilities automatically de-gear and reduce LTV
as borrowers are required to increase their equity
subordination to finance those underperforming
assets. Added to that automatic de-gearing, we
retain senior ranking over both the asset and the
cash of the borrower, which means we can control
the flow of loans in and out of the business if a
critical moment emerged.
2022 – GOOD PERFORMANCE AND
GROWING AUM
Throughout 2022 the Credit business has been
focused on both raising capital and building long
term investor relationships alongside deploying
funds in attractive transactions and ensuring the
existing portfolio continues to perform well. AuM
increased in the year by 36 per cent to £1.6 billion
with flagship Credit III nearing its final close in April
KEY FIGURES
£1.6bn AuM
104 deals
over the last
6 years
11% gross
unlevered
returns
Strategic Report
POLLEN STREET
15
2023 with a good pipeline of new investors in late-
stage discussions.
The portfolio performed well in the year despite the
challenging macro environment with structuring,
prudent loan to value ratios (“LTVs”) and seniority
leading to consistent performance whilst the benefit
of the higher interest rate environment drives
increased deal returns. 25 new transactions or
upsizes were completed during the year totalling
£0.7 billion of commitments with all new deals now
incorporating sustainability linked factors including
ESG margin ratchets to incentivise our borrowers to
improve their impact.
The pipeline of new opportunities continues to be
strong as we observe a shift to a less competitive
environment on the lending side as banks become
less active and public markets are largely closed for
new debt issuances. Pollen Street is maintaining a
highly selective approach and cautious underwriting
but believes it is an attractive time to deploy capital
with opportunities to generate higher returns
through financing well capitalised borrowers who
are leaders in their markets, underpinned by strong
performing assets with prudent LTVs.
Matthew Potter
Partner
22 March 2023
Financial Statement 2022
POLLEN STREET
16
DELIVERING IN LINE WITH TARGETS
I am pleased to present Pollen Street’s first financial
results following completion of the Combination on
30 September 2022. It was a successful year with
financial performance in line with guidance issued to
the market and with the consensus of equity analysts.
Over 2022, we have been focused on growing
assets under management, referred to as AuM, from
organic fundraising under the credit strategy. We
raised £0.4 billion of funds into flagship Credit III and
SMAs, equivalent to 36 per cent per annum growth.
Under the Private Equity strategy, AuM was
maintained at £1.8 billion with portfolio realisations
offset by increases in co-investment capital. The
Private Equity business was not actively fundraising
in 2022, however good progress has been made
towards the launch of flagship Private Equity V. We
expect the first close in 2023.
Deployment under the Credit strategy has also
been strong with Average Fee-Paying AuM across
the whole Group increasing by 29 per cent to £2.3
billion as at 31 December 2022 (31 December
2021: £1.8 billion).
The Combination of Pollen Street Capital Holdings
Limited and Honeycomb Investment Trust plc to
form Pollen Street plc has been transformative.
The Combination unlocks value by enabling us
to deploy capital from the Investment Company
to accelerate the growth in third-party AuM in the
Asset Manager through helping to scale existing
funds and seed new strategies. The Combination
occurred on 30 September 2022 and was effected
CFO
REPORT
“It has been a successful year
with financial performance
in line with guidance issued
to the market and the equity
analysts’ consensus.”
Julian Dale
Chief Financial Officer
Financial Statement 2022
POLLEN STREET
18
19
AUM
(£ BILLION) (£ BILLION)
AVERAGE FEE-PAYING AUM
36%
Growth in Credit AuM
5
Year on year growth
21%
Net Investment Return
in line with historic
track record
8.5 8.0
1.6
7.0
8.5
2021 2022
1.8 1.8
1.2
31 Dec 21 31 Dec 22
2021 2022
2021 2022
Growth in
Average
Fee-Paying
AuM
5
29%
1.0
0.8
1.1
1.2
Credit CreditPrivate Equity Private Equity
5
See section 5, page 212, for the definition of terms and the Reconciliation to Alternative Performance Measures (“APM”). The APMs
include AuM and Average Fee-paying AuM growth. APMs are not audited. 36% growth in Credit AuM and 29% growth in Average Fee-
Paying AuM calculated from unrounded figures. Average Fee-Paying AuM is calculated as the average of the opening and closing investor
commitments for active fee-paying Private Equity funds, invested cost for other fee-paying Private Equity funds, total assets for the on
balance sheet assets and investment commitments for fee paying-private credit funds.
£3.4bn £2.3bn
by Honeycomb Investment Trust plc acquiring
100 per cent of the share capital of Pollen Street
Capital Holdings Limited with newly issued shares
in the Company as the consideration. As such
the statutory financial statements only incorporate
Pollen Street Capital Holdings Limited from 30
September 2022, the point at which it became a
subsidiary of the Company The combined group
was renamed Pollen Street plc. Pollen Street has
two complementary business segments: the Asset
Manager, which encompasses all activities focused
on managing third-party AuM, and the Investment
Company, which encompasses all on-balance sheet
investment activity and the Group’s debt facilities.
The Asset Manager activities solely reside in Pollen
Street Capital Holdings Limited and its subsidiaries.
The Investment Company business segment has
£588 million of Investment Asset, £2 million of which
are held in Pollen Street Capital Holdings Limited
and its subsidiaries, the remainder are held within
Pollen Street plc, Bud Funding Limited and Sting
Funding Limited.
Earnings from the Asset Manager are incorporated
into the Group’s statutory consolidated financial
statements from 30 September 2022, being the
date of completion of the Combination. This basis
(the “Statutory Basis”) excludes earnings arising
in Pollen Street Capital Holdings Limited and
its subsidiaries prior to 30 September 2022. In
addition to the statutory results, we also present
proforma results for the business that incorporate
the earnings from the Asset Manager as if the
Combination had completed prior to the start of the
period. This basis (the “Proforma Basis”) explains
the performance of the newly combined entity more
fully because it includes a full history of Pollen Street
Capital Holdings Limited and its subsidiaries. It is
also aligned to the basis on which equity analysts
forecasts are prepared for the combined business.
A reconciliation between the two bases is presented
on page 27. There is no material difference between
the Statutory Basis profitability measure and
the Proforma Basis for the Investment Company
segment. Comparable results under the Proforma
Basis have also been shown for 2021 to show the
profitability trend of the Asset Manager.
On the Statutory Basis, the operating profit for the
Group was £27.3 million (2021: 30.3 million). As
noted above, this measure does not include profits
arising in Pollen Street Capital Holdings Limited
Strategic Report
POLLEN STREET
19
ASSET MANAGER GROWTH
Assets under management are tracked on a total
AuM and fee-paying basis. Total AuM broadly tracks
the commitments that investors have made into
funds managed by the Asset Manager whereas the
Average Fee-Paying AuM tracks the basis on which
the Group earns management fee, with the average
calculated from the opening and closing positions.
For Private Equity, the Fee-Paying AuM is the
committed capital in the funds, stepping down to
invested capital at the point when the subsequent
flagship fund holds its first close. Co-investment
vehicles are typically non-fee-paying. Fee-Paying
AuM for Private Credit is the net invested amount.
See page 212 for full definitions.
Proforma Profitability
(Incorporating the Asset Manager
for full year)
2022
£ million
2021
£ million
Fund Management EBITDA 8.5 7.0
Net Investment Return 28.3 30.3
EBITDA 36.8 37.3
prior to 30 September 2022, being the date of
completion of the Combination. It also includes
a charge of £3.4 million of business combination
expenses associated with the acquisition of shares
in Pollen Street Capital Holdings Limited.
The profit on a Proforma Basis incorporates the
earnings of the Asset Manager for the whole of
2022. On this basis, EBITDA closed the year at
£36.8 million (2021: £37.3 million) with earnings well
positioned to grow with the Asset Manager. Fund
Management EBITDA increased by 21 per cent in
2022 to £8.5 million (2021: £7.0 million) driven by
growth in the Fund Management Income.
Net Investment Asset Return from the Investment
Company was stable at 8.0 per cent per annum.
This corresponds to Net Investment Return of £28.3
million (2021: £30.3 million). The return for 2022 is
in line with the historical track record and guidance
issued to the market. This performance in the
current economic backdrop shows the resilience of
the strategy. The investments are senior and asset-
secured with modest LTVs, which provides strong
downside protection.
Total AuM grew to £3.4 billion as at 31 December
2022, driven by organic fundraising under the Credit
strategy. £0.4 billion of funds were raised in the
flagship Credit III and SMAs, equivalent to 36 per
cent per annum. £0.1 billion of these funds were
raised in the fourth quarter, the period over which
the statutory accounts are prepared, demonstrating
the consistency of the AuM growth over the year.
Under the Private Equity strategy we have been
preparing for the launch of flagship Private Equity V
in 2023 and not actively fund raising during 2022.
AuM for the Private Equity strategy was maintained
at £1.8 billion.
Financial Statement 2022
POLLEN STREET
20
Assets Under Management
31 December 2022
£ billion
30 September 2022
£ billion
31 December 2021
£ billion
Flagship Private Equity IV 0.7 0.7 0.7
Flagship Private Equity III 0.3 0.3 0.3
Satellite and co-investment vehicles 0.8 0.8 0.8
Private Equity 1.8 1.8 1.8
Flagship Credit III 0.4 0.4 0.3
SMAs 0.6 0.5 0.3
Investment Company assets 0.6 0.6 0.6
Credit 1.6 1.5 1.2
Total AuM 3.4 3.3 3.0
The momentum in deployment under the Credit
strategy continued in 2022, with a 29 per cent per
annum increase in Average Fee-Paying AuM
6
from
2021 to 2022. Average Fee-Paying AuM increased
to £2.3 billion by the end of 2022, up from £1.8
billion at the end of 2021. Private Equity constituted
£1.1 billion of the Asset Manager’s Average Fee-
Paying AuM over 2022 (2021: £1.0 billion) with Credit
making up £1.2 billion (2021: £0.8 billion).
The Asset Manager earns management fees from
managing and advising third-party funds. These
fees are long-term contracted revenues that are
recurring and stable and driven by the quantum of
Fee-Paying AuM.
In general, Private Equity funds charge fees on
committed capital. Investors who join these funds
after the first investors’ admission date are charged
catch-up fees, so all investors pay fees from the
date of the first close. When the next flagship fund
holds its first close, the fees are charged on invested
capital for earlier funds in the same strategy.
In general, Private Credit funds charge fees on net
invested capital. Capital is generally recycled until
the end of the investment period. Management fee
rates remain the same for the duration of the funds,
irrespective of strategy. We have guided to a long-
term management fee rate of between 1.25 per cent
and 1.5 per cent. This depends on the revenue mix
including the relative size of Private Equity compared
to Private Credit.
In addition to management fees, the Group earns
performance fees and carried interest. These fees allow
the Group to share in the profits of the funds under
management subject to meeting certain hurdles.
As part of the terms of the Combination, the Group
earns 25 per cent of the carried interest in the most
recent vintage of all flagship funds and all future
funds. For the Private Equity strategy, this includes
flagship Private Equity IV. Carried interest is generally
20 per cent of the Private Equity fund returns over
a hurdle of 8 per cent per annum with full catch-up.
For the Private Credit strategy, carry is earned on
flagship Credit III and certain SMAs. Carried interest
for the Private Credit funds is generally 10 per cent
of returns with a 5 per cent hurdle and full catch-up.
The Asset Manager segment delivered £2.9 million of
Operating Profit on a Statutory Basis over the fourth
quarter of 2022 (2021: nil). Annualising the Statutory
profitability metrics demonstrates the returns are
consistent. The annualised Total Income was £40.6
million. Fund Management Income has been growing
over the year with the growth in Fee-Paying AuM. The
annualised Statutory Asset Manager Administration
Costs were £28.9 million. This resulted in an
annualised Statutory Operating Profit of £11.7
million. Operating profit excludes depreciation of the
right of use asset which was £1.0m on an annualised
basis over 2022. The depreciation is part of Fund
Management Administration Costs on a proforma
basis.
6
Average Fee-Paying AuM is defined in the Definitions and Reconciliation to Alternative Performance Measures on page 212
Strategic Report
POLLEN STREET
21
Financial Ratios for the 3 months ended 31 December 2022 2022
Management Fee Rate (% of Average Fee-Paying AuM) 1.28%
Performance Fee (% of Fund Management Income) 24%
Fund Management EBITDA Margin (%of Fund Management Income) 26%
Fund Management Income increased by 10 per
cent (2022: £37.4 million, 2021: £33.9 million). Fund
Management Income comprises management fees,
performance fees and income from carried interest.
Revenue growth has been driven by increases in the
Group’s Average Fee-Paying AuM and income from
carried interest. The growth was offset by catch-up
fees received on flagship Private Equity IV occurring
during 2021 but not 2022.
Statutory Basis
(Incorporating the Asset Manager from
30 September 2022)
2022
£ million
2021
£ million
Total Income 10.2 -
Administration costs (7.3) -
Operating profit 2.9 -
The Management Fee Rate for the three months
ended 31 December 2022 was 1.28 per cent. This
is within the range of our medium-term guidance
of 1.25 per cent to 1.5 per cent. Performance
fees and carried interest were 24 per cent of Fund
Management Income for the quarter. This is at the
top end of the long-term guidance range of 15
per cent to 25 per cent and reflects the strength
of the underlying investment performance despite
the macroeconomic environment. The Fund
Management EBITDA Margin was 26 per cent for
2022. We are continuing our journey to raising a
long-term EBITDA Margin above 50 per cent.
On a Proforma Basis, the Asset Manager segment
delivered £8.5 million (2021: £7.0 million) of EBITDA
over 2022. This was an increase of 21 per cent from
2021. This is consistent with the technical guidance
we issued to the market at the half year and in line
with analysts’ consensus forecasts.
Proforma Basis
(Incorporating the Asset Manager for full year)
2022
£ million
2021
£ million
Change
%
Fund Management Income 37.4 33.9 +10%
Fund Management
Administration Costs
(28.9) (26.9) +7%
Fund Management EBITDA 8.5 7.0 +21%
Financial Statement 2022
POLLEN STREET
22
Financial Ratios for the year ended 31
December 2022
2022 2021
Management Fee Rate (% of Average Fee-Paying AuM) 1.27% 1.73%
Performance Fee (% of Fund Management Income) 23% 10%
Fund Management EBITDA Margin (%) 23% 21%
The Management Fee Rate for 2022 was 1.27
per cent. This is ahead of the guidance issued for
2022 of 1.25 per cent, and within the range of our
medium-term guidance of 1.25 per cent to 1.5 per
cent. We expect this to increase in 2023 as Private
Equity capital is raised.
Performance fees and carried interest for 2022 were
23 per cent of Fund Management Income for the pe-
riod. This is at the top end of the long-term guidance
range of 15 per cent to 25 per cent and reflects the
strength of the underlying investment performance.
Fund Management Administration Costs were £28.9
million for 2022 (2021: £26.9 million). The increase
of 7 per cent is driven by incremental headcount
as well as inflation. This moderate increase reflects
a well-invested cost base leading to a high drop
through from incremental revenue to profitability. We
are investing in headcount in the Investor Relations
team to support capital raising across the Group
and to internalise some capital raising costs. This will
increase the capacity and improve the efficiency of
capital raising in the longer term with some modest
overlap in costs in the shorter term. We are also
investing in dedicated talent in the adjacent strategies
that we described in the capital markets day to
support growth in those business lines.
The Fund Management EBITDA increased by 21
per cent in 2022 to £8.5 million (2021: £7.0 million)
driven by growth in the Fund Management Income.
The Group is well positioned for EBITDA growth in
future, given the momentum in AuM growth and
operational leverage.
The Fund Management EBITDA Margin was 23 per
cent for 2022. We are continuing our journey to raising
a long-term EBITDA Margin above 50 per cent.
INVESTMENT COMPANY RESILIENCE
The Group’s £588 million investment portfolio is well
diversified across deals and borrowers and is 97
per cent invested in Credit Assets originated under
our credit strategy. Investments are all either senior
secured or portfolios of well-seasoned mortgages.
The investment portfolio includes a £30 million
commitment to flagship Credit III in line with the
strategy of deploying the balance sheet to align
interests with our investors and drive third-party
AuM growth.
Our Investment Asset portfolio maintained its track
record of performance throughout the year and
delivered Net Investment Asset Return of 8.0 per
cent per annum, demonstrating a consistent and
robust performance despite the more challenging
macroeconomic backdrop. This is in line with the
historic track record and our guidance previously
issued. We believe that our Investment Asset
portfolio strategy, combining bespoke structuring
and built to withstand highly stressed scenarios with
backing by diverse pools of financial and hard assets,
enables us to deliver consistent performance.
Strategic Report
POLLEN STREET
23
Note The chart above shows annualised Net Investment Asset Returns for 2022 and the NAV Return prior to this, presented on a semi-
annual basis
H1 2018 H2 2018 H1 2019 H1 2020 H1 2021 H1 2022H2 2019 H2 2020 H2 2021 H2 2022
Annualised Net Investment Asset Returns since 2018
9.0%
7.9%
7.6%
8.0%
8.2%
7.2%
8.7%
8.2%
7.8%
8.2%
The income on Net Investment Assets was £28.3
million (2021: £30.3 million). The income was higher
in 2021, reflecting a slightly larger Investment Asset
base prior to some share buy-backs in early 2022 and
some higher yielding investments in 2021.
This robust performance was driven by strong credit
asset return of 9.4 per cent annualised (2021: 9.5
per cent ). The credit impairment charge for the
year was minimal, a release of £0.2 million (2021:
£0.8 million). The low impairment charge, despite
the macroeconomic headwinds, reflects Pollen
Street’s underwriting approach where the deals are
stress tested to withstand a materially more adverse
macroeconomic environment than has occurred over
2022. See the Credit strategy section on page 10 for
further information.
Investment Asset Segment 2022 2021
7
Investment Assets £588 million £615 million
Average Net Investment Assets £355 million £359 million
Income on Net Investment Assets £28.3 million £30.3 million
Return on Net Investment Assets 8.0% 8.5%
7
Note 2021 return is calculated as the NAV return for the period
Financial Statement 2022
POLLEN STREET
24
8
See section 5 for reconciliation to Alternative Performance Measures.
RETURNS BRIDGE 2022
8
9.4%
Investment
Yield
Impairments
and Write Offs
Risk
Adjusted
Yield
Equity &
WC
Effect of
Leverage
Effect of
IM Fees
Fund Opex Investment
Asset
Return
0.0% 9.4%
(-0.6%)
2.2%
(-2.5%)
(-0.5%)
8.0%
Investment Assets reduced slightly in the year (31
December 2022: £588 million; 31 December 2021
£615 million) with the Company redeploying capital
from realised deals into new facilities as well as
upsizing existing investments. New transactions
in the period have included five structured deals
including Onto, an electric vehicle subscription
service with a commitment of £25 million. There
were also two real estate partnerships, Earlsfort and
MM Capital, that target loans between €1 million and
€25 million in Ireland. The Investment Asset portfolio
comprises 38 investments, with an average balance
outstanding of £15 million and an average LTV of 68
per cent. The remainder of the portfolio is made up of
the small equity portfolio of 3 per cent.
The Investment Company is well-positioned for an
interest rate rise with more floating rate assets than
floating rate liabilities. As such, we expect yield on
the Credit Assets to rise with the increase in interest
rates over the period.
PROFIT AFTER TAX
The statutory profit after tax was £26.4 million (2021:
£30.3 million). The main drivers of this change were
the operating profit from the new Asset Manager
segment of £2.9 million (2021: nil) and the operating
profit of the Investment Company segment closing
the year at £28.3 million (2021: £30.3 million), offset
by £3.4 million of expenses incurred by Pollen
Street plc in acquiring the share capital of Pollen
Street Capital Holdings Limited and £0.5 million
of costs relating to the start-up losses of the US
asset management business, which form part of
the operating profit of the Central segment. The US
business comprises a team of six individuals building
our franchise in that market. The start-up losses are
expected to reduce as the US business raises AuM
and increases revenue. The charge for depreciation
and amortisation was £0.4 million. This principally
relates to the computer and office equipment and
a charge of £0.7 million per annum effective from
completion of the acquisition in the shares in Pollen
Street Capital Holdings limited until 2028, associated
with the amortisation of the intangible assets
representing the value of customer relationships.
Strategic Report
POLLEN STREET
25
Statutory Basis
(Incorporating the Asset Manager
from 30 September 2022)
2022
(£ million)
2021
(£ million)
Operating profit of Asset Manager 2.9 -
Operating profit of Investment
Company
28.3 30.3
Operating profit of Central seg-
ment
(3.9) -
Operating profit of Group 27.3 30.3
Depreciation and amortisation (0.5) -
Profit before tax 26.8 30.3
Corporation tax (0.4) -
Profit after tax 26.4 30.3
The profit after tax on the Proforma Basis increased to £32.9 million (2021: £31.3 million) with the growth
principally coming from the Asset Manager.
9
Effective tax rate is calculated as the ratio of the tax charge (£ 1.5 million) to the Fund Management EBITDA (£8.5 million),
expressed as a percentage
Proforma Basis
(Incorporating the Asset Manager
for full year)
2022
(£ million)
2021
(£ million)
EBITDA 36.8 37.3
US costs (2.0) (2.1)
Depreciation and amortisation (0.4) (0.4)
Profit before tax 34.4 34.8
Corporation tax (1.5) (3.5)
Profit after tax 32.9 31.3
The Investment Company has not incurred corporation tax, because it is an investment trust. However, the
Group incurs corporation tax in its Asset Manager business, which is not an investment trust. The effective tax
rate for 2022 was 14 per cent of Operating profit on a Statutory Basis or 18 per cent of the Fund Management
EBITDA on a Proforma Basis
9
. This is slightly favourable compared to the illustrative tax rate described in the
capital markets day presentation.
The following table shows a reconciliation between the profit before tax under the Statutory Basis and the
Proforma Basis.
Financial Statement 2022
POLLEN STREET
26
Reconciliation of Proforma Basis profit after tax to
Statutory Basis profit after tax
2022
(£ million)
2021
(£ million)
Proforma Basis 32.9 31.3
Profit after tax in Pollen Street Capital Holdings Limited
prior to Combination
(3.1) (1.0)
Business combination expenses (3.4) -
Statutory Basis 26.4 30.3
LEVERAGE
The Group uses leverage in the Investment Company.
The leverage facilities were extended and upsized
during 2022 to provide long-term liquidity to the
business and a lower blended margin. As at 31
December 2022 the Group had £263.6 million of
leverage and £23.3 million of cash. This is equivalent
to a net debt-to-tangible equity ratio of 69 per cent.
It is less than the borrowing limit set by the Board of
100 per cent and within the target range of 50 to 75
per cent.
DIVIDENDS
Pollen Street declared dividends of £30 million for
2022, an increase of £2 million from the prior year
(2021: £28 million). This was in line with the dividend
targets issued by the Board on capital markets day
on 1 March 2022. They reflect a quarterly dividend of
20.0p per share for the first half of the year and 16.0p
per share for the second half.
The Board’s dividend targets published in March
2022 remain in place. Dividends for 2023 are
targeted at £32 million with the Group aiming to grow
dividends progressively thereafter, with a dividend no
lower than £33 million in 2024
10
. The dividend will be
paid quarterly for 2022 and 2023, and semi-annually
from 2024 onwards.
As part of the terms of the Combination, former
Pollen Street Capital Holdings Limited shareholders
waived dividends paid to them in 2022 and 2023
with respect to around 50 per cent of the shares
issued to them by the Group. As such, the dividend
targets correspond to a dividend per share of 16p for
each quarter for 2023 and at least 25.5p for each half
year for 2024.
OUTLOOK
The Group remains in a strong position for growth
in 2023. Fund Management Income is expected
to step up following the anticipated closing of the
flagship Private Equity V in 2023 and continued capital
deployment under the credit strategies. The balance
sheet assets have strong downside protection from
credit risk and are positioned to benefit from rising
interest rates.
10
Dividend targets stated in GBP amounts are based on the outstanding shares at the time of publication (64,209,597)
and would be scaled according to any buybacks or new issuance
Strategic Report
POLLEN STREET
27
Financial Guidance
AuM £4 to £5 billion medium-term Fee-Paying AuM
Management Fee Rates
c.1.25%–1.50% Average Fee-Paying AuM over
the long term
Performance Fees and Carry
c.15%–25% of total Fund Management Income
on average over the long term
Fund Management EBITDA Margin
Long-term fund management adjusted EBITDA
margin in excess of 50%
Net Investment Income
c.8% long-term target return on net
investment assets
Dividend
Targeted at £32 million in respect of 2023 and
no lower than £33 million in 2024
Julian Dale
Chief Financial Officer
22 March 2023
Our financial guidance for the medium term remains in place. The medium term is defined as two to three years
from completion of the Combination, being 30 September 2022.
Financial Statement 2022
POLLEN STREET
28
INVESTMENT COMPANY TOP TEN HOLDINGS
Country Deal Type Sector Value of
Holding
at Year-end
(£m)
LTV Percentage
of
Investment
Assets
1. Sancus Loans
Limited
United
Kingdom
Senior
Short Term
Property
Loans
60.2 56% 10.5%
2. Creditfix Limited
United
Kingdom
Senior
Discounted
Fee Receiv-
ables
58.2 44% 10.2%
3. UK Agricultural
Loans Limited
United
Kingdom
Senior
Short Term
Property
Loans
45.7 51% 8.0%
4. Beaufort
United
Kingdom
Senior
Short Term
Property
Loans
45.4 67% 7.9%
5. IWOCA Loans
Limited
United
Kingdom
Senior SME 31.0 89% 5.4%
6. Downing
Development
Loans
United
Kingdom
Senior
Short Term
Property
Loans
29.8 66% 5.2%
7. Nucleus Limited
United
Kingdom
Senior CBILS SME 26.2 92% 4.6%
8. GE Portfolio
United
Kingdom
Secured
Secured
Consumer
23.7 66% 4.1%
9. Duke Royalty
United
Kingdom
Senior SME 23.5 21% 4.1%
10. Tier
United
Kingdom
Senior
Micro Mobility
Fleet Finance
20.6 64% 3.6%
Data as at 31 December 2022
Strategic Report
POLLEN STREET
29
Alison Collins
Head of ESG
At Pollen Street, ESG is core to our strategy, purpose
and culture. We drive positive change through our
investments, whether by funding green alternatives
for homes and transport, accelerating financial
inclusion, or driving regional economic growth by
investing in businesses that help to reduce social and
regional disparities.
OUR APPROACH TO ESG
At Pollen Street, we have a proud history of thinking,
behaving and investing responsibly, and we believe
in the potential for positive impact through the work
that we are passionate about. We are committed to
maintaining and enhancing our focus on actions that
generate positive impact for our investors, people,
portfolio and wider society.
Over recent years, Pollen Street has been strengthen-
ing its approach to ESG, relevant to our investments
and overall strategy. As a financial and business ser-
vices specialist, the firm can promote positive societal
impacts directly in the businesses in which it invests,
but also with an amplifying effect through those it
supports either with funding, or access to resources
and expertise. We were delighted that Pollen Street
Capital was named Best Responsible Alternative In-
vestment Team UK 2023 by Capital Finance Interna-
tional Magazine – the third year in a row. In addition,
at the FTAdviser Diversity in Finance awards, Lindsey
McMurray, our CEO, was named Diversity Champion
of the Year and Pollen Street was highly commended.
“We believe in the
potential for positive
impact through the
work that we are
passionate about.”
ENVIRONMENTAL,
SOCIAL & GOVERNANCE
(“ESG”)
Financial Statement 2022
POLLEN STREET
30
In 2022, we also made great strides in our approach
to ESG data and analytics, developing a proprietary
scoring mechanism, with inputs from the compre-
hensive ESG data points collected from our portfolio
investments. This enables us to rank our investments,
assess progress and to direct improvements.
Commitment to positive ESG outcomes is manifest-
ed through direct and measurable goals, and effec-
tive 2021, Pollen Street has set a number of targets
at both Group and portfolio level. These include:
• Pollen Street maintaining a carbon neutral status
for each year and working with our portfolio
companies to be net zero within five years of
investment (for new investments after 2021); and
• Pollen Street is committed to promoting strong
governance throughout the portfolio including the
universal inclusion of ESG matters on all portfolio
company board agendas.
To strengthen commitments to ESG and sustain-
ability,in 2022 we have incorporated sustainability
linked factors, including an ESG margin ratchet
mechanism, into our new credit facilities as an incen-
tive to achieve ESG goals. Under this mechanism,
Pollen Street provides margin reductions on facilities,
subject to the counterparty improving their ESG
score and achieving performance targets, such as
achieving net zero status, and there is a correspond-
ing margin increase if their scores do not improve or
meet agreed thresholds.
Pollen Street is now carbon neutral. To achieve our
goal of carbon neutral operations by 2022, we have
taken the step to reduce Pollen Street’s Scope 2
emissions by sourcing renewable electricity tariffs,
and we have offset all residual Scope 3 emissions
occurring in 2021 (excluding purchased goods and
services) by purchasing carbon offsets through
Ecologi. We will continue to follow the same ap-
proach for future periods.
Strategic Report
POLLEN STREET
10. REDUCED INEQUALITIES
11. SUSTAINABLE CITIES
& COMMUNITIES
13. CLIMATE ACTION
4. QUALITY
EDUCATION
5. GENDER
EQUALITY
12. RESPONSIBLE
CONSUMPTION &
PRODUCTION
3. GOOD
HEALTH &
WELL-BEING
9. INDUSTRY,
INNOVATION &
INFRASTRUCTURE
8. DECENT WORK &
ECONOMIC GROWTH
1. NO POVERTY
HOW OUR INVESTMENTS ALIGN TO SDGS
OUR STRATEGY AND SDG ALIGNMENT
At Pollen Street our framework helps contribute to
the UN Sustainable Development Goals (SDGs). The
SDGs provide a lens through which investors can
align themselves with the needs of the wider world.
The metrics we collect from our Private Equity and
Credit portfolios enable us to develop deeper insights
into where our investing has an impact.
Across both Private Equity & Credit, our investments
align to multiple SDGs. We have performed an
analysis of contributions towards the achievements
of the SDGs portfolio company and Credit platforms,
including the Credit platforms within the Investment
Company. The chart below shows the results of this
analysis. SDGs where we have the most material
impact are shown with the largest area and SDGs
with a smaller impact are shown with a smaller area.
Financial Statement 2022
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32
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33
OUR ESG IMPACT FRAMEWORK
Our ESG framework is built around identifying where our investments can have a positive impact, and
amplifying that through our investment process.
Promoting diversity and, in particular
seeking to broaden representation
at Board and company levels
PROMOTE
DIVERSITY
We aim to ensure that the products and services of our portfolio companies and credit partners provide
the best outcomes for stakeholders, including improving financial health for consumers and SMEs.
We believe that a diverse business has multiple benefits. We champion diversity and seek to ensure
that equal opportunities are promoted to all.
We focus on efforts that provide real benefits and which address relevant regional issues.
SOCIAL IMPACT
Access to loans and other financial
products is made available to a
broader audience, promoting greater
access to opportunity
FINANCIAL
INCLUSION
Provide services to small businesses
promoting growth and job creation
throughout the markets in which
Pollen Street operates
REGIONAL
ECONOMIC
GROWTH
GOVERNANCE & LEADERSHIP
We ensure we are appropriately accountable for our decisions, implementing strong governance throughout
operational processes with the ability to identify and manage material risk factors, including sustainability risks.
As we focus our investments within the largely regulated financial services sector, our portfolio operates high
governance standards as a baseline.
Help reduce financial crime through a
focus on governance, regulatory
compliance and effective AML &
Cyber procedures
REDUCING
THE IMPACT
OF FINANCIAL
CRIME
ENVIRONMENTAL IMPACT
We recognise our responsibility to do business in a manner that protects and improves the environment for future
generations, as well as supporting businesses that take us closer to a clean and sustainable environment.
Create solutions that have a positive
environmental impact – e.g. funding for
residential energy efficiency initiatives
and electric vehicles
CREATING
A LASTING
ENVIRONMENTAL
IMPACT
Financial Statement 2022
POLLEN STREET
34
35
ESG IN THE INVESTMENT PROCESS
Our approach to investing is guided by our purpose and to focus on actions that generate positive impact for
our investors, people, portfolio companies and wider society. As a core part of our investment process, we
engage with both our Credit and Private Equity partners to identify impact areas within ESG that are relevant
to them and where we can support them to accelerate their positive impact. We set out our approach in more
detail in the graphic below:
UPFRONT DUE DILIGENCE
As new partners join our portfolio, we
assess their existing ESG programme and
impact, identifying areas of improvement
and ways to support.
1
EFFECTIVE MONITORING
& MEASUREMENT
We have developed a set of standard
KPIs to enable consistent tracking and
benchmarking across our portfolio. ESG
is a standing agenda item as part of
quarterly monitoring.
4
ACTIVE MANAGEMENT
We engage with management teams to
set impact goals and ambitions. Senior
deal team members sit on the board of our
PE portfolio companies and ensure ESG
is on the management team agenda and
achieves senior-level buy-in.
2
GOVERNANCE & OVERSIGHT
The Pollen Street ESG Committee reviews
implementation of the ESG programme
and recommends any changes or
improvements.
5
CROSS-PORTFOLIO
COLLABORATION
We hold collaborative workshops where
we benchmark best-practice and identify
development opportunities. The Pollen
Street Hub leads ESG best practice
sharing, assisting with impact assessments
and project activity within individual
companies.
3
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POLLEN STREET
35
ESG DATA AND SCORING
We treat our approach to ESG data and analytics
with the same rigour that we approach any other
strategic driver of our business, which means we are
better equipped than ever to track and build on our
positive impact.
We now collect over 50 data points for each portfolio
company and active credit partner on an annual
basis. We have used internal talent and expertise to
develop our proprietary scoring system and the ESG
data and analytics are incorporated into our data
warehouse, which we use as a track record.
The scoring is based on internal indices and
benchmarks, and informed by categories commonly
used by ESG ratings agencies, investor and industry
standards including the ESG Data Convergence
Initiative and Sustainable Finance Disclosure
Regulations (“SFDR”), and what is relevant for Pollen
Street to assess ESG sustainability and practice
across our investments.
This means that we can easily track progress against
our targets, create league tables for investments in
PE and Credit, and set a base level for improvement,
using reporting dashboards as a basis to engage
portfolio companies on action plans to improve their
scores and overall ESG practice.
The same scoring system is used in the investment
process, as part of our Due Diligence and to inform
post-investment action plans, and we are starting to
incorporate the scoring into an ESG ratchet for credit
investments.
We will publish more details, including relevant data
points for the 2022 reporting period, as part of
our annual ESG report later this year. This will also
include relevant Principal Adverse Impact (“PAI”)
disclosures as pertaining to our Article 8 fund status
under the SFDR.
Reporting dashboards and
feedback frameworks rolled out
The ESG team is now working with our PE
portfolio to implement action plans, and
strengthening data collection to this level
across our credit partners.
50
data points for each
portfolio company
Financial Statement 2022
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36
37
INDUSTRY INITIATIVES ALIGNMENT
We are proud to participate in a number of organisations and initiatives to advance collaboration, best-practice
and transparency on ESG and sustainability across the industry and broader society.
SIGNATORY OF
RESPONSIBLE INVESTMENT
We have been a signatory to the United Nations’ Principles for
Responsible Investment since 2019. We received an A rating in both
the Strategy & Governance and Private Equity modules in the most
recent rankings.
Pollen Street has committed to progressive Article 8 for current PE and
Credit funds, and is working to align processes and disclosures with
Article 8 requirements across all future funds.
CLIMATE CHANGE
Pollen Street has joined the initiative Climat International (ICI) and is
signing up to the ICI commitments in order to participate with industry
peers and share best practice to address Private Equity’s exposure to
climate change risk.
We are also a member of Fairr Initiative, the world’s fastest -growing
investor network focusing on ESG risks in the global food sector.
DIVERSITY, EQUITY & INCLUSION (DEI)
We are advocates and partners to a number of diversity organisations
and initiatives, to advance awareness and representation agenda
across the industry.
ESG REPORTING EXCELLENCE
An inaugural member of the ESG Data Convergence Initiative
A collective investor initiative to increase the quality, consistency, and
comparability of ESG data in private markets.
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37
CASE STUDIES
Supporting socially
impactful products
and propositions
Micro-mobility
TANDEM
ONTO
In November 2022 one of our Private Equity portfolio
companies, Tandem, launched its new Tandem
Marketplace, a consumer-focused hub which
provides information and resources to promote
greener living. With an aim to be one of the UK’s
greener digital banks, Tandem is focused on
supporting its customers to make greener financial
choices, leveraging its position as a green enabler.
The first phase of the Tandem Marketplace gives
people the information they need to retrofit their
homes and connects them to Tandem’s home
improvement partners, helping consumers to take
climate action and save money on their energy bills.
Pollen Street first became a financing partner to
Onto in 2021. We recently announced a new £100
million asset-backed facility with Onto, boosting
its mission to accelerate electric car adoption and
provide a flexible alternative to the traditional car
ownership model.
The facility will enable Onto to continue expanding
its UK fleet with the latest electric car models. The
next few years represent a pivotal moment for the
adoption of electric cars and we want to help Onto
to make them more accessible and affordable
to people who want to make environmentally
conscious choices.
Financial Statement 2022
POLLEN STREET
38
39
ADDRESSING CLIMATE RISKS
AND OPPORTUNITIES
Climate change is one of the most pressing issues of
our time. As we begin to see an increase in extreme
weather conditions, including recent heatwaves
and wildfires across the globe, the threat of climate
change is clear, and it is imperative that businesses
focus on the issue.
Financial Services has an important role to play
in addressing both climate-related risks and
opportunities and at Pollen Street. In line with
the principles of the Task Force for Climate-related
Disclosures (“TCFD”), we are building a framework
to better understand the impacts of our operations
on the climate, and the impacts of climate change
across the portfolio. As an investment trust we are
not obligated to comply with TCFD, however we
have considered our progress against the TCFD
requirements in preparation for adopting these in the
future. We have described our progress against the
11 recommendations of the TCFD, across four key
pillars of Governance, Strategy, Risk Management
and Metrics and Targets below.
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39
GOVERNANCE
The organisation’s
governance around
climate related risks
and opportunities.
1. Description of the Board’s oversight of
climate-related risks and opportunities
The Board has established a Committee structure to
assist in the discharge of its responsibilities, through
delegations within approved terms of reference.
Climate related responsibilities are allocated to
certain Committees dependent on their overall
purpose and remit.
The Board Risk Committee is responsible for
oversight of all risk matters across the Group
including TCFD. The ESG Committee, which is one
of the Group’s management-level Committees, is
responsible for overseeing the implementation of
the Group’s responsible investment policies and
initiatives, including climate matters across the
firm and broader portfolio. It meets on a quarterly
basis. The Investment Committee, comprising
senior investment partners from across the Group,
considers and reviews ESG risks and opportunities
as they relate to investee companies.
2. Description of management’s role in assessing
and managing climate-related risks and
opportunities
The Group has a dedicated Head of ESG, who,
supported by the ESG Committee, is responsible
for setting the strategic direction of ESG at Pollen
Street and communicating and instructing relevant
Pollen Street staff and portfolio stakeholders on the
contents of the ESG Policy. The Head of ESG sits
within the Pollen Street Hub. The Hub is a dedicated
resource within Pollen Street that works across the
portfolio to drive the ESG agenda both internally and
throughout the portfolio. In conjunction with the ESG
team, the investment teams are responsible for:
• Ensuring that ESG considerations are fully
embedded within the investment process; and
• Escalation of ESG issues identified as part of
diligence and monitoring of investments; with
appropriate follow-up with investee companies to
ensure these are being addressed.
The Investment Committee reviews ESG risks
assessed as part of the due diligence process, which
includes environmental and climate risks.
The Group’s governance priorities for 2023 are:
• Continue to enhance Board oversight and
governance frameworks as related to climate-
related matters and progress against net zero
commitments; and
• Continued focus on Group-wide education of the
impacts of climate change, including addressing
any Board or management skills gaps on this area.
Financial Statement 2022
POLLEN STREET
40
STRATEGY
The actual and
potential impacts of
climate-related risks
and opportunities on
the organisation’s
businesses, strategy
and financial planning
where such information
is material.
3. Description of the climate-related risks and
opportunities the organisation has identified
over the short, medium, and long term.
The group has performed an initial materiality
assessment of climate-related risks and opportunities.
Given the nature of the Group’s day-to-day activities
across our offices, which are leased and are in
metropolitan areas, the impacts of both transition and
physical climate-related risks are considered low.
In our investment process, whilst we aim to avoid
investing in companies whose products, services or
practices cause environmental harm, we recognise
that our portfolio companies have ESG risks and
opportunities, which vary by company, sector, and
jurisdiction, as well as holding periods of investments.
We believe that financial services has a significant role
to play in funding green initiatives, such as electric
vehicles and green home improvements, and we
recognise the significant contribution this will make
in turning the tide on the climate crisis. We believe it
is our responsibility to support solutions that have a
positive environmental impact, enabling businesses
and people to make a real difference.
4. Description of the impact of climate related
risks and opportunities on the organisation’s
businesses, strategy and financial planning. As
noted above, at a Group level we consider the impact
of climate related risks on the firm’s operations and
financial statements to be limited.
However, as an organisation, ESG and environmental
matters play a significant role in our investment
process. For example, the team have invested in
creating a proprietary approach to rating potential
investments’ ESG performance and we track
performance against ESG KPIs across investments,
where environmental KPIs are a key component.
We are also committed to integrating climate related
risks and opportunities into our investment strategy,
considering the following areas:
• The ability to decarbonise our investment portfolio,
supporting the implementation of net zero com-
mitments and carbon reduction strategies; and
• Investment in products and solutions that help
reduce negative environmental impacts.
5. Description of the resilience of the organisa-
tion’s strategy, taking into consideration differ-
ent climate-related scenarios, including a 2°C
or lower scenario.
The Group invests in Financial and Business services
sectors, we consider the risk of significant effects
of climate change associated with a 2°C or lower
scenario on the Group’s direct operations to be
limited in terms of proportionality to the Group’s
broader risk agenda. Relevant disaster recovery
policies are in place to ensure the safe and continued
operation of our office and IT infrastructure, which
are overseen by the Executive Committee supported
by relevant departments such as IT and ESG.
As part of our ESG strategy, we work with investee
companies to set climate reduction and decarboni-
sation strategies across investment horizons.
The Group’s strategy priorities for 2023 are:
• In 2023, the Group will further develop an internal
view of climate change risks and opportunities,
reflecting best practice, to help inform the Group’s
strategy.
• The Group will also develop a framework to
perform climate-related scenario analysis,
including a 2°C or lower scenario.
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41
RISK MANAGEMENT
How the organisation
identifies, assesses,
and manages climate-
related risks.
6. Description of the organisation’s
processes for identifying and assessing
climate-related risks.
As set out in the risk management & principal risks
and uncertainties section on page 56, the Group
has developed a comprehensive risk management
framework, with the Board overseeing the
management of key and emerging risks, including
Climate and other ESG risks, which are included on
the Group risk register.
We typically do not invest in energy-intensive sectors
or have direct exposure to the fossil fuel sector, and
therefore consider our exposure to climate risks to
be limited.
The Group has a set of minimum standards to
ensure climate change risks are assessed and
measured, which are incorporated into initial deal
team investment assessments and ongoing portfolio
management. This includes reviewing counterparty
approach to environmental factors and collecting
metrics to identify the environmental impacts of their
operations, and to implement reasonable measures
to minimise any negative impacts.
7. Description of the organisation’s processes
for managing climate-related risks.
Any climate-related risks are managed by the ESG
and investment teams with support from other
parts of the business as appropriate. The risks are
also subject to challenge from our second line risk
management function and third line internal audit
function as described in the risk management
section on page 56.
Across our investment strategies, ESG forms a
key part of our active ownership and engagement
activities. We work closely with the companies’
management teams, using our influence to support
implementation of appropriate ESG policies,
initiatives and KPIs. This includes climate-related
risks such as measurement of carbon emissions.
We ensure that each portfolio company board of
directors is accountable for ESG and that it regularly
reviews progress against agreed ESG roadmaps.
Each company assigns an ESG point of contact
and the Group supports them in identifying and
managing material risks.
Pollen Street believes that the Group has a important
role to play in managing ESG risks for society.
However, the Group has concluded that there are no
material ESG risks related to the financial statements.
8. Description of how processes for identifying,
assessing and managing climate-related risks
are integrated into the organisation’s overall
risk management.
The monitoring of climate-related risks is integrated
into Pollen Street’s existing risk management and
investment monitoring processes. With respect to
individual portfolio companies, any identified climate
risks will be monitored on a regular basis, including
progress against ESG roadmaps, initiatives and KPIs.
In addition, the ESG team, with support from the
Investment teams, conducts an annual portfolio-wide
ESG review which includes climate-related risks.
Over the last year we have developed our proprietary
ESG scoring model and we measure Carbon
Footprint across the firm and portfolio. This enables
us to analyse and track progress against our net zero
targets, as well as to identify further improvement
opportunities.
The Group’s risk management priorities for 2023 are:
• Enhance data strategy for collecting and reporting
on Climate risk.
• Leverage best practice such as iCI tools and
knowledge to support our Climate risk management
processes.
Financial Statement 2022
POLLEN STREET
42
METRICS AND TARGETS
The metrics and
targets used to assess
and manage relevant
climate-related risks and
opportunities where such
information is material.
9. Disclosure of the metrics used by the
organisation to assess climate-related risks
and opportunities in line with its strategy and
risk management process.
At Group level, we have focused on the measurement
of our carbon footprint and track the emissions from
our Scope 1, 2 and 3 activity.
As part of our ESG data collection, we regularly
monitor a broad range of climate-related metrics along
with a wider set of ESG measures. The metrics that
we track range from standardised KPIs such as the
adoption of climate-related policies and appropriate
governance through to KPIs specific to individual
portfolio companies. We also measure and report
on greenhouse gas emissions from across all Private
Equity portfolio companies and Credit counterparties,
using a third party to undertake the assessment.
10. Disclosure of Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas (GHG)
emissions and the related risks.
We have performed an annual carbon footprint
measurement exercise since 2019 with the results
for the Group shown below for 2021. The numbers
in the table below were calculated by BeZeroCarbon
for Pollen Street Capital Holdings Limited and its
subsidiaries. The Company has not disclosed
this information previously, because prior to the
Combination it had no internal operations or physical
assets such as property.
We have taken action to reduce our carbon
emissions by sourcing renewable energy from
Ecotricity and we are taking action across the
Group to further reduce our carbon footprint by
working with our employees and our suppliers to
implement environmentally friendly practices. We
have entered into carbon offsetting arrangements in
2022 to offset the residual carbon produced during
2021 as measured by BeZeroCarbon. We will
disclosing our 2022 figures in our ESG report to be
published later in 2023.
We are working with our portfolio companies to
develop net zero commitments and strategies,
leveraging science based targets methodologies
or equivalent.
2021
tCO2e
Scope 1 Direct emissions form the organisation’s activity -
Scope 2 Emissions from the use of purchased electricity 5.8
Scope 3
Indirect emissions that occur in value chain,
including emissions upstream and downstream
(excludes financed emissions)
80.8
Total Total Scopes 1,2, and 3 emissions 86.6
Intensity Scope 1 and 2 emissions per FTE 0.08
Scope 1,2 and 3 emissions per FTE 1.2
The method used for calculating GHG emissions is in line with the GHG Protocol Corporate Accounting and Reporting Standard. Scope
1 represents the direct emissions from owned or controlled sources (such as gas boilers or owned fleet vehicles), Scope 2 represents the
indirect emissions from the generation of purchased electricity and Scope 3 represents other indirect emissions across our value chain
(including business travel, employee commuting including work from home, waste and water and excluding purchased goods and services)
Strategic Report
POLLEN STREET
43
11. Description of the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
As a firm, we set a target for Pollen Street to
be carbon neutral by the end of 2022. This was
achieved, not only by making carbon reductions, but
also by purchasing carbon offsets through Ecologi.
We also set targets for portfolio companies to set
net zero commitments within five years of Pollen
Street investment. In 2022, 40 per cent of companies
had either achieved carbon neutral status or had
set net zero commitments. We also score portfolio
companies on their climate and environmental
strategies as part of our deal scoring model, setting
expectations to improve practice in this area and to
put in place meaningful carbon reduction plans. We
use these scores as part of an ESG margin ratchet
for Credit investments, subject to achieving ESG
performance targets.
Our priorities for metrics & targets for 2023 are:
• Strengthen measurement activities for Carbon
footprint, including Scope 3 emissions of under-
lying investments.
• Formalise net zero commitments and ensure the
portfolio is setting its own meaningful targets,
leveraging science-based methodology.
• Ensure tracking of operational carbon reduction
plans.
Financial Statement 2022
POLLEN STREET
44
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
The Group complies with the Non-Financial Reporting
requirements contained in sections 414CA and
414CB of the Companies Act 2006. This information
is intended to help stakeholders better understand
how we address key non-financial matters.
Further details of the activities we undertake in
supporting these frameworks are available on our
website. Details of our business are included on
pages 47 to 54 and our principal risks and how we
manage those risks are included on pages 58 to 62.
SOCIAL MATTERS
Powered by Purpose, we believe in the critical role
that financial services has to play in driving positive
impact in a tangible way for the real economy.
Our purpose is to deliver long-term sustainable
performance by enabling society through frictionless
financial services. The firm is committed to being:
• Honest and fair with investors and portfolio
companies.
• A good citizen, driving growth that also delivers a
positive impact.
• A responsible and responsive employer that treats
every person as a whole person.
• A guardian for the next generation, contributing
our expertise to promote a better world.
EMPLOYEE MATTERS
Our people are our most valuable asset, and this
unwavering belief guides the way in which we
conduct our business. From recruiting diverse
talent, exceptional professionals that celebrate our
core values, to the extensive investment we make
in learning and development initiatives, our goal
is to foster a high performing, collaborative and
entrepreneurial culture. We are also committed
to valuing our people’s differences, their different
experience, backgrounds and expertise, and being
an equal opportunities employer. We will not tolerate
any form of unlawful discrimination and our approach
to recognising and rewarding employees is free from
any form of bias.
DIVERSITY, EQUITY & INCLUSION –
ORGANISATION
At Pollen Street we value our differences. It is our
different experiences, backgrounds, expertise,
and identities that promote an environment of
entrepreneurial and progressive thinking. It is
therefore critical that we have a diverse and inclusive
workforce. Irrespective of how our people identify,
where they come from, where they went to school,
who they love, their race, their ethnicity, or any other
factor that differentiates them, they can thrive at
Pollen Street.
We take a strategic approach to DEI and undertake
a comprehensive annual survey to understand our
workforce demographics. This data informs our
strategy, which allows us to foster a truly inclusive
workplace where our people can be their true selves.
We are also committed to making broader social
change, and this is demonstrated via our partnerships
with Future First and 10,000 Black Interns.
DIVERSITY, EQUITY & INCLUSION –
BOARD OF DIRECTORS
The Board recognises the importance and material
benefits of diversity and remains committed to
ensuring Directors bring a wide range of backgrounds,
skills, knowledge, experience, and perspectives. All
appointments are made on merit against objective
criteria recognising the benefits of a diverse Board.
The Board met its original target of at least 25 per cent
female representation on the Board, with two female
Directors of the seven (29 per cent ). Recognising
new recommendations for FTSE listed companies will
revise its target to 40 per cent female representation.
Furthermore, recognising the importance of ethnic
diversity as highlighted by the Parker Review, the
Board has met its target of at least one Director from
an ethnic minority with its most recent appointment.
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45
RESPECT FOR HUMAN RIGHTS
We are committed to preventing any form of slavery
and human trafficking. We seek to ensure there are
no such practices in our business and supply chain.
During the year, we have carried out employee
training and awareness raising and continued
to include anti-slavery considerations in supplier
selection and due diligence.
We have also conducted a review of our own
business, our portfolio companies that are covered
by our statement and material suppliers. The Group’s
full policy on Modern Slavery can be found at https://
www.pollenstreetgroup.com/modern-slavery-act/
ANTI-CORRUPTION AND
ANTI-BRIBERY MATTERS
We are committed to acting honestly, fairly, and
professionally across all our business activities
and take a zero-tolerance approach to bribery and
corruption. Our systems and controls are designed
to identify and reduce corruption risk, and where
applicable, consider the requirements of the UK
Bribery Act and the Foreign Corrupt Practices Act
and other relevant laws and regulations.
Alison Collins
Head of ESG
22 March 2023
Financial Statement 2022
POLLEN STREET
46
The Strategic Report, including this section, has been
prepared in accordance with the requirements of
Section 414A to 414D of the Companies Act 2006
(the “Act”). This section covers other business and
statutory disclosures including section 172 disclosures.
KEY INFORMATION
investment company incorporated and domiciled
in the United Kingdom
registered number 09899024.The Company is a
On 30 September 2022, the Company acquired
Pollen Street Capital Holdings Limited with newly
issued shares in the Company as consideration. This
transaction is referred to as the Combination. The
Company was renamed Pollen Street plc.
PRINCIPAL ACTIVITIES
more information on investment companies, please
see: http://www.theaic.co.uk/guide-to-investment-
companies.
INVESTMENT OBJECTIVE
Pollen Street is a closed-ended investment
company that benefits from a complementary
set of on-balance sheet investments activities,
referred to as the Investment Company, and asset
management activities focused on managing
third-party AuM, referred to as the Asset Manager.
Pollen Street obtained its asset management
capability through its acquisition of Pollen Street
Capital Holdings Limited which completed on 30
September 2022. Following the acquisition, the
Group now has extensive experience as an asset
manager investing in both Credit and Private Equity
strategies and has a strong and consistent track
record of delivering top tier returns.
The Investment Company portfolio is well diversified
and focused on senior asset-based direct lending
investments. These investments target stable
high-income returns together with strong capital
preservation. The portfolio consists of both direct
investments and investments in funds managed by
Pollen Street. The investment objective is to provide
shareholders with an attractive level of dividend
income and capital preservation and growth through
execution of its business model.
INVESTMENT COMPANY
ASSET ALLOCATION AND RISK
DIVERSIFICATION
The Group uses its balance sheet to seed assets or
funds originated under its strategies. Assets may be
originated directly onto the Investment Company’s
balance sheet or the Investment Company may
invest into funds managed or advised by the Asset
Manager. The Directors believe that this approach
will help to accelerate the launch of new strategies
and grow AuM. The risk profile of the Investment
Company is intended to remain as predominately
Credit Assets with non-credit investments limited to
10 per cent of the investment portfolio.
Credit Assets consist of loans, within a range of
sub-sectors selected based on their risk & return
characteristics. The Group undertakes such
investments directly, or via subsidiaries or special
purpose vehicles (“SPVs”). It is also possible that
the Group may seek to use alternative investment
structures which achieve comparable commercial
results, but which offer enhanced returns for the
Group or other efficiencies such as, without limitation,
efficiencies as to origination, funding, servicing or
administration of the relevant Credit Assets.
The Group also invests in Equity Assets, restricted to
not more than 10 per cent of the investment portfolio.
This restriction shall not apply to any consideration
BUSINESS REVIEW
Strategic Report
POLLEN STREET
47
paid by the Group for the issue to it of any Equity
Assets that are convertible securities. However, it will
apply to any consideration payable by the Group at the
time of exercise of any such convertible securities or
any warrants issued. The Group may invest in Equity
Assets indirectly via other investment funds (including
those managed by the Group or its affiliates).
The Credit Asset portfolio has performed well over
the year with the expected credit loss (“ECL” or
“Impairment Provision”) balance reducing from £10.8
million as at 31 December 2021 to £9.3million as at
31 December 2022 on gross Investment Assets of
£533 million (31 December 2021: £577 million). The
£1.6 million reduction in the impairment balanced
was mainly driven by a write-off of a small portfolio of
unsecured loans that were fully provided for and a sale
of another portfolio loans.
The credit impairment release for the year was £0.2
million (2021: £0.8 million). The impairment release
is attributable to the Company’s continued focus on
senior secured Credit Assets and a cautious approach
to provisioning. As at 31 December 2022, 97 per cent
of the assets were senior secured (31 December 2021:
97 per cent ).
A number of the Group’s loans are secured against
underlying collateral. The Directors do not consider
the value of this collateral to directly influence the
probability of default or whether there has been a
significant increase in credit risk. However, the
Directors consider that the structure of some of the
Group’s lending arrangements may mean that this
collateral generates income for the Group’s borrowers
that supports the borrowers’ ability to service the loan
from the Group and therefore influence the probability
of default and the trigger for a significant increase in
credit risk.
The Directors note that there has not been a material
increase in the gross carrying amount of assets
classified as stage 2, defined as those assets where
there has been a significant increase in credit risk,
between 31 December 2021 and 31 December
2022 despite the more adverse macroeconomic
environment. This is considered to be a reflection of
the performance of the loan book and the conservative
lending criteria employed by the Group.
Uncertainty in the economic environment has
persisted since the outbreak of Covid-19 across
the globe in 2020 and the geopolitical instability
and macroeconomic disruption caused by Russia’s
invasion of Ukraine. The downside protection built
into the majority of the investment portfolio has
limited the impact of these events on the ECL
provision. However, given the Group’s activities, its
performance is linked to the health of the economy
and consequently if economic expectations
deteriorate against current expectations the Group
could experience further impairments.
The Group invests in Credit Assets originated across
various sectors and across credit risk bands to
diversify risk exposure. The following investment limits
and restrictions apply to the Group to ensure that the
diversification of the portfolio is maintained and that
concentration risk is limited:
• The Group will not invest more than 20 per cent of
the aggregate value of the total assets, at the time
of investment, in any single investment fund that
invests in Credit Assets;
• No single Credit Asset comprising a consumer credit
asset shall exceed 0.15 per cent of total assets at
the time of such investment;
• No single unsecured SME or corporate loan, or trade
receivable, shall exceed 5.0 per cent of total assets
at the time of such investment;
• No single facility, security or other interest backed by
a portfolio of loans, assets or receivables (excluding
any borrowing ring-fenced within any SPV which
would be without recourse to the Company) shall
exceed 20 per cent of total assets at the time of
such investment. For the avoidance of doubt, this
restriction shall not prevent the Group from directly
acquiring portfolios of Credit Assets which comply
with the other investment restrictions described in
this section; and
• The Group will in aggregate commit no more than 10
per cent of total assets at the time of commitment
to investments in Equity Assets, as described
in the above section – asset allocation and risk
diversification.
These restrictions were not breached during the year
ended 31 December 2022, or the year ended 31
December 2021.
The Group may invest in cash or money market
instruments, money market funds, bonds, commercial
paper or other debt obligations with banks or other
counterparties having single-A (or equivalent) or
Financial Statement 2022
POLLEN STREET
48
higher credit rating as determined by an internationally
recognised agency or systemically important bank, or
any ‘‘governmental and public securities’’ (as defined
for the purposes of the FCA’s Handbook of rules and
guidance) (“Cash Equivalent Investments”) for cash
management purposes and with a view to enhancing
returns to shareholders or mitigating risk.
The Group will not invest in Collateralised Loan
Obligations (“CLO”) or Collateralised Debt Obligations
(“CDO”) without prejudice to investments permitted in
the above section on investment restrictions. CLOs
are a form of securitisation whereby payments from
multiple loans are pooled together and passed on to
different classes of owners in various tranches. CDOs
are pooled debt obligations where pooled assets serve
as collateral.
These restrictions were not breached during the year
ended 31 December 2022, or the year ended 31
December 2021.
BORROWING
The Investment Company may incur debt, through
bank or other facilities on an unsecured or secured
basis. Pollen Street may incur debt (net of any cash
or cash equivalent investments) up to a maximum of
100 per cent of the tangible net asset value of the
Group, calculated in accordance with the valuation
policies of the Group from time to time, in aggregate
(calculated at the time of draw down under any facility
that the Group has entered into). The Group targets net
borrowings in the range of 50 per cent to 75 per cent
of tangible net asset value. These restrictions were not
breached in year ended 31 December 2022 or the year
ended 31 December 2021.
In September 2022, the main debt facility was reduced
by £30 million to £170 million (2021: £200 million ). In
addition, the Sting facility increased from £55 million to
£84 million. The Bud facility remained the same as the
previous year at £35 million.
HEDGING
The Group hedges currency exposure between Sterling
and any other currency in which the Group’s assets
may be denominated, including US Dollars and Euros.
The Group will, to the extent it is able to do so on
terms that it considers to be commercially acceptable,
seek to arrange suitable hedging contracts, such as
currency swap agreements, futures contracts, options
and forward currency exchange and other derivative
contracts in a timely manner and on terms acceptable
to the Company. Details of derivative financial
instruments in place at 31 December 2022 and 2021
can be found in Note 18 of the financial statements.
DIRECTORS’ DUTIES
Section 172 of the Companies Act 2006
The Directors’ overarching duty is to act in good faith
and in a way that is the most likely to promote the
success of the Group as set out in Section 172 of the
Companies Act 2006.
Fulfilling this duty naturally supports the Group in
achieving its objectives and helps to ensure that all
decisions are made in a responsible and sustainable
way. In accordance with the requirements of the
Companies (Miscellaneous Reporting) Regulations
2018, the Group explains how the Directors have
discharged their duty under Section 172 below.
To ensure that the Directors are aware of, and
understand, their duties, they are provided with the
pertinent information when they first join the Board
as well as receive regular and ongoing updates
and training on the relevant matters. They also
have continued access to the advice and services
of the company secretary, and when deemed
necessary, the Directors can seek independent
professional advice.
The Board of Directors confirms that
during the year under review, it has acted
to promote the long-term success of the
Company for the benefit of shareholders,
whilst having due regard to the matters
set out in section 172(1)(a) to (f) of the
Companies Act 2006, being:
(a) the likely consequences of any decision
in the long term;
(b) the interests of the Company’s
employees;
(c) the need to foster the Company’s
business relationships with suppliers,
customers and others;
(d) the impact of the Company’s operations
on the community and the environment;
(e) the desirability of the Company
maintaining a reputation for high
standards of business conduct; and
(f) the need to act fairly between members of
the Company.
Strategic Report
POLLEN STREET
49
DECISION MAKING
The importance of the stakeholder considerations, in
the context of decision making, is taken into account
at every Board and Committee meeting. All discus-
sions involve careful considerations of the longer-term
consequences of any decisions and their implications
for stakeholders. The table below sets out three prin-
cipal decisions made by the Board in 2022: consider-
ation of the proposed Combination; the Group’s ex-
posure to Russia; and a cyber risk review. The table
also includes the ways in which stakeholder consid-
erations were factored in and addressed during the
decision-making process:
CONSIDERATION OF THE
COMBINATION WITH
POLLEN STREET CAPITAL
HOLDINGS LIMITED
On 15 February 2022, the Group announced that it
had reached agreement on the terms of an all share
combination with Pollen Street Capital Holdings
Limited such that the Honeycomb Investment Trust
plc and Pollen Street Capital Holdings Limited would
combine into a single business.
HOW WERE STAKEHOLDERS CONSIDERED?
Prior to announcing the transaction the Board
commissioned BofA Securities (“BofA”) as a finan-
cial adviser to Honeycomb Investment Trust plc to
undertake a review of strategic options. The review
highlighted the Combination as a potential option for
Honeycomb. BofA negotiated the terms of the Com-
bination between stakeholders including seeking
irrevocable undertakings from shareholders to sup-
port the proposal at the general meeting. The Board
commissioned a broad range of advisers, including
financial, legal, regulatory and remuneration advisers,
to diligence the potential Combination and establish
the appropriate structure for executing it. The Board
consulted extensively with shareholders to evaluate
whether they were supportive of the proposal.
WHAT WAS THE OUTCOME OF
SUCH ENGAGEMENT?
The proposed Combination was approved by
shareholders on the 22 June 2022 at a general
meeting with the transaction completing on 30
September 2022.
RUSSIAN EXPOSURE
The Board noted the extremely unfortunate events in
Ukraine and knock on effects to the markets.
HOW WERE STAKEHOLDERS CONSIDERED?
The Group engaged with a wide range of stakehold-
ers to conduct a review of the Group’s exposure to
Russia together with any exposure that might be
obtained through the Combination. The Board met
with the management team to discuss the evolving
situation and any potential impact on the Group. The
management team conducted an extensive review
of the exposure to Russian across its funds under
management business.
WHAT WAS THE OUTCOME OF
SUCH ENGAGEMENT?
The Board concluded that the Group does not have
direct exposure to Russia, however the knock-on
effects of Russia’s invasion on financial markets
could impact the economic environment. The Board
was satisfied that the ongoing risk management
processes would adequately monitor and manage
any risks around this.
CYBER RISK REVIEW
Cyber risk has been an area of increasing focus
recently given the wide prevalence of cyber
incidents in corporates and other areas of society.
The Risk Committee led a review of cyber risk in
conjunction with the management team and a third-
party cyber security firm.
HOW WERE STAKEHOLDERS CONSIDERED?
The Group commissioned a review of its systems
and controls from a third-party cyber risk expert. The
review and its conclusions were discussed with the
Board members and relevant experts.
WHAT WAS THE OUTCOME?
The review concluded that the Group had adequate
mitigation from cyber risk and identified a number
of minor recommendations that were implemented.
The Group has agreed to commission the review on
an annual basis.
Financial Statement 2022
POLLEN STREET
50
HOW WE ENGAGE WITH STAKEHOLDERS
The Board seeks to understand the needs and
priorities of the Group’s stakeholders, and these are
taken into account during all its discussions and as
part of its decision making. Further explanation on
environmental, human rights, employee, social and
community issues is set out on pages 47 to 54.
The description of the business on pages 50 to 53
explains the various stakeholders in the Group’s
business. The Board defines the Group’s key
stakeholders as individuals or groups who have an
interest in, or are affected by, the activities of our
business; accordingly, the Board has considered its
key stakeholders to be as follows:
Shareholders
Continued shareholder support and engagement
is critical to the existence of the business and the
delivery of the long-term strategy of the business.
The Group’s shareholders include institutional,
professional and professionally advised and
knowledgeable investors. The Group understands
the need to effectively communicate with existing
and potential shareholders, briefing them on strategic
and financial progress and attaining feedback. The
Board is committed to maintaining open channels of
communication and to engage with shareholders in a
manner which they find most meaningful, in order to
gain an understanding of the views of shareholders.
The Board engagement includes:
• Annual General Meeting
The Group welcomes engagement from
shareholders at the AGM as it sees it as an
important opportunity for all shareholders to
engage directly with the Board. Further details are
included in the Notice of AGM which will be posted
to shareholders along with this Annual Report and
Accounts. The Board values any feedback and
questions it may receive from shareholders ahead
of and during the AGM and will take action or make
changes, when and as appropriate. All Directors
attended the 2022 AGM. All voting at general
meetings of the Company is conducted by way
of a poll. All shareholders have the opportunity to
cast their votes in respect of proposed resolutions
by proxy, either electronically or by post. Following
the AGM, the voting results for each resolution are
published and made available on the Company’s
website;
• Publications
The Annual Report and Accounts and half-year
results are made available on the Group’s website
and are circulated to shareholders. These reports
provide shareholders with a clear understanding
of the underlying portfolio and the financial
position of the Group. The Group also publishes
quarterly trading updates, which are available
on the website and the publication of which is
announced via the London Stock Exchange.
Feedback and questions the Group receives from
the shareholders and analysts help the Board
evolve its reporting;
• Shareholder concerns
In the event shareholders wish to raise issues or
concerns with the Directors, they are welcome to
do so at any time by writing to the Chairman at
the registered office. Other members of the Board
are also available to shareholders if they have
concerns that have not been addressed through
the normal channels. Feedback can also be
gained via the Group’s corporate brokers, which
is communicated to the Board; and
• Working with external partners
The Group’s corporate brokers maintain an active
dialogue with shareholders and potential investors
at scheduled meetings or analyst briefings
following financial results and provide the Board
with regular reports and feedback on key market
issues and shareholder concerns. This includes
market dynamics and corporate perception.
Investors
It is our priority to maintain investors’ trust through
continuous engagement to ensure their ongoing
investment and support. The Group manages funds
on behalf of third-party investors. Continued support
from investors is critical to enable the Group to grow
its AuM and deliver the Group’s strategy. The Group
maintains an ongoing dialogue with investors to
ensure there is a clear understanding of expectations
and performance.
Financial Statement 2022
POLLEN STREET
52
Employees
The Group cannot operate and achieve strategic
goals without employees who are engaged and
motivated to deliver for the Group’s success. Our
priorities include ensuring employees are able to
share their views and be appropriately rewarded
within a respectful corporate culture.
We pro-actively engage with our employees in a
number of ways, as outlined below:
• A well-established internal communications
strategy which comprises the following:
o A bi-monthly company-wide townhall and a
bi-monthly newsletter. This allows us to provide
employees with general business and strategy
updates, an update on portfolio performance
and news, latest deals, and other news such as
awards and recent media coverage;
o Deal announcements and news alerts keeping
employees up to date with our latest deals,
strategic focus, and news as it happens;
o Annual engagement and Diversity, Equality and
Inclusion survey, allowing us to understand
employee engagement and sentiment and
collect DEI data. We report back to employees
the results of the survey and in response to the
feedback collated we agree tangible actions
for the year ahead. In addition, we publish the
results of our survey in our annual ESG report;
o A learning and development curriculum called
“Grow at Pollen Street”, which includes a
series of bite-size lunchtime sessions covering
a multitude of topics (for example Climate and
Net Zero and Dissecting Deals), along with
development orientated initiatives to support
our business strategy; and
o Employees are also encouraged to share
news across the team regarding specific
successes or events (such as Corporate Social
Responsibility events).
• Managers meet with their direct reports on a regular
basis to better understand levels of engagement
and to identify any particular challenges/concerns.
This is supplemented by a comprehensive mid-
year and year-end performance process.
• Representatives from HR meet with employees
on a regular basis and conduct a DEI and
engagement survey. Furthermore, there is an
employee engagement strategy focusing on
annual events and observances that acts as a
conduit for bringing our people together.
• A People update is presented at monthly Executive
Committee meetings, ensuring people, culture
and engagement remain a strategic priority. In
turn, relevant content is included and discussed
at Board level.
The Board has carefully considered the methods
described in the UK Code of Corporate Governance
for engaging with employees. These methods include
appointing a representative from the workforce as a
director; establishing a formal workforce advisory
panel and designating a Non-Executive Director as
an employee representative. The Board concluded
that these methods are not appropriate given Pollen
Street’s size and instead relies on the approaches
described above. The Board will keep these matters
under review in the future.
Lenders & portfolio companies
The Group maintains ongoing dialogue with a broad
range of lenders and potential acquisition targets
to seek investment opportunities as part of its
asset management business. The Group aims to
demonstrate to these stakeholders that it can help
them grow to deliver this own business objectives.
Regulators
The Group regularly considers how it meets various
regulatory and statutory obligations and follows
voluntary and best-practice guidance, and how any
governance decisions it makes can have an impact
on its stakeholders, both in the shorter and in the
longer-term.
Corporate advisors and service providers
The Group relies on a diverse range of advisers and
service providers for support with meeting all relevant
obligations. The Board maintains regular contact with
its key external providers, primarily at the Board and
Committee meetings.
Strategic Report
POLLEN STREET
53
CORPORATE AND OPERATIONAL
STRUCTURE
Corporate Structure
On the 30 September 2022, the Company acquired
100 per cent of Pollen Street Capital Holdings
Limited, a limited company incorporated under the
laws of Guernsey as a company limited by shares
pursuant to the Companies (Guernsey) Law, 2008.
The Company is considered to control Pollen Street
Capital Holdings Limited and its subsidiaries through
holding 100 per cent of the issued shares.
On 20 June 2019 the Group incorporated Sting
Funding Limited (“Sting”), a limited Company
incorporated under the law of England and Wales.
The Group is considered to control Sting through
holding 100 per cent of the issued shares. Sting
became active on 28 August 2019 when it drew
down on a debt facility backed by commercial and
second charge residential mortgages.
The Company also controls Bud Funding Limited
(“Bud”), a limited company incorporated under
the law of England and Wales. The Company is
considered to control Bud through its exposure to
the variable returns of the vehicle through holding of
a junior note issued by it. Bud was incorporated on 2
November 2020.
As a result, the financial statements for the year
ended 31 December 2022 and 31 December 2021
are prepared on a consolidated basis.
Alternative Investment Fund Managers
Directive (“AIFMD”)
In accordance with the AIFMD, the Group has
appointed Pollen Street Capital Limited to act as the
Group’s Alternative Investment Fund Manager (“AIFM”)
for the purposes of the AIFMD. The AIFM ensures
that the Group’s assets are valued appropriately
in accordance with the relevant regulations and
guidance. The Group has appointed Indos Financial
Limited as depository. In addition, the Group entered
into an amended Depository Agreement enabling it to
delegate certain custody functions as required by the
AIFMD to Sparkasse Bank Malta plc (the “Custodian”)
on 17 November 2017.
Financial Statement 2022
POLLEN STREET
54
The Group has developed a comprehensive risk
management framework to ensure that risks are
managed within a risk appetite.
Effective risk management underpins the successful
delivery of our strategy and longer-term sustainability
of the business, and offers an integrated approach
to the evaluation, control, and monitoring of the risks
that the Group faces. The Board acknowledges
that risk exists in the pursuit of targeted returns for
shareholders, its strategies, and objectives and has
implemented a risk management framework that is
proportionate to the Group’s activities and aligned to
its objectives.
The Group’s culture is expressed through the record
of good conduct of its personnel, the dedicated
governance arrangements that it has embedded
within all areas of the business, as well as staff that
are sensitive to the need to maintain appropriate
management and control of the business. The
Group has an open, risk-management orientated
culture that encourages and facilitates clear
communication and challenge where appropriate
and the Group’s governance framework is designed
to safely deliver the agreed business strategy,
ensuring its shareholders and clients’ best interests
are safeguarded and are at the forefront of the
Group’s business. As well as the adoption of a robust
governance structure, the Group demonstrates
compliance with its governance requirements
by the adoption of a tailored set of systems and
controls. The Group has maintained a strong control
environment during periods of remote working.
The monitoring and control of risk is a fundamental
part of the management process within the Group.
The Board oversee the management of the key
risks across the organisation, along with capital and
liquidity adequacy.
The Group’s governance structure is by way of
Committees, designed to ensure that the Board
has adequate oversight and control of the Group’s
activities. The effectiveness of the governance
framework is considered by senior management on
an ongoing basis so that any emerging risk matters
can be addressed promptly.
The Group has established the Risk Committee as
a Board-level Committee with responsibility for risk
oversight. The Group has also established the Risk
and Operation Committee (“ROC”) as a management
level Committee to provide stewardship of the risk
framework of the Group, promote the risk awareness
culture for all employees, and review the key risk
together with the management approach to each risk.
The Group has established a risk management
function consisting of the risk and compliance teams,
headed by the Group’s Chief Financial Officer and the
Group’s General Counsel respectively.
The individuals making up the risk management
function possess an appropriate knowledge to
deliver the level of oversight required to monitor
adherence to the Group’s stated risk appetite and
tolerance limits, along with the skill set required to
implement the risk framework and react to changes
to the risks affecting the Group and its ability to
deliver its business objectives.
RISK MANAGEMENT
Strategic Report
POLLEN STREET
55
REPORTING
Regular reporting is provided
to the risk committee. Risks
are monnitored and the
effectiveness of mitigants
considered
RISK
IDENTIFICATION
The Group periodically
reviews its risk profile. Key
and emerging risks facing the
Group are identified
RISK APPETITE
The Group has
established a risk appetite
which is reviewed annually
by the Board
ACCOUNTABILITY
The Group has established
clear accountability for the
management of all risks
RISK LIMITS
The Group has established
risk limits to quantify its
tolerance to risk.These
are regularly reviewed and
changed as required
CONTROLS
Mitigating actions are
identified for each risk,
taking into account the
effectiveness of the current
control environment. Where
appropriate, changes to
the control environment are
identified and implemented
RISK MANAGEMENT
PROCESS
Risks are identified,
monitored and managed
RISK MANAGEMENT
FRAMEWORK
The Group’s risk management framework includes
risk identification, risk appetite, accountability, risk
limits, controls, and reporting. These components,
when used together, enable effective oversight of
risk across the Group.
The Group has established a three lines of defence
model for managing risk. The first line of defence
are the staff that have primary responsibility for
managing a particular risk on a day-to-day basis.
First line staff are responsible for understanding and
implementing effective internal controls; they should
identify, assess, control, and mitigate risks, guiding
the development and implementation of internal
policies and procedures and ensuring that activities
are consistent with goals and objectives.
The second line of defence are the risk and
compliance teams. They are responsible
for oversight and challenge of the first line’s
management of risk. The second line provides
regular challenge as part of its quality assurance
of first line activity and checks that the first line
is operating within the Group’s defined policies,
procedures, and risk appetite and tolerance
parameters. A compliance monitoring programme
is in place and a risk-based suite of tests are
undertaken on a quarterly basis. The programme is
tailored to key risks and thematic issues that arise
and output is provided to the Risk and Operations
Committee, which is the Group’s management-level
risk Committee, on a regular basis. The second line
also regularly reviews and reports on the status of
the risks recorded within the Group’s risk registers.
The third line of defence is the internal audit
function. It is responsible for proving assurance to
the Board and senior management that the first and
second lines of defence are operating in line with
policy and in compliance with the requisite laws and
regulations. The internal audit function has been
outsourced to a third party thereby ensuring that the
function remains truly independent, has access to
the latest industry development and has increased
flexibility of service. The internal audit programme
includes the review of the effectiveness of risk
management processes and recommendations to
improve the internal control environment.
Financial Statement 2022
POLLEN STREET
56
RISK ENVIRONMENT
2022
2022 remained a year of uncertainty. As the world
began to see green shoots of recovery following the
Covid-19 pandemic, other geopolitical events such
as Russia’s unprovoked invasion of Ukraine caused
the markets to suffer further instability. Tensions
between Russia and the US, the UK and a number
of European states have heightened significantly
as a result and should the conflict escalate further,
geopolitical instability could increase causing
additional negative impacts on the global economic
environment. The Risk Committee has conducted an
assessment across the funds, which concluded that
there was no direct exposure to Russia and Ukraine
through revenues, suppliers and staff. We continue to
work closely with our portfolio companies to assess
and respond to the current economic challenges.
2022 also saw a number of climate-related records
broken. The changes in the physical climate system,
most notably more intensive extreme events, have
adversely affected natural and human systems
around the world. This has contributed to a loss and
degradation of ecosystems, including tropical coral
reefs; reduced water and food security; increased
damage to infrastructure; additional mortality and
morbidity; human migration and displacement;
damaged livelihoods; increased mental health
issues; and increased inequality. It is now more
evident than ever that a period of great change must
occur if we are to avoid the worst predictions. Pollen
Street is determined to be part of this change, more
information on our ESG approach can be found in
the ESG Report on page 30.
Financial instability, macroeconomic deterioration
and monetary and fiscal stress also increased during
the year. Inflation is becoming an important concern
for both experts and the general public and the
increase in interest rates in the UK, and globally,
has fuelled social tensions and destabilised markets
further. We continue to monitor our exposure and
make amendments to our strategy where required.
Notwithstanding these pressures, we have seen
continued positive momentum in the portfolio
performance across both business lines during the
year, and performance has been underpinned by
consistent deployment and a strong asset base.
There are, however, a number of potential headwinds
which will affect the global economy and consumer
and investor confidence, and we continue to monitor
performance closely and update our outlook and risk
profile accordingly.
Strategic Report
POLLEN STREET
57
PRINCIPAL RISKS & UNCERTAINTIES
The Group’s assessment of risk has identified a broad range of risks and uncertainties which it believes could
adversely impact the Group. The following key risks have been identified as having the potential to be material.
They include emerging risks and have been reviewed by the Risk and Operations Committee and the Risk
Committee regularly and recorded on the risk register.
ECONOMIC & MARKET CONDITIONS
Economic and market
factors, may affect the
Group’s investments, track
record or ability to raise
new capital
Regular investment reviews are
undertaken. The Investment
Committee focuses on investment
strategy, exit processes and
refinancing strategies throughout the
life of an investment or Credit Asset.
Early involvement of Investment
Committee as new investment ideas
are identified ensures that the Group
can capitalise from downturns in
markets in certain conditions.
Periods of market volatility may allow
the Group to make investments at
attractive prices and terms.
Despite macroeconomic
factors seen during 2022,
the portfolios remained
resilient, and performance
remained robust. We
continue to monitor
performance and act
accordingly when required.
FUND RAISING
An inability to secure new
fund mandates or raise
capital under existing
mandates
The Group has a strong and
consistent track record of delivering
top tier returns. The Group has sector
specialism, knowledge of and expertise
in the industries that it invests in, and
the investment team have an extensive
network and investment experience to
enable them to identify opportunities
attractive to potential investors.
The Group maintains open
communications with fund advisory
boards and investors to ensure any
potential issues are detected.
The risk at the end of 2022
was somewhat elevated
given recent market
volatility. Management
remains actively focused
on fund raising across the
business.
The Group is making efforts
to broaden its investor
base and is targeting new
geographies and investors
as part of its ongoing
fundraising activities.
Financial Statement 2022
POLLEN STREET
58
MANAGEMENT FEE RATES AND OTHER FUND TERMS
The management fee
rates, and other terms
that the Group receives to
manage new funds could
be reduced, affecting the
Group’s ability to generate
revenue
The Board believes that management
fee rates generated are supported
by the Company’s track record and
the growing allocations to alternative
investment market investments
Pollen Street’s
management fee revenue is
long term and contractual
in nature. Its investment
performance during 2022
was stable and no change
in management fee revenue
is anticipated.
RECOGNITION OF PERFORMANCE FEES AND CARRIED INTEREST
The risk that carried interest
recognised on current or
future funds is less than
anticipated
The Group forecasts its income, and
budgets carefully using the latest
information available
Pollen Street recognition
of carried interest and
performance fees was in
line with management’s
expectations
ON BALANCE SHEET INVESTMENT UNDERPERFORMANCE
The risk of returns of
Pollen Street’s Investment
Company falling below
target levels due to poor
investment decisions or a
deterioration in the macro
environment
This includes credit risk,
market risk (such as
interest rate, currency
and price risk), capital
management risks and
liquidity risk
The Group has a clear track record of
delivering investment returns that are
resilient to market conditions and in line
with published guidance.
Investments are monitored closely as
part of the Group’s ongoing investment
monitoring programmes and input is
given by all investment Committee
members to ensure return objectives
are met, and to anticipate and discuss
any underperformance.
Our Investment Assets
are exposed to credit and
market risks. The Group
has a diversified, granular
portfolio of assets. Loans
are subject to stringent
underwriting and stress
testing. Investment
performance remains
strong.
Further information on
financial risk is set out in
more detail in Note 20.
Risk Description
KEY
Risk Management 2022 Summary
Strategic Report
POLLEN STREET
59
ESG AND SUSTAINABILITY PERFORMANCE
Risks associated with the
physical effects of climate
change, the risks that arise
as economies transition
towards greener solutions,
and the risk of a regulatory
breach associated with
SFDR
12
, TCFD
13
, FCA
14
,
SEC
15
etc. reporting.
Poor or insufficient
management of ESG risks
or adverse developments
impact the Group’s
reputation as an investor.
The ESG Committee oversees Pollen
Street’s ESG matters, including ESG
related risks. The Risk and Operations
Committee as well as the Board Risk
Committee has responsibility for
oversight of ESG risk matters.
ESG is considered as an evolving
risk given the nature of the
Group’s investments. The Group is
strengthening its approach to climate-
related risk identification and mitigation,
including the TCFD framework and
disclosing accordingly.
The Group has a set of minimum
standards to ensure ESG risks are
assessed and measured, which are
incorporated into initial deal team
investment assessments and ongoing
portfolio management. This includes
reviewing counterparty approach to
environmental factors and collecting
metrics to identify the environmental
impacts of their operations.
Progress has been made
over the past year in
respect of advancements
in data and measurement,
socially impactful examples
from across the portfolio,
becoming carbon neutral
and recognition for work on
DE&I.
Pollen Street believes that
the Group has a important
role to play in manging ESG
risks for society. However,
the Group has not identified
any material ESG risks
related to the financial
statements for 2022.
TALENT AND RETENTION
Failure to attract, retain
and develop an inclusive
and diverse workforce to
ensure the right skills are in
the right place at the right
time to deliver the Group’s
strategy, heightened by an
ever-increasing competitive
job marketplace.
Inadequate succession
planning for key individuals.
The Group has competitive reward
and retention schemes in place for all
employees, aligning individual, team
and organisational goals, driving value
for the Group. For senior management,
these include a blend of short and
long-term incentives.
The Group invests in leadership
development.
Pollen Street is committed to raising
awareness and encouraging diversity
amongst the workforce and has
established a DEI Working Group.
Key persons have been identified and
protections are in place.
The business has made
a number of key hires in
2022 and has invested in
the investment team which
possesses a broad skill
set covering analytical,
technical and strategic
capabilities and an
operational team which has
industry experience across
servicing, collections,
finance, technology,
compliance and risk.
Financial Statement 2022
POLLEN STREET
60
12
Sustainable Finance Disclosure Regulation
13
Task Force on Climate-related Financial Disclosures
14
Financial Conduct Authority
15
U.S. Securities and Exchange Commission
INFORMATION SECURITY & RESILIENCE
Risks associated with
information security and
resilience, including:
• Failure to invest and
successfully implement,
appropriate technology
• Financial loss, data loss,
business disruption or
damage to reputation from
failure of IT systems
• Data protection &
information security
• Business continuity,
disaster recovery and
operational resilience
• Financial or reputation losses
arising from a cyber attack
The Group has implemented
appropriate security controls against
common threats, including cyber-
security threats.
Awareness of the need for security
of the Group’s information systems is
promoted and encouraged, and the
importance of processing personal data
in accordance with the Group Data
Protection policy is set out.
The Group’s information security
incident response plan is a set of
guideline procedures to be followed
in the event of an information security
attack or breach. The primary aim
of any response is to remediate and
minimise the impact of the breach as
quickly as possible and the plan sets
out communication, oversight, and
other considerations to be undertaken.
The Group continues to
invest in external reviews and
cyber penetration testing and
all policies and procedures
have been refreshed during
the year.
The technology team has
been strengthened and new
hires made to cope with the
increased demands of the
Group.
REPUTATIONAL RISK
Risks that could result in
damage to Pollen Street’s
reputation
The Group’s reputation in the eyes of
our customers, regulators, employees,
partners and society is critical to
delivering our strategic objectives.
Business is conducted in a transparent
and fair manner, minimising actions
that could damage the Group’s
reputation or result in customer
detriment of any kind.
The Group has established
a best practice risk
management framework
with a full suite of policies,
procedures, compliance
testing and senior
management oversight in
place.
The Group engages
professional third parties
to ensure all activities
are performed to a high
standard.
The Group engages an
external PR agency to
handle communications.
Strategic Report
POLLEN STREET
61
EMERGING RISK
IDENTIFICATION
The Group monitors its emerging risks, supporting
organisational readiness for external volatility,
incorporating input and insight from both a top-down
and bottom-up perspective:
• Top-down: Emerging risks identified by the Risk
Committee and the Board, helping to define the
overall attitude of the Group to risk.
• Bottom-up: Emerging risks identified at a business
level and escalated where appropriate by the Risk
and Operations Committee.
Geopolitical, macro and climate risk have dominated
the headlines during 2022 and look set to continue
throughout 2023 and beyond. Technology risk also
continues to be a challenge for companies, with both
the emergence of new technologies whose effects
have yet to be understood, and the volatile nature
of digital assets, e.g., cryptocurrencies bringing
challenges to the markets. The Risk Committee will
continue to monitor these risks and respond to the
evolving risk landscape.
Financial Statement 2022
POLLEN STREET
62
REPORT
02.
DIRECTORS’
REPORT
POLLEN STREET
65
The Directors of the Company who were in office
during the year and up to the date of signing the
financial statements were Robert Sharpe, Lindsey
McMurray, Jim Coyle, Gustavo Cardenas, Julian
Dale, Joanne Lake and Richard Rowney.
ROBERT SHARPE
Chair of the Board
Appointed: 14 December 2015
Chair of the Nomination Committee.
Member of the Remuneration Committee.
Robert has over 45 years’ experience in retail
banking. He is currently Chair at MetroBank plc and
Hampshire Trust Bank plc. He has had an extensive
number of appointments in both the UK and the
Middle East including Non-Executive Director (NED)
at Aldermore Bank plc, George Wimpey plc, Barclays
Bank UK Retirement Fund, Vaultex Limited, LSL
Properties plc, RIAS plc and several independent
NED roles at banks in Qatar, UAE, Oman and Turkey.
Robert was previously Chief Executive Officer (CEO)
at West Bromwich Building Society, a role he took to
chart and implement its rescue plan. Prior to this, he
was CEO at Portman Building Society and Bank of
Ireland in the UK.
BOARD OF
DIRECTORS
Director’s Report
POLLEN STREET
65
LINDSEY MCMURRAY
Chief Executive Officer
Appointed: 30 September 2022
Lindsey founded Pollen Street in 2013 and is the
CEO as well as Chair of the Investment Committee.
Lindsey has been investing in Private Equity and
Credit for over 25 years. Lindsey has built Pollen
Street into a fast growing, purpose led asset
manager investing with the mega-trends across
financial and business services, with a diversified
AuM base across Private Equity and senior secured
Credit.
Before she founded Pollen Street, Lindsey led the
team managing the £1.1 billion Special Opportunities
Fund within RBS and spent six years as a Partner
at Cabot Square Capital, focusing on operating
investments in real estate and other asset-backed
investments.
Lindsey serves as Non-Executive Director of several
portfolio companies including Shawbrook Bank,
Cashflows Europe and BidX1. She has a First Class
Honours degree in Accounting and Finance and
studied for an MPhil in Finance from Strathclyde
University. Outside of work Lindsey is a keen runner
and has successfully completed the Marathon
Des Sables in 2007 and 2011. She also supports
several charities with a particular focus on mentoring
children in state schools, supporting climate action
initiatives through producing documentary films,
and supporting the speech and language charity,
Auditory Verbal UK, which provided early years
therapy to her daughter Grace.
Financial Statement 2022
POLLEN STREET
66
JIM COYLE
Senior Independent Director
Appointed: 14 December 2015
Chair of the Audit Committee. Member
of the Risk Committee, the Nomination
Committee and the Remuneration
Committee
Jim is a Non-Executive Director, Chairman of the
Audit Committee, member of the Risk Committee
and member of the Chairman’s Nominations and
Remuneration Committee at HSBC UK Bank plc and
Chairman of HSBC Trust Company (UK) Ltd. He is
also Deputy Chairman of the Oversight Board and
member of the Audit Governance Board of Deloitte
LLP; Chairman of Marks & Spencer Unit Trust
Management Limited; and a Non-Executive Director
of Marks and Spencer Financial Services plc. Former
appointments include: Chairman of the Board and
Chairman of the Audit and Risk Committee of World
First UK Limited; Chairman of Supply@ME Capital
PLC, Chairman of the Audit and Risk Committee
of Scottish Water, member of Committees of
the Financial Reporting Council, Group Financial
Controller for Lloyds Banking Group; Group Chief
Accountant of Bank of Scotland; member of the
Audit Committee of the British Bankers Association;
Non-Executive Director of the Scottish Building
Society; and Non-Executive Director and Chairman
of the Audit Committee of Vocalink plc.
Director’s Report
POLLEN STREET
67
GUSTAVO CARDENAS
JULIAN DALE
Non-Executive Director
Appointed: 1 November 2022
Gustavo Cardenas is a Managing Director at Wafra,
where he helps lead Wafra’s strategic partnership
investment mandates in both mature and growth
state asset management businesses. While at
Wafra, Gustavo has completed several direct
minority investments, financings and secondary
investments as well as investments within closed
end funds. Previously, Gustavo was a Vice President
at Hamilton Lane, focused on co-investments and
fund investments. He began his career in investment
banking at Bank of America Securities and then at
Mesoamerica Partners, a Central American financial
group. Gustavo earned a BA from Harvard College
and an MBA from the Wharton School of Business.
Chief Financial Officer
Appointed: 30 September 2022
Julian is the Chief Financial Officer (CFO) of Pollen
Street. He is responsible for all finance activities
across the Group. He has spent all of his professional
career in financial services focused on finance
and risk topics in asset management, specialist
lending, retail banking, investment banking and
strategy consultancy for financial institutions across
the United Kingdom, Europe, the Middle East and
South Africa. Prior to joining the team, Julian was
CFO of Castle Trust, which he helped to grow over
a period of seven years from a start-up into a multi-
niche specialist lender. He started his career at Oliver
Wyman strategy consultants where he spent seven
years focusing on finance and risk matters across the
financial services industry. He has a first class degree
in engineering from Cambridge University.
Financial Statement 2022
POLLEN STREET
68
JOANNE LAKE
Independent Non-Executive Director
Appointed: 1 January 2021
Chair of the Remuneration Committee.
Member of the Audit Committee, the
Risk Committee and the Nomination
Committee
Joanne has over 35 years’ experience in financial and
professional services. She is currently independent
Non-Executive Chair of Made Tech Group plc,
the AIM-listed leading provider of digital, data and
technology services to the UK public sector, Senior
Independent Director of Main Market-listed land
promotion, property development and investment,
and construction group, Henry Boot PLC, and is an
independent Non-Executive Director at AIM-listed
Gateley Holdings plc, the legal and professional
services group, and Braemar PLC, an established
international provider of shipping, marine and energy
services. Joanne is a Chartered Accountant and has
previously held senior roles at UK investment banks
including Panmure Gordon, Evolution Securities and
Williams de Broe and in audit and business advisory
services with PwC. Joanne is a fellow of the Institute
of Chartered Accountants in England & Wales and
a member of its Corporate Finance Faculty and is
a fellow of the Chartered Institute for Securities and
Investment.
Director’s Report
POLLEN STREET
69
RICHARD ROWNEY
Independent Non-Executive Director
Appointed: 1 July 2019
Chairman of the Risk Committee. Member
of the Audit Committee, the Nomination
Committee and the Remuneration
Committee
Richard is currently Group CEO of James Hay
Partnership (JHP) and Nucleus Financial Group
(NFG), a leading retirement and wealth management
specialist managing over £48 billion of assets.
Backed by Private Equity specialist Epiris, JHP is
a consolidator in the platform market. He is also a
Non-Executive Director at MSP Capital Limited. Prior
to this, Richard was group Chief Executive of LV=
a leading financial services provider and a mutual
where he worked as an executive member of the
board for 13 years. Richard left LV= at the end of 2019
following the sale of the General Insurance business
to the Allianz Group. Richard had led the business to
win the Moneywise Most Trusted Life Insurer award
as well as YouGov’s UK’s Most Recommended
Insurer. Prior to his position as Chief Executive Officer
he had been Managing Director of the group’s Life &
Pensions business which he successfully turned into
one of the UK’s leading protection and retirement
specialist companies. Prior to his time at LV=
Richard held various Chief Operating Officer and risk
roles across Barclays corporate and retail banking.
Richard holds a first-class degree in Geography
from the University of Leeds and an MBA from
Henley Business School and completed the Harvard
Management Programme in 2006.
Financial Statement 2022
POLLEN STREET
70
The Directors of Pollen Street plc (Registered:
09899024) present their report and audited
financial statements of the Company and its
subsidiaries, referred to as the Group, for the year
ended 31 December 2022. The shares are listed on
the Main Market of the London Stock Exchange.
STATUTORY
INFORMATION
The information regarding the Company’s principal
activities and business review and details of the
Directors’ overarching duty in relation to section
172 of the Companies Act 2006 are set out in the
Strategic Report.
BOARD MEMBERS, DIRECTORS’ AND
OFFICERS’ INSURANCE
The names and biographical details of the Board
members who served on the Board as at the year-end
can be found on pages 65 to 70.
During the year under review the Group maintained
directors’ and officers’ liability insurance for its
Directors and Officers as permitted by section 233 of
the Companies Act 2006. The directors’ and officers’
liability insurance has been renewed and will remain in
place under the current renewal until February 2024.
STATUS OF THE COMPANY
The Company is an investment company within the
meaning of section 833 of the Companies Act 2006.
The Company has operated as an investment trust
in accordance with Section 1158 of the Corporation
Tax Act 2010 and the Investment Trust (Approved
Company) (Tax) Regulations 2011. HM Revenue &
Customs approved the Company as an investment
trust upon its listing on 23 December 2015. In
the opinion of the Directors, the Company has
conducted its affairs so that it is able to maintain its
status as an investment trust.
The Company’s Investment Manager is Pollen
Street Capital Limited, a subsidiary of the Group.
The Company was incorporated in England and
Wales on 2 December 2015 and started trading
on 23 December 2015, immediately upon the
Company’s listing.
Following completion of the Combination, the
Company holds 100 per cent of the share capital in
Pollen Street Capital Holdings Limited. Note 3 gives
further details on the acquisition of Pollen Street
Capital Holdings Limited.
Director’s Report
POLLEN STREET
71
INTERNAL CONTROLS AND RISK
MANAGEMENT
The Board has established an ongoing process for
identifying, evaluating and managing risk on behalf
of the Group. The Board has carried out a robust
assessment of its principal and emerging risks and
the controls to help mitigate these. Further details
of the Group’s principal and emerging risks and
uncertainties can be found in the Strategic Report
on pages 58 to 62 and details of the Group’s internal
controls can be found on page 85. Details of the
Group’s hedging policies are set out in the Strategic
Report on page 49.
SHARE CAPITAL
As at 31 December 2022, the Company had
68,922,582 ordinary shares in issue, of which
4,712,985 ordinary shares were held by the
Company as treasury shares. (31 December 2021:
39,449,919 ordinary shares in issue, of which
4,190,178 were held in treasury).
Authority to allot shares
On 22 June 2022, at the Company’s last AGM, the
Board was granted authority to allot the Company’s
ordinary shares of £0.01 each or grant rights to
subscribe for, or convert any security into ordinary
shares in the Company up to an aggregate nominal
amount of £34,973.43 representing 3,497,343
ordinary shares. The Company was also granted
authority to issue a further 10 per cent of the issued
share capital to a total nominal amount of £34,973.43
in connection with a rights issue. Resolutions giving
authority to the directors to allot shares up to a
maximum nominal value of £69,946.86 (being
approximately 20 per cent of the then issued share
capital) as if statutory pre-emption rights did not
apply, were also approved. All authorities will expire
(unless previously renewed, varied or revoked) on the
conclusion of the 2023 AGM of the Company (or, if
earlier, at the close of business on 31 August 2023.)
The ordinary shares carry the right to receive
dividends and have one voting right per ordinary
share. There are no shares which carry specific
rights with regard to the control of the Company.
The shares are freely transferable. There are no
restrictions or agreements between shareholders on
the voting rights of any of the ordinary shares or the
transfer of shares.
The Company does not have a fixed life, and pursuant
to the Articles of Association, a continuation vote will
be put to shareholders every five years. The Directors
convened a General Meeting on 16 December
2019 at which a resolution for the continuation
of the Company was proposed and passed by
Shareholders.
Purchase of own shares
At the AGM held on 22 June 2022, the Directors
were granted the authority to purchase in the market
up to 5,242,517 ordinary shares representing 14.99
per cent of the ordinary shares at 10 May 2022, such
authority expiring at the conclusion of the 2023 AGM
of the Company (or, if earlier, until close of business
on 31 August 2023). The Company intends to seek
approval from the shareholders, by special resolution,
to renew this authority at the next AGM.
Further to the authority granted by shareholders at
the 2021 AGM, the Company commenced a share
buyback programme on 21 March 2022 to return
capital to shareholders, which was extended on the
29 April 2022 to the 30 June 2022. The Company
purchased 522,807 ordinary shares during 2022,
representing 0.76% of the issued capital as at 31
December 2022. The shares were repurchased for
£4,824,000 and are held in treasury. No further shares
have been purchased by the Company pursuant to
the buyback programme up to 22 March 2023 being
the latest practical date prior to the issue of this report.
Under Article 151 of the Company’s Articles of
Association, where in a financial period of the
Company ending on or after 31 December 2016 the
ordinary shares have traded, on average over that
financial period, at a discount in excess of 10 per cent
to net asset value per ordinary share, the Directors are
required to propose a special resolution at the next
AGM for the discontinuation of the business of the
Company in its present form. If such a discontinuation
resolution is passed, the Directors must, within
the next four months, put forward proposals to
shareholders to address the circumstances which
gave rise to the discontinuation resolution. Article 151
is a legacy of the Company’s constitution from when it
was trading as Honeycomb Investment Trust plc and
is reflective of the Company’s business structure at
that time.
Financial Statement 2022
POLLEN STREET
72
This threshold was exceeded for the financial period
ending 31 December 2022 and the Directors shall
therefore propose a discontinuation resolution at the
Company’s AGM. At least 75 per cent of shareholders
would need to vote in favour of the discontinuation
resolution for it to be passed. The Directors are
unanimously recommending that the Company’s
shareholders vote against the discontinuation
resolution, and have already received indications from
certain shareholders that they intend to vote against
it. These shareholders, as of the latest practical date
prior to the issue of this report, hold in aggregate
sufficient shares in the Company to prevent the
discontinuation resolution from passing.
On a winding up or a return of capital by the Company,
the ordinary shareholders are entitled to the capital of
the Company.
The Company’s policy is to pay dividends on a
quarterly basis. As such the dividends are declared
as interim dividends rather than final dividends. The
dividends paid or payable in respect of the year ended
31 December 2022 are set out in Note 17 to the
financial statements. A reconciliation of movements
in reserves is presented in the Statement of Changes
in Shareholders’ Funds on pages 130 to 131 of
the financial statements. The Company may make
distributions from the revenue reserve, the special
distributable reserve or from realised capital gains.
SHAREHOLDERS
No shareholder enjoys any special control rights.
Former shareholders of Pollen Street Capital
Holdings Limited, excluding CC Hive, have
undertaken, subject to certain limited exceptions set
out in their respective lock-up agreements, not to sell
or otherwise dispose of their consideration shares for
five years following completion of the Combination.
Notwithstanding the foregoing, the shareholders are
entitled to sell or otherwise dispose of 25 per cent
of the shares on completion of the Combination
plus a further 18.75 per cent of the shares on each
of the second, third, fourth and fifth anniversaries
of completion. CC Hive has undertaken, subject to
certain limited exceptions set out in a corporate lock-
up agreement, not to sell or otherwise dispose of the
shares it received as consideration for six months
following completion of the Combination.
Lindsey McMurray has entered into a written and
legally binding relationship agreement with the
Company. Under the terms of the Agreement,
Lindsey McMurray undertook that she will: conduct
all transactions and arrangement with any member
of the Group on arm’s length and on normal
commercial term; for the duration of her appointment
as a member of the Board, disclose to the Board any
matter which could give rise to a potential conflict
of interest between herself (and any family member
or related trust) and a member of the Group; and
not exercise her powers to prevent Pollen Street
plc from being managed in accordance with the
principles of good governance and in compliance
with the listing rules, the disclosure guidance and
transparency rules, the market abuse regulation
(as defined in the relationship agreement) and the
corporate governance code. Lindsey McMurray will
be entitled to appoint two-sevenths of the Board
for so long as certain persons with whom she is
deemed to be acting in concert collectively hold at
least two-sevenths of all Pollen Street plc shares or
one-seventh of the Group Board for so long as such
persons hold at least one-seventh of all shares.
SUBSTANTIAL SHARE INTERESTS
As at 31 December 2022, the Company had been
advised that the following parties had an interest
in 3 per cent or more of the issued share capital of
the Company pursuant to Rule 5 of the Disclosure
Guidance and Transparency Rules (“DTR”). This
information was correct at the date of notification.
It should be noted that these holdings may have
changed since notified to the Company and may
not therefore be wholly accurate statements of
actual holdings as at 31 December 2022. However,
notification of any change is not required until the
next applicable threshold is crossed.
Director’s Report
POLLEN STREET
73
Shareholders Number of shares
held
Percentage of
issued ordinary
share capital with
voting rights held
Nature of holding
Lindsey McMurray 11,582,090 18.04% Indirect
Quilter Plc 9,988,000 15.56% Indirect
CC Beekeeper Ltd 4,012,006 6.25% Direct
Minerva Analytics Ltd 4,000,000 6.23% Indirect
Matthew Potter 3,721,422 5.80% Indirect
Michael England 3,666,569 5.71% Indirect
Close Asset Management
Limited
2,879,687 4.48% Direct
Ian Gascoigne 2,700,501 4.21% Indirect
CC Hive LP 2,221,416 3.45% Direct
M&G Plc 1,998,641 3.11% Indirect
INDEPENDENT AUDITORS
The Company’s independent auditors,
PricewaterhouseCoopers LLP (“PwC”), were
reappointed at the Company’s AGM in 2022 and
have expressed willingness to continue to act as the
Group’s auditors for the forthcoming financial year.
This is the second year that Claire Sandford has
served as senior statutory auditor.
The Audit Committee has carefully considered the
auditors’ appointment, as required in accordance
with its terms of reference, and, having regard to
its effectiveness and the services it has provided
the Group during the year under review, has
recommended to the Board that the independent
auditors be reappointed at the forthcoming 2023
AGM. At the 2023 AGM, resolutions are therefore
to be proposed for the reappointment of the
independent auditors and to authorise the Directors
to agree its remuneration for the forthcoming
financial year. In reaching its recommendation, the
Audit Committee considered the points detailed on
pages 91 to 92 of the Audit Committee’s report.
AUDIT INFORMATION
As required by section 418 of the Companies Act
2006, the Directors who held office at the date of this
report each confirm that, so far as they are aware,
there is no relevant audit information of which the
Group’s auditor are unaware and each Director has
taken all the steps required of a Director to make
themselves aware of any relevant audit information
and to establish that the Group’s auditors are aware
of that information.
ARTICLES OF ASSOCIATION
Any amendments to the Company’s Articles of
Association must be made by special resolution.
GOING CONCERN
The Directors have reviewed the financial projections
of the Group from the date of this report, which shows
that the Group will be able to generate sufficient
cash flows in order to meet its liabilities as they fall
due within 12 months from the date of this Annual
report and Accounts. These financial projections
have been performed for the Group under various
new business volumes and stressed scenarios and
in all cases the Group is able to meet its liabilities
as they fall due. The stressed scenarios considered
Financial Statement 2022
POLLEN STREET
74
included ceasing to raise future funds, halting future
Investment Asset originations, late repayments of the
largest structured facility and individual exposures
experiencing ongoing performance at the worst
monthly impact experienced throughout 2020 and
2021, which incorporated one-off macroeconomic
charges for Covid-19. The Directors consider
these scenarios to be the most relevant risks to the
Group’s operations. As part of these projections,
the Directors have considered the discontinuation
resolution, which is described further in the Share
capital section, and do not consider that it will affect
the going concern assessment of the Group given
sufficient shareholders have already indicated that
they will vote against discontinuation. The Directors
also reviewed financial and non-financial covenants
in place for all debt facilities with no breaches
anticipated, even in the stressed scenario.
The Directors are satisfied that the going concern
basis remains appropriate for the preparation of the
financial statements. The Group also has detailed
policies and processes for managing the risk, set out
in the Strategic Report on pages 55 to 62.
VIABILITY STATEMENT
In accordance with provision 31 of the UK Corporate
Governance Code, published by the Financial
Reporting Council in 2018 (the “Code”), including
revisions published in 2022, and the corresponding
provision 36 of The AIC Code of Corporate
Governance (the “AIC Code”), the Directors have
assessed the prospects of the Group over the three-
year period to the AGM in 2026. The Board believes
this period to be appropriate, taking into account the
current trading position and the potential impact of
the principal risks that could affect the viability of the
Group.
At the year-end, the Group had cash balances of
£23.3 million. The Group also has £577.5 million of
net assets. There are therefore limited risks to the
viability of the Group.
To prepare the viability statement the Board has
considered the prospects of the Group in light
of its current position and has considered each
of the Group’s principal risks, uncertainties and
mitigating factors that are detailed on pages 58 to
62, to develop a comprehensive scenario analysis
for viability. These projections consider the Group’s
income, net asset value and the cash flows over
the three-year period under a range of scenarios.
The scenarios are not a business plan in itself, but
rather a prudent view of how the Group may evolve,
based principally upon its growth to date, in order to
demonstrate its viability. Analysis to assess viability
has focused on the risks in delivery of the growth
of the business and a series of projections have
been considered changing origination volumes and
the performance of the assets acquired. As part of
these scenarios, the Directors have: considered the
discontinuation resolution, which is described in the
Share capital section, and do not consider that it will
affect the viability assessment of the Group given
sufficient shareholders have already indicated that
they will vote against discontinuation and; reviewed
financial and non-financial covenants in place for all
debt facilities with no breaches anticipated.
The recent geopolitical and macroeconomic
disruption has been considered in these scenarios.
The Group continues to be viable and the Directors
expect the actual impact to be more favourable than
the levels projected.
All the analysis indicates that due to the stability and
cash-generating nature of the fund management
revenue and the investment asset portfolio, as well
as the long-term debt facilities in place, the Group
would be able to withstand the impact of the risks
identified. Based on the robust assessment of the
principal risks, prospects and viability of the Group,
the Board confirms that they have reasonable
expectation that the Group will be able to continue
operation and meet its liabilities as they fall due over
the three-year period to the AGM in 2026. The Board
also continuously monitors the financial performance
of the Group against key financial ratios, ensuring a
strict discipline in the financial management of the
business.
CAPITAL REQUIREMENTS
The Group is subject to externally imposed capital
requirements:
• The Company’s Articles of Association restrict
borrowings to the value of its share capital and
reserves;
• As a public company, the Company has a
minimum share capital of £50,000;
• To be able to pay dividends out of profits
available for distribution by way of dividends, the
Director’s Report
POLLEN STREET
75
Company must be able to meet one of the two
capital restriction tests imposed on investment
companies by company law;
• The Company’s borrowings are subject to
covenants limiting the total exposure based on a
cap of borrowings as a percentage of the eligible
borrowing base; and
• Some of the Group’s subsidiaries are regulated by
the Financial Conduct Authority or the Guernsey
Financial Services Committee and have minimum
regulatory capital requirements.
The Group has complied with all the above
requirements during this financial year.
MANAGEMENT AND ADMINISTRATION
Following completion of the Combination, the Group
has an operating business and a management
team. This team is responsible for the management
and administration of the Group. It has outsourcing
arrangements with the following vendors.
Company Secretary
Link Company Matters Limited has been appointed
as the company secretary of the Group. The
company secretary was appointed in September
2018. The company secretary undertakes the general
secretarial functions required by the Companies Act
and is responsible for the maintenance of specified
statutory registers of the Company.
Custodian
The Company has delegated its obligations in
respect of the safekeeping of the Group’s financial
instruments to Sparkasse Bank Malta plc. In
accordance with Articles 21(13) or 21(14) of the
AIFMD, the Custodian is liable to the Group for a loss
of financial instruments held in custody.
CHANGE OF CONTROL
There are no agreements to which the Company is
party that might be affected by a change of control
of the Company except for the agreement in relation
to the Company’s debt facility. Pursuant to the terms
of that agreement, on a change of control of the
Company, the Company shall promptly notify the
lender. The lender is not obliged to fund a utilisation
except in relation to a rollover loan and if negotiations
to continue the facility are not concluded within 30
days, the liability may be repayable.
SUBSEQUENT EVENTS
On 22 February 2023 a dividend of 16 pence per
ordinary share was approved for payment on 31
March 2023.
GREENHOUSE GAS EMISSIONS
Refer to the ESG section in the Strategic Report
for further details on the Group’s greenhouse gas
emissions.
FUTURE DEVELOPMENTS
Indications of likely future developments in the
business are discussed in more detail in the
Chairman’s Statement on pages 6 to 7.
Financial Statement 2022
POLLEN STREET
76
REGULATORY DISCLOSURES
The disclosures below are made in compliance with
the requirements of Listing Rule 9.8.4.
Listing Rule
9.8.4(1) – capitalised interest The Group has not capitalised any interest in the year under review
9.8.4(2) – unaudited financial
information
The Company publishes a quarterly trading update in addition to its
interim financial statements and audited annual financial statements
9.8.4 (4) – incentive schemes
The Group‘s incentive schemes are described in the Directors’
Remuneration Report and the Annual Report on Remuneration. See
page 98 to 111 for more information
9.8.4 (5) and (6) – waiver
No Director of the Company has waived or agreed to waive any
current or future emoluments from the Group
9.8.4 (7), (8) and (9)
During the year under review, Pollen Street plc issued 29,472,663
shares. See note 24 for further information
9.8.4 (10) (11) – contract of
significance
Lindsey McMurray and the other senior management of Pollen
Street are considered to be controlling shareholders under the
Listing Rules because together they hold more than 30% of the
shares in issue.
During the year under review, the only contracts of significance
subsisting to which the Group is a party and in which a Director of
the Group is or was materially interested or between the Group and
a controlling shareholder are customary employment contracts
9.8.4 (12) and (13) –
waiving dividends
During the year under review, a number of shareholder have
waived dividends in relation to shares issued to them as part of the
Combination. See note 17 for more information
9.8.14 Not applicable
Director’s Report
POLLEN STREET
77
The corporate governance statement explains how
the Board has sought to protect shareholders’
interests by protecting and enhancing shareholder
value. Since the Company’s listing, the Financial
Reporting Council’s UK Corporate Governance
Code (the “Code”) has been voluntarily followed
by the Company. The Directors are ultimately
responsible for the stewardship of the Company
and this section explains how they have fulfilled
their corporate governance responsibilities. This
corporate governance statement forms part of the
Directors’ report.
The UK Listing Rules applicable to closed-ended
investment companies that are listed on the premium
listing segment of the UK Listing Authority apply in full
to the Company. The Board remains fully committed
to high standards of corporate governance and, as
introduced by the Board in the Company’s 2020
Annual Report and Accounts, has taken steps to
revise its Committee structure and membership to
be in line with developing good practice. Further,
the governance structure was reviewed as part of
the Combination with Pollen Street Capital Holdings
Limited. This is set out in more detail in subsequent
sections of this report.
The Listing Rules and the Disclosure Guidance
and Transparency Rules (“DTR”) require the Board
to disclose how it has applied the principles of the
Code, published by the Financial Reporting Council
(“FRC”) in July 2018. A copy of the Code is available
from the website of the Financial Reporting Council
at www.frc.org.uk.
The Association of Investment Companies (“AIC”)
revised and published the AIC Code of Corporate
Governance (the “AIC Code”) in February 2019. The
AIC Code provides a comprehensive guide to best
practice in certain areas of governance where the
specific characteristics of investment trusts suggest
alternative approaches to those set out in the Code.
For the purposes of this Statement, the Board
considers that reporting against the principles and
recommendations of the AIC Code will provide more
relevant and insightful information to shareholders.
The AIC Code is available from the AIC’s website at
www.theaic.co.uk.
CORPORATE
GOVERNANCE
STATEMENT
Financial Statement 2022
POLLEN STREET
Board Robert Sharpe (Chair)
Lindsey McMurray
Jim Coyle
Gustavo Cardenas
Julian Dale
Joanne Lake
Richard Rowney
Audit Committee Jim Coyle (Chair)
Joanne Lake
Richard Rowney
Risk Committee Richard Rowney (Chair)
Jim Coyle
Joanne Lake
Remuneration
Committee
Joanne Lake (Chair)
Jim Coyle
Richard Rowney
Robert Sharpe
Nomination
Committee
Robert Sharpe (Chair)
Jim Coyle
Joanne Lake
Richard Rowney
STATEMENT OF COMPLIANCE
The Company has complied with the recommendations
of the AIC Code and the relevant provisions of the
Code wherever appropriate. The Directors note that
it was not considered appropriate to fully comply
with provision 25 of the AIC Code. This provision
requires an external search consultancy and open
advertising to be used for Director appointments. No
external search consultancy or open advertising was
used for the appointment of Gustavo Cardenas as a
Non-Executive Director because he was appointed
as a shareholder representative. An explanation of
Gustavo’s appointment can be found on page 97.
The Board and Committee structure and
membership is as follows:
THE BOARD OF DIRECTORS
The Board consists of seven Directors: five Non-
Executive Directors and two Executive Directors.
Four of the Non-Executive Directors are considered
independent. Biographies of the Directors are shown
on pages 65 to 70 and demonstrate the wide
range of skills and experience that they bring to the
Board. The Directors possess business and financial
expertise relevant to the direction of the Company
and consider themselves to be committing sufficient
time to the Company’s affairs.
Each Non-Executive Director has been appointed
pursuant to a letter of appointment entered into with
the Company in accordance with the Company’s
articles of association. The Directors’ appointment
can be terminated in accordance with the Company’s
articles of association and without compensation.
There are no agreements between the Company
and any Director which provide for compensation for
loss of office in the event that there is a change of
control of the Company. Each Executive Director has
entered into a service agreement with the Group as
set out in the Directors’ Remuneration Policy.
Copies of the letters of appointment and service
agreements are available on request from the
Company Secretary and will be available at the
Company’s 2023 AGM.
Time commitment
The Nomination Committee considers the time
commitments of proposed candidates prior to
appointment to ensure that they are able to dedicate
sufficient time to the role. Directors’ external
commitments are reviewed on a regular basis to
ensure they continue to devote sufficient time to
the role. All Directors are required to obtain prior
approval before taking on any additional external
appointments. Directors are expected to attend
all Board and relevant Committee meetings and
attendance in 2022 is set out in the table below.
Director’s Report
POLLEN STREET
79
THE OPERATION OF THE BOARD
The Board of Directors meets at least six times a
year and more often if required. The table below sets
out the Directors’ attendance at scheduled Board
and Committee meetings from 1 January 2022 to 31
December 2022. Lindsey McMurray, Julian Dale and
Gustavo Cardenas were appointed during the year.
Their attendance has only been recorded in the table
below from the date of their appointment.
Director Board
16
Audit
Committee
Risk
Committee
Nomination
Committee
Remuneration
Committee
Robert
Sharpe
15/15 - - 2/2 4/4
Lindsey
McMurray
3/3 - - - -
Jim Coyle 15/15 4/4 3/3 2/2 4/4
Gustavo
Cardenas
2/2 - - - -
Julian Dale 3/3 - - - -
Richard
Rowney
14/15 4/4 3/3 2/2 4/4
Joanne Lake 14/15 4/4 3/3 2/2 4/4
Total 15 4 3 2 4
16
A number of additional meetings of the Board were held throughout the year to discuss transactional matters, including the proposed
combination of Honeycomb and Pollen Street
Financial Statement 2022
POLLEN STREET
80
No individuals other than the Committee or Board
members are entitled to attend the relevant meetings
unless they have been invited to attend by the Board
or relevant Committee.
Directors are provided with a comprehensive set of
papers for each Board or Committee meeting, which
equips them with sufficient information to prepare for
the meetings.
The Board has a formal schedule of matters
specifically reserved to it for decision, which includes:
• The Group’s structure, including share issues
and setting a discount/premium management
programme;
• Reviewing and approving Board changes;
• Considering and authorising Board conflicts of
interest;
• Reviewing and approving the Group’s audited
Annual Report and Accounts and half-yearly
Report and Accounts including accounting
policies;
• Reviewing and approving the Group’s level of
gearing;
• The review and approval of terms of reference and
membership of Board Committees; and
• Reviewing and approving liability insurance. There
is a procedure in place for the Directors to take
independent professional advice at the expense of
the Company.
The Company has taken out directors’ and officers’
liability insurance, such cover to be maintained for
the full term of each Director’s appointment.
Culture
The Directors have considered and defined the
Company’s culture, purpose and values. By formally
identifying the important elements of the Company’s
dynamic and driven culture, the Directors are able
to assess and monitor it and ensure that it remains
well aligned with the Company’s purpose, values and
strategy. The Board promotes a culture of openness
and debate. The culture of the Board is considered
as part of the annual review of the Company’s terms
of reference, performance evaluation and strategy
review processes.
The Company operates around five key values;
expert, caring, enterprising, progressive and
driven. We aim to be a purpose-led asset manager
delivering consistent returns and sustainable growth
for our investors and stakeholders alongside positive
impact for our people, portfolio companies and wider
society. The culture of the Board is considered as
part of the annual review of the board effectiveness
and the strategy review processes.
Independence of Directors
Robert Sharpe, Jim Coyle, Richard Rowney and
Joanne Lake were considered, on appointment,
to be free from any business or other relationship
that could materially interfere with the exercise of
his or her independent judgement and remained
so throughout the year. The Board is of the view
that there are no relationships or circumstances
relating to the Company that are likely to affect the
judgement of any of the independent Directors.
Gustavo Cardenas was appointed as a Non-
Executive Director of the Board with effect from
1 November 2022. Gustavo is a shareholder
representative of our largest institutional shareholder,
Wafra, who hold shares in the Company through CC
Beekeeper Ltd.
Care will be taken at all times to ensure that
the Board is composed of members who, as a
whole, have the required knowledge, abilities
and experience to properly fulfil their role and are
sufficiently independent.
Director’s Report
POLLEN STREET
81
Board evaluation
The performance of the Board and its Committees
and Directors as well as the independence of the
Directors during 2022 were evaluated by means
of a Director self-assessment questionnaire. The
results of the evaluation process were reviewed by
the Board in November 2022 and actions arising
from the evaluation process were agreed. These
were: continuing to closely monitor and observe the
Company’s risk and control systems; maintaining
business performance and resilience and looking for
further opportunities for sustainable growth.
In terms of Director training, the Company Secretary
and the management team offer induction training
to new Directors about the Company, the Directors’
duties and obligations and other matters as may be
relevant from time to time.
The Board members are encouraged to keep up
to date and attend training courses on matters that
are directly relevant to their involvement with the
Company. It is the Board’s intention to consider an
external Board evaluation in 2023.
Board appointment, election and tenure
The rules concerning the appointment and
replacement of Directors are contained in the
Company’s articles of association and the Companies
Act 2006.
None of the Directors consider length of service as
an impediment to independence or good judgement
but, if they felt that this had become the case, the
relevant Director would stand down.
The Board considers that all of the current Directors
contribute effectively to the operation of the Board
and the strategy of the Company. The Board
believes that it is in the best interests of shareholders
that each of the Directors be re-elected at the
forthcoming AGM. The next AGM will be held during
or before June 2023.
DIRECTORS’ SUCCESSION POLICY
At the start of 2019, the AIC published an updated
AIC Code of Corporate Governance. The Committee
welcomed the AIC’s approach to tenure of chairs
of investment companies which, recognising
that the circumstances of chairs of investment
companies differed from other companies, the AIC
recommended that instead of adhering to a nine-year
limit on chair tenure, the Boards could determine and
disclose their policy on the chair tenure instead.
Taking the AIC recommendations into account, the
Board has adopted a policy on Directors’ Succession.
In accordance with the policy, the Company has put
into effect an orderly rotation of the Board which
commenced at the 2019 AGM. The Board will
continue to review succession arrangements in light
of the Combination at Board level and determine
the most appropriate time for the next phase of the
succession policy to be implemented. All directors
will stand for re-election at the AGM.
MANAGEMENT AGREEMENT AND
CONTINUING APPOINTMENT
The performance of the Investment Manager, Pollen
Street Capital Limited, a subsidiary of the Group,
was previously reviewed and monitored by the
Management Engagement Committee. Following
the completion of the Combination the Management
Engagement Committee was disbanded as the
manager became a wholly owned subsidiary of
the Group. Since the Combination, the monitoring
of the Investment Manager is carried out by the
Board which receives reports on performance from
the CEO and CFO. The Board is satisfied that the
Investment Manager has performed in line with
expectations and the Board is of the opinion that the
continuing appointment of the Investment Manager
on the terms agreed is in the best interests of the
shareholders.
Director’s Report
POLLEN STREET
83
CONFLICTS OF INTEREST
The Company’s articles of association provide that
the Directors may authorise any actual or potential
conflict of interest that a Director may have, with or
without imposing any conditions that they consider
appropriate on the Director in question. Directors
are not able to vote in respect of any contract,
arrangement or transaction in which they have a
material interest, and, in such circumstances, they
are not counted in the quorum at the relevant Board
meeting. A process has been developed to identify
any of the Directors’ potential or actual conflicts of
interest. This includes declaring any potential new
conflicts before the start of each Board meeting. A
schedule is maintained of each Director’s potential
conflicts of interest.
COMMITTEES
As set out on page 79, the Committee structure
was reviewed by the Board in early 2022. The Board
now constitutes the following Committees. Details of
membership of the Committees is set out on page
79. The terms of reference of each Committee are
available from the office and the Company’s website.
Each Committee reports to the Board on its
proceedings after each meeting.
Audit Committee
The Board has delegated certain responsibilities to
its Audit Committee. An outline of the remit of the
Audit Committee and its activities during the year are
set out on pages 88 to 93.
The Audit Committee is chaired by Jim Coyle and
meets at least on a quarterly basis. It is responsible
for ensuring that the financial performance of
the Group is properly reported and monitored
and provides a forum through which the Group’s
external auditors may report to the Board. The Audit
Committee reviews and recommends to the Board
the annual and half-yearly reports and financial
statements, and financial announcements.
Risk Committee
The Board has delegated certain responsibilities to
its Risk Committee. An outline of the remit of the Risk
Committee and its activities during the year is set out
on pages 94 and 95.
The Risk Committee is chaired by Richard Rowney
and meets at least on a quarterly basis. The Risk
Committee is responsible for: reviewing the Group’s
internal control and risk management systems, in
collaboration with the Audit Committee in respect
of financial control; setting and monitoring the
Company’s risk appetite; carrying out a robust
assessment of the Company’s emerging and
principal risks; and key policies and processes
for identifying and assessing both financial and
non-financial business risks and the management
of these risks along with an assessment of their
robustness, appropriateness and effectiveness.
The Risk Committee reviews and approves
statements to be included in the Annual Report
and Accounts concerning internal controls and risk
management; and assesses the adequacy of the
levels of professional indemnity insurance and other
insurance cover maintained for the Company.
The principal risks and uncertainties for the Group
are set out in detail on pages 58 to 62.
Nomination Committee
The Board has delegated certain responsibilities to its
Nomination Committee. The Nomination Committee
is chaired by Robert Sharpe and meets at least once
a year. The report of the Nomination Committee is set
out on pages 96 to 97.
Remuneration Committee
The Board has delegated certain responsibilities to its
Remuneration Committee. The Committee is chaired
by Joanne Lake and meets at least once a year.
The primary responsibility of the Committee is to
consider and make recommendations to the Board on
Directors’ remuneration. Further details on the work
of the Remuneration Committee can be found in the
Directors’ Remuneration Report on pages 98 to 101.
COMBINATION WITH POLLEN STREET
The Board led the negotiations that culminated in
the Combination with Pollen Street Capital Holdings
Limited, which completed on 30 September 2022.
The Company appointed financial and legal advisers
to advise on the terms of the transaction, as well as a
sponsor to advise on the Company’s compliance with
its regulatory obligations under the listing rules. The
Company’s professional advisers conducted legal,
Financial Statement 2022
POLLEN STREET
84
financial and tax due diligence on the Pollen Street
corporate group prior to agreeing the terms of the
transaction. The Board has updated the governance
structure and arrangements to ensure they are robust
and appropriate in light of the Combination.
COMPANY SECRETARY
The Board has direct access to the advice and services
of the company secretary, which is responsible for
ensuring that the Board and Committee procedures
are followed, and that applicable rules and regulations
are complied with. The company secretary is also
responsible for ensuring good information flows
between all parties.
REVIEW OF SHAREHOLDER PROFILE
The Board reviews reports provided by qualified
independent industry consultants and the Company’s
brokers on the Company’s shareholder base and its
underlying beneficial owners. The brokers disclose
any concerns raised by shareholders to the Board.
RELATIONS WITH SHAREHOLDERS
All shareholders will ordinarily have the opportunity
to attend and vote, in person or by proxy, at the
AGM and any general meetings of shareholders.
The notice of the AGM, which is sent out at least 21
days in advance of the AGM, sets out the business
of the meeting and any item not of an entirely
routine nature is explained in the Directors’ report.
Separate resolutions are proposed in respect of each
substantive issue.
Shareholders are encouraged to attend the AGM and
to participate in proceedings. The Chair of the Board
and the Directors, together with representatives of the
Company, will be available to answer shareholders’
questions at the AGM. Proxy voting figures are
available to shareholders at the AGM.
The Group holds regular discussions with
major shareholders, the feedback from which is
provided to and greatly valued by the Board. The
Directors are available to enter into dialogue and
correspondence with shareholders regarding the
progress and performance of the Company. Further
information about the Company can be found on
the Company’s website.
INTERNAL CONTROL REVIEW
The Group has established internal control
frameworks to provide reasonable assurance on
the effectiveness of the internal controls operated
on behalf of their clients. The Audit Committee
considers annually whether there is any need for an
internal audit function. Following completion of the
Combination, the Board has appointed Deloitte LLP
as internal auditor of the Group.
The Board confirms that there is an ongoing
process for identifying, evaluating and managing the
significant risks faced by the Group and for reviewing
the effectiveness of the Group’s system of internal
controls including financial, financial reporting,
operational, compliance and risk management.
The Board has in place a robust process to assess
and monitor the risks of the Group. The Board has
reviewed the effectiveness of systems of internal
control and risk management. During the year under
review, the Board has not identified any significant
failings or weaknesses in its internal control systems.
The Group has established a risk matrix, consisting
of the key risks and controls in place to mitigate those
risks. The Board confirms that there is an ongoing
process for identifying, evaluating and managing
the principal risks faced by the Group. Details of the
Group’s risks can be found on pages 55 to 62 of the
Strategic Report, together with an explanation of the
controls that have been established to mitigate each
risk. The risk matrix provides a basis for the Risk
Committee and the Board to regularly monitor the
effective operation of the controls and to update the
matrix when new risks are identified.
The system of internal control and risk management
is designed to meet the Group’s particular needs
and the risks to which it is exposed. The Board
recognises that these control systems can only be
designed to manage, rather than eliminate, the risk of
failure to achieve business objectives and to provide
reasonable, but not absolute, assurance against
material misstatement or loss.
Director’s Report
POLLEN STREET
85
ALTERNATIVE INVESTMENT FUND
MANAGEMENT DIRECTIVE DISCLOSURE
Quantitative remuneration disclosure
In accordance with 3.3.5 (5) of the FCA’s Investment
Funds Sourcebook (“FUND”) and in accordance
with FCA Finalised guidance – General guidance
on the AIFM Remuneration Code (SYSC 19B)
(“the Guidelines”), dated January 2014, the total
remuneration paid by Pollen Street Group companies
which include the AIFM, Pollen Street Capital
Limited, during the year was £24.7 million, split
£11.8 million into variable and £12.9 million in fixed
remuneration. During the year, the average number
of beneficiaries at the Group which includes the AIFM
were 81 and the aggregate amount of remuneration
paid in relation to the senior management of the firm
was £10 million. Fixed remuneration is amounts paid
as salaries. Variable remuneration is amounts paid
under bonus and similar remuneration arrangements.
The AIFM does not consider that any individual
member of staff of the AIFM has the ability to
materially impact the risk profile of the Company.
Other disclosures
The AIFMD requires that the AIFM ensures that
certain other matters are actioned and or reported to
investors. Each of these is set out below.
• Provision and content of an Annual Report (FUND
3.3.2 and 3.3.5). The publication of the Annual
Report and Accounts of the Company satisfies
these requirements.
• Material changes of information. The AIFMD
requires certain information to be made available
to investors in the Company before they invest and
requires that material changes to this information
be disclosed in the Annual Report and Accounts.
Periodic disclosure (FUND 3.2.5 and 3.2.6)
There are no assets subject to special arrangements
due to their illiquid nature and no new arrangements
for the managing of the liquidity of the Company.
There is no change to the arrangements, as set out in
the prospectus, for managing the Company’s liquidity.
The current risk profile of the Company is set
out in the Strategic Report: Principal Risks and
Uncertainties on pages 58 to 62 and in Note 20 to
the financial statements, Financial Risk Management.
The Company is permitted to be leveraged and has
borrowing restrictions in place. In accordance with the
Company’s prospectuses dated 26 September 2022,
the Company has a maximum leverage limit of 100
percent of tangible NAV, the actual leverage employed
by the Company as a percentage of tangible NAV was
76.1 per cent as at 31 December 2022. There have
been no breaches of the permitted leverage limits
within the year and no changes to maximum level of
leverage employed by the Company.
The table below sets out the current maximum
permitted and actual leverage under the gross and
commitment method in accordance with Annex
IV Article 8 of the AIFMD. This differs from the
Company’s borrowing restriction, which is an absolute
measure. The gross and commitment method are
ratios between the Company’s gross assets and
NAV. The gross method represents the sum of the
Company’s positions (total assets) after deducting
cash balances. The commitment method represents
the sum of the Company’s positions without deducting
cash balances. The Company is required to state its
maximum and actual leverage levels, calculated as
prescribed by the AIFMD as at 31 December 2022,
and these are as follows:
As a
percentage
of net asset
value
Gross
method
Commitment
method
Maximum level
of leverage
200% 200%
Leverage as at
31 December
2022
143% 146%
Financial Statement 2022
POLLEN STREET
86
Other matters
The required reporting to the FCA has been
undertaken in accordance with the Financial Conduct
Authority’s FUND source book paragraph 3.4.
APPROVAL
This report was approved by the Board of Directors
on 22 March 2023.
On behalf of the Board
Robert Sharpe
Chairman
22 March 2023
Director’s Report
POLLEN STREET
87
MEMBERSHIP
All members of the Committee have recent and
relevant financial experience, as a result of their
involvement in financial services and other industries.
As Chair of the Audit Committee, I can confirm
that I am a Chartered Accountant and I maintain
my membership of the Institute of Chartered
Accountants of Scotland. As such, I have relevant
financial experience. The other members of the
Audit Committee are Joanne Lake and Richard
Rowney. They both have recent and relevant financial
experience, as a result of their involvement in financial
services and other industries
THE ROLE OF THE AUDIT COMMITTEE
The role of the Audit Committee is defined in its terms
of reference, which can be found on the Company’s
website at www.pollenstreetgroup.com.
For the year ended 31 December 2022, the roles
and responsibilities of the Audit Committee include
the following:
• to monitor the financial reporting process;
• to review and monitor the integrity of the half-year
and Annual Report and Accounts and review and
challenge where necessary the accounting policies
of the Group;
• to review the adequacy and effectiveness of the
Group’s internal financial and internal control and
risk management systems, in collaboration with
the Risk Committee in relation to financial controls;
• to make recommendations to the Board on the
reappointment or removal of the external auditors
and to approve its remuneration and terms of
engagement;
• to review and monitor the external auditors’
independence and objectivity; and
• to review and consider on an annual basis the
internal audit function.
THE COMMITTEE’S CHALLENGE OF
INFORMATION
The Committee recognises the importance of its role,
on behalf of shareholders and wider stakeholders, to
ensure the integrity of the Group’s financial reporting
and risk management processes. We rely on a
number of sources to ensure this integrity, including
the views of the external auditor.
The Committee has worked with the management
team over the course of 2022 to continue to improve
the quality and timeliness of written and verbal
reporting to the Committee and we are pleased with
progress to date. These continued improvements
have enriched the debate and discussion at the
REPORT OF THE
AUDIT COMMITTEE
As Chair of the Audit Committee, I am pleased to
present the report of the Audit Committee for the
year ended 31 December 2022. Full details of the
number of Committee meetings and attendance
by individual Committee members can be found
on page 80.
Financial Statement 2022
POLLEN STREET
88
meetings of the Committee and supported the
Committee to fulfil its responsibilities, which are set
out below. For example, the Audit Committee held
a meeting with management in January 2023, to
challenge the key assumptions and judgements
used in preparing the Annual Report and Accounts.
This included a review of the IFRS 9 assumptions
and a deep-dive review on a sample of investments.
In addition to this, the Audit Committee reviewed
management’s preparation for the full-year accounts
including the key accounting judgements proposed
by management. The review concluded that
management judgements were satisfactory.
SIGNIFICANT MATTERS CONSIDERED
DURING THE YEAR
The Audit Committee met four times during the year
under review and considered the following items:
• The Group’s Annual Report and Accounts for the
year ended 31 December 2022 and advised the
Board accordingly;
• The Company’s half-year financial statements for
the period ended 30 June 2022 and advised the
Board accordingly;
• The impact of the acquisition of shares in Pollen
Street Capital Holdings Limited on the accounts
of the Group, referred to as the Combination.
Given the nature of the transaction, this required a
significant amount of time and judgement;
• The appropriateness of the Group’s accounting
policies and whether appropriate estimates and
judgements have been made;
• The independence and reappointment of the
external auditor;
• The audit plan for the Group’s annual audit shared
by the external auditors;
• The Company’s policy on non-audit services
provided by the external auditor;
• The Group’s approach to expected credit loss
modelling under IFRS 9;
• The Group’s internal audit approach;
• The Group’s approach to the going concern
assessment and viability statement on pages 74
and 75 as to the longer-term viability of the Group
including consideration of the discontinuation
resolution and shareholder support already
received;
• The ongoing impact and risks associated with
recent geopolitical and macroeconomic events,
including the impact of Russia’s invasion of
Ukraine, significant increases in inflation and
interest rates as well as any further impacts of
Covid-19; and
• The Group’s ESG and climate related risks and
disclosures, including the process by which
management gather ESG data and metrics and
the support.
Director’s Report
POLLEN STREET
89
Director’s Report
SIGNIFICANT ACCOUNTING MATTERS
The Audit Committee met on 21 February 2023 to
review the report and financial statements for the year
ended 31 December 2022. The Audit Committee
considered the following significant issues, including
principal risks and uncertainties in light of the
Group’s activities and matters communicated by the
external auditors during their audit, all of which were
satisfactorily addressed:
Issue considered How the Committee gained assurance
Risk of misappropriation of
assets and ownership of
investments
The Audit Committee has reviewed key controls over the assets
of the Group over the course of 2022. The Board has put in place
procedures to ensure that investments can only be made to the
extent that the appropriate contractual and legal arrangements are
in place to protect the Group’s assets. The Company’s Depositary
issues a quarterly report on the status of the assets to the Directors
for review.
Risk on valuations of unlisted
equities at fair value
The Audit Committee received presentations in 2022 and 2023
from the management team including valuations of Equity Assets
held at fair value and justification for these. After challenging the
assumptions, the Committee concluded that the valuations held
were reasonable.
Goodwill recognised on the
acquisition of Pollen Street
Capital Holdings Limited
The Audit Committee has reviewed the goodwill that has been
recognised on the Statement of Financial Position of the Group.
The Audit Committee was presented with the goodwill impairment
test for 2022. After challenging the assumptions of the goodwill
impairment model, the Committee concluded that there is no
goodwill impairment. The Audit Committee recognises that an
annual impairment review is required for the goodwill, and that
judgement is required in the underlying calculations used to test the
value in use of goodwill.
Internally generated intangibles
recognised as part of
acquisition of Pollen Street
Capital Holdings Limited
The Audit Committee has reviewed the assumptions of the
intangibles that have been recognised on the Statement of Financial
Position of the Group. The Audit Committee recognises that
estimates are required in the underlying calculations to estimate the
value of the existing customer relationships and the corresponding
annual amortisation. After challenging the assumptions of the
intangibles model, the Committee concluded that the value of
intangibles recognised during the year is reasonable and that there
is no indication of impairment, and that the intangibles will be
amortised over their life as originally set out.
Accounting for carried interest The Audit Committee has reviewed and discussed the accounting
and presentation of carried interest, which required a number of
estimates and judgements which are explained in Note 2. Whilst
IFRS does not prescriptively lay out the accounting treatment for
carried interest, the Audit Committee is satisfied that the IFRS
principles and framework have been applied consistently in the
estimates and judgements.
Financial Statement 2022
POLLEN STREET
90
EXTERNAL AUDITORS
The Group’s external auditors, PricewaterhouseCoop-
ers LLP (“PwC”), were appointed on 16 May 2016
and last re-appointed on 22 June 2022 at the Com-
pany’s AGM. Under the Financial Reporting Council’s
transitional arrangements, the Company is required
to re-tender, for the audit of the financial year ending
2026, at the latest. A tender was not conducted during
the year but the Audit Committee intends to re-tender
within the timeframe set by the Financial Reporting
Council.
Issue considered How the Committee gained assurance
The risk of material
misstatement of expected
credit losses under IFRS 9
Financial instruments
The Audit Committee view credit provisioning as a key accounting
estimate area for the Group. As in previous years, the Committee
received presentations in 2022 and 2023 from the management
team explaining key judgement areas, such as consistency of
approach and the Group’s business mix. After challenging the
assumptions, the Committee concluded that the provisioning
approach and key judgements were reasonable.
A particular focal area for the Committees in 2023 has been on the
actual and forecasted impact of the more recent geopolitical events
on expected credit losses. The Committee has carefully challenged
a number of the assumptions underpinning reporting under IFRS 9.
The impact of these matters are described in the Strategic Report on
pages 4 to 62; and the Board’s role in managing this impact over the
course of 2022 is set out in the s172 statement on page 49 and 50.
Going concern and viability
statement
The Audit Committee reviewed a paper from the management
team in support of the going concern basis and the longer-term
viability of the Group. The paper analysed the discontinuation
resolution. The Committee challenged management’s assumptions
and concluded sufficient shareholders have already indicated their
intention to vote against discontinuation such that the Company
does not believe a discontinuation resolution would be passed
and therefore this should not affect the going concern or viability
assessment.
The Committee noted the stability of the Group’s business model,
its successful track record, the Group’s three-year financial
projections and the results of internal stress testing and concluded
this provided sufficient evidence to support the Board’s viability
statement set out on page 75. The Committee will continue to
monitor this area closely given the macroeconomic uncertainty
described in the Strategic Report.
Fair, balanced and
understandable
The approach taken by the Committee in determining whether
the annual report is, when taken as a whole; fair, balanced
and understandable, is described in greater detail in this Audit
Committee report on pages 88 to 93.
Retention of Investment
Trust Status
The Audit Committee confirms that the Company has remained
compliant with the requirements to maintain its investment trust
status. The Directors regularly review the investments and their mix
to ensure they remain diversified, its retained income levels to ensure
sufficient distributions are made and the Company’s shareholdings to
determine if the Company has become a close company.
Director’s Report
POLLEN STREET
91
The individual at PwC who acts as the Group’s senior
statutory auditor is Claire Sandford. Claire became
senior statutory auditor in 2021 following Richard
McGuire’s fifth and final year as senior statutory audi-
tor. The auditor rotation was completed in accordance
with the Financial Reporting Council’s Revised Ethical
Standard 2019.
The audit and non-audit fees for the year under review
can be found in Note 5 to the financial statements.
NON-AUDIT SERVICES
In relation to non-audit services, the Audit Committee
has reviewed and implemented a policy on the
engagement of the auditors to supply non-audit
services and this is reviewed on an annual basis.
All requests or applications for other services to
be provided by the auditors over a threshold are
submitted to the Audit Committee and will include
a description of the services to be rendered and an
anticipated cost. The Audit Committee will review
the scope and size of any such services provided
and any consequent impact upon the auditors’
independence.
The Group’s policy follows the requirements of
the Financial Reporting Council’s Revised Ethical
Standard for Auditors published in December 2019.
The policy specifies a number of prohibited services
which it is not permitted for the auditors to provide
under the revised Ethical Standard.
The auditors did not provide any non-audit services
to the Group in 2022 (2021: nil) however the auditors
have historically provided advisory services to the
Investment Manager, prior to completion of the
Combination.
EXTERNAL AUDIT INDEPENDENCE
The Committee has undertaken a formal assessment
of PwC’s independence, which included a review of:
• a report from PwC describing its arrangements to
identify, report and manage any conflicts of interest;
• its policies and procedures for maintaining
independence and monitoring compliance with
relevant requirements; and
• the value of non-audit services provided by PwC.
The Audit Committee monitors the auditors’ ob-
jectivity and independence on an ongoing basis. In
determining PwC’s independence, the Audit Com-
mittee has assessed all relationships with PwC and
received confirmation from PwC that it is independ-
ent and that no issues of conflicts arose during the
year. The Audit Committee is therefore satisfied that
PwC is independent.
EXTERNAL AUDIT EFFECTIVENESS
The Audit Committee monitors and reviews the
effectiveness of the external audit process on an
annual basis and makes recommendations to the
Board on its reappointment, remuneration and terms
of engagement of the auditors. Over the reporting
period, the Audit Committee reviewed management’s
proposed judgements. The Committee asked the
auditor to review key areas and to ensure that they
were challenging management’s judgement with
appropriate professional scepticism. Key matters
included new accounting policies required for
the enlarged Group following the Combination,
acquisition accounting for the Combination and other
key judgements such as IFRS 9. This work concluded
that the judgements used in the financial statements
were appropriate. In addition the chair of the Audit
Committee met with the audit partner and assessed
PwC’s performance to date. The review involved an
examination of the auditors’ remuneration, the quality
of its work including the quality of the audit report,
the quality of the audit partner and audit team, the
expertise of the audit firm and the resources available
to it, the identification of audit risk, the planning and
execution of the audit and the terms of engagement.
Accordingly, the Audit Committee recommended
to the Board that it proposes to shareholders via
an ordinary resolution that PwC be reappointed
as auditors at the AGM. PwC has confirmed its
willingness to continue in office.
The Audit Committee has direct access to the
Group’s auditors and provides a forum through which
the auditors report to the Board. Representatives of
PwC attend regular meetings of the Audit Committee.
INTERNAL AUDIT
Following completion of the Combination, the Audit
Committee recommended to the Board that Deloitte
LLP be appointed as internal auditor of the Group.
This appointment was effective from 22 February
2023. The Audit Committee will review reports from
the internal audit function as the work is completed.
Financial Statement 2022
POLLEN STREET
92
FAIR BALANCED AND UNDERSTANDABLE
REPORTING
Following the year end, the Audit Committee
reviewed the 2022 Annual Report and Accounts to
consider whether they provide a true and fair view of
the Group’s affairs at the end of the year and provided
shareholders with the necessary information in a fair,
balanced and understandable way to enable them to
assess the Group’s position, performance, business
model and strategy.
There was a rigorous review process and challenge
at different levels within the Group to ensure balance
and consistency. The Committee also reviewed
copies of the 2022 Annual Report and Accounts
during the drafting process to ensure key messages
and themes being followed throughout the report
and financial statements were aligned with the
Company’s position, performance and strategy
intentions, and that the narrative in the report and
financial statements was consistent throughout.
When forming its opinion, the Committee considered
the following questions to encourage challenge and
assess whether the Annual Report and Accounts
was fair, balanced and understandable:
Is the Report fair? • Is the whole story presented?
• Have any sensitive material areas been omitted?
• Are the KPIs disclosed at an appropriate level based on the
financial reporting?
Is the Report balanced? • Is there a good level of consistency between the front and back
sections of the Annual Report and Accounts?
• Is the Annual Report and Accounts a document for shareholders
and other stakeholders?
Is the Report
understandable?
• Is there a clear and understandable framework to the Annual
Report and Accounts?
• Are the Annual Report and Accounts user-friendly, easy to
understand and presented in straightforward language?
EFFECTIVENESS
The Committee’s effectiveness was reviewed as
part of the Board evaluation, with results presented
in November 2022, and it was concluded that
the Committee was operating effectively. Board
effectiveness will continue to be a priority for
the Committee and our approach to evaluating
effectiveness will continue to evolve in accordance
with our strategic objectives.
TERMS OF REFERENCE
The Committee has formal terms of reference which
can be accessed on the Group’s website at https://
www.pollenstreetgroup.com/. The terms of reference
are reviewed by the Board on a regular basis.
CONCLUSION
After completion of its review, the Committee was
satisfied that, when taken as a whole, the Group’s
Annual Report and Accounts were fair, balanced
and understandable, and provide the information
necessary for shareholders to assess the Group’s
performance, business model and strategy.
APPROVAL
This report was approved by the Audit Committee on
22 March 2023.
Jim Coyle
Chair of the Audit Committee
22 March 2023
Director’s Report
POLLEN STREET
93
REPORT OF THE
RISK COMMITTEE
As Chair of the Risk Committee, I am pleased to
present the Committee’s report for the year ended
31 December 2022. This is the first report since the
Combination occurred on 30 September 2022 and
the mandate of the Committee broadened to include
oversight of risk matters across the expanded Group.
MEMBERSHIP
The Risk Committee is chaired by Richard Rowney.
Jim Coyle and Joanne Lake are also members. All
three members have risk and broader business
experience due to the senior positions they hold or
have held in other listed or publicly traded companies
and/or similar large organisations. The members’
biographies can be found on pages 65 to 70.
The Group’s CEO and CFO are not members of the
Committee but attend meetings at the invitation of
the Chair of the Committee together with the Group’s
Chief Compliance Officer. PwC, as external auditor,
and members of the Group’s management team also
regularly attend meetings.
Full details of the number of Committee meetings
and attendance by individual Committee members
can be found on page 80.
THE ROLE OF THE RISK COMMITTEE
The purpose of the Committee is to assist the Board
in fulfilling its oversight responsibilities related to
the risk management processes of the Group. Its
principal activities are:
• overseeing the Group’s risk management and
compliance activities;
• setting and monitoring the Group’s risk appetite;
• reviewing the Group’s internal control and risk
management systems, in collaboration with the
Audit Committee in respect of financial controls;
• carrying out a robust assessment of the Group’s
emerging and principal risks;
• reviewing the Group’s key risk policies, including
the risk management, market abuse, related party
transactions and significant transaction policies;
• reviewing and approving risk statements to be
included in the Annual Report and Accounts
concerning internal controls and risk management;
and
• overseeing the Group’s internal capital and risk
assessment (“ICARA”).
Further details of the duties and responsibilities of
the Risk Committee can be found in the terms of
reference.
Financial Statement 2022
POLLEN STREET
94
SIGNIFICANT MATTERS CONSIDERED
DURING THE YEAR
During the year under review, the Risk Committee
met three times. The Committee considered the
following items during the year under review:
• The Group’s risk appetite statement, taking in
consideration the risk profile of the expanded
Group following completion of the Combination;
• The Group’s risk registers and risk dashboard, in
light of the Combination;
• Risk and compliance reports received from the risk
and compliance teams, which included information
relating to compliance monitoring activities,
debt facilities, compliance with covenants and
regulatory horizon scanning;
• The Group’s ICARA, including risk assessment and
corresponding mitigation;
• The Group’s policies in relation to risk management,
market abuse, related party transactions and
significant transaction;
• The recent share price performance together with
the brokers’ narrative and recommendations;
• The risk profile of a sample of on-balance sheet
investments, in conjunction with the Audit
Committee; and
• The Group’s assessment of the impact of
consumer duty requirements, noting that the
Group’s business model is not focused on dealing
directly with consumers, and the way in which
the Group works with Private Equity portfolio
companies and Credit partners to test how they
are complying with the new consumer duty rules
where they are relevant.
Details of the Group’s risk management process
and the management and mitigation of key risks can
be found on pages 55 to 62. The Board, through
the Risk Committee, has carried out a review of the
principal risks facing the Group and agreed with how
they have been represented within the annual report.
EFFECTIVENESS
The Committee’s effectiveness was reviewed as
part of the Board evaluation, with results presented
in November 2022 and it was concluded that
the Committee was operating effectively. Board
effectiveness will continue to be a priority for
the Committee and our approach to evaluating
effectiveness will continue to evolve in accordance
with our strategic objectives.
TERMS OF REFERENCE
The Committee has formal terms of reference which
can be accessed on the Group’s website at https://
www.pollenstreetgroup.com/. The terms of reference
are reviewed by the Board on a regular basis.
CONCLUSION
After completion of its review, the Risk Committee
was satisfied that the Group was operating within the
risk appetite set by the Board and, when taken as
a whole, the Group’s Annual Report and Accounts
provide the information necessary for shareholders
to assess the Group’s risk position.
APPROVAL
This report was approved by the Risk Committee on
22 March 2023.
Richard Rowney
Chair of the Risk Committee
22 March 2023
Director’s Report
POLLEN STREET
95
REPORT OF THE
NOMINATION
COMMITTEE
As Chair of the Nomination Committee, I am pleased
to present the Committee’s report for the year ended
31 December 2022. This is the first report since the
Combination occurred on 30 September 2022.
MEMBERSHIP
The Nomination Committee is chaired by Robert
Sharpe. The other members are Richard Rowney,
Joanne Lake and Jim Coyle. All members have
extensive experience acting on boards. The
members biographies can be found on pages 65
to 70.
The Group’s CEO and CFO are not members of the
Committee but attend meetings at the invitation of
the Chair of the Committee together with external
advisers as required.
Full details of the number of Committee meetings
and attendance by individual Committee members
can be found on page 80.
THE ROLE OF THE NOMINATION
COMMITTEE
Effective governance requires a breadth of skills,
experience, knowledge and diversity making the
work of the Nomination Committee a key part of the
Board’s oversight.
The responsibilities of the Nomination Committee
include:
• to review the structure, size and composition of
the Board (taking into account the balance of
skills, knowledge, experience and the provisions of
the Company’s Board Diversity Policy) and make
recommendations to the Board with regard to any
changes;
• to ensure plans are in place for orderly succession
to both the Board and senior management
positions, and oversee the development of a
diverse pipeline for succession, taking into account
the challenges and opportunities facing the
Company, and the skills and expertise needed on
the Board in future;
• to keep under review the leadership needs of the
organisation, both executive and non-executive,
with a view to ensuring the continued ability of
the organisation to compete effectively in the
marketplace;
• to keep up to date and fully informed about
strategic issues and commercial changes affecting
the Company and the market in which it operates;
• responsibility for identifying and nominating for
the approval of the Board candidates to fill board
vacancies as they arise;
• before any appointment is made by the Board,
to evaluate the balance of skills, knowledge,
experience and diversity on the Board and, in
light of this evaluation, prepare a description of
the role and capabilities required for a particular
appointment and the time commitment expected;
• to consider the membership of any other Board
Committees as appropriate, in consultation with
the Chair of those Committees; and
• to oversee a formal and rigorous annual evaluation
process in relation to the performance and
effectiveness of the Board, its Committees, the
Chair of the Board and individual Directors and
to review the results of the Board performance
evaluation process that relate to the composition
of the Board and succession planning.
Financial Statement 2022
POLLEN STREET
96
SIGNIFICANT MATTERS CONSIDERED
DURING THE YEAR
During the year under review, the Nomination
Committee met twice.The Committee’s work
focused on considering and preparing for the
Combination with Pollen Street Capital Holdings
Limited. Key matters considered and decision
included:
• Lindsey McMurray’s appointment as the CEO
of the Group and an Executive Director on 30
September 2022, being the date of completion of
the Combination;
• Julian Dale’s appointment as the CFO of
the Group and an Executive Director on 30
September 2022, being the date of completion of
the Combination; and
• Gustavo Cardenas’ appointment as a Non-
Executive Director of the Board with effect from
1 November 2022. Gustavo is a shareholder
representative of our largest institutional
shareholder, Wafra, who hold shares in
the Company through CC Beekeeper Ltd.
Consideration of the appointment arose through
an existing shareholder relationship therefore,
in this instance, neither external advertising nor
an outside agency was used. The Committee
considered that the combination of Gustavo’s
professional experience and background as well
as his experience of both sides of the combined
Pollen Street business made him an ideal
candidate to be appointed to the Board to fulfil
existing skill gaps and increase diversity.
The appointments are considered to broaden and
deepen the Board’s experience. The Committee
continues to closely monitor the composition of the
Board, to ensure it remains well balanced, diverse
and of a commensurate size.
EFFECTIVENESS
The Committee’s effectiveness was reviewed as
part of the Board evaluation, with results presented
in November 2022, and it was concluded that
the Committee was operating effectively. Board
effectiveness will continue to be a priority for
the Committee and our approach to evaluating
effectiveness will continue to evolve in accordance
with our strategic objectives. Furthermore, the
Committee recognises the importance of succession
planning and will continue to work closely with the
Executive Directors regarding this.
TERMS OF REFERENCE
The committee has formal terms of reference which
can be accessed on the Group’s website at https://
www.pollenstreetgroup.com/. The terms of reference
are reviewed by the Board on a regular basis.
CONCLUSION
After completion of its review, the Nomination
Committee was satisfied that the Board had the
breadth of skills, experience, knowledge and
diversity appropriate for the enlarged Group.
APPROVAL
This report was approved by the Nomination
Committee on 22 March 2023.
Robert Sharpe
Chair of the Nomination Committee
22 March 2023
Director’s Report
POLLEN STREET
97
DIRECTORS’
REMUNERATION
REPORT
As Chair of the Remuneration Committee, I am
pleased to present the Directors’ Remuneration
Report for the year ended 31 December 2022. This
is the first report since the Combination occurred
on 30 September 2022 and the mandate of the
committee broadened to include oversight of
remuneration matters across the expanded Group.
REMUNERATION PHILOSOPHY AT
POLLEN STREET
Our people are our most valuable asset – a group of
talented, collaborative and committed professionals.
This unwavering belief guides the way in which we
conduct our business and also how we recognise and
reward our people.
At Pollen Street we truly value our people and
their differences. It is our different experiences,
backgrounds and expertise that promote an
environment of entrepreneurial and progressive
thinking. We invest a huge amount of time and effort
into ensuring we recruit exceptional talent, people who
celebrate our values and embody our high performing
culture. We have built a comprehensive development
curriculum for our employees, something which we
will continue to prioritise to ensure every employee has
a challenging and rewarding career at Pollen Street.
We have a dynamic and driven culture underpinned
by meritocracy and effective risk management and
our remuneration structures reflect this. Alongside
market-competitive salaries and a comprehensive
benefits package, discretionary bonus awards aligned
to individual performance and performance of the
Company are awarded. We will continue to review
our approach to remuneration to ensure we continue
to build upon our strong pay-for-performance culture,
and we maintain our strong levels of employee
engagement.
Separately, certain employees of the Group
participate in carried interest schemes linked solely
to the fund performance; this is not considered to be
remuneration.
COMBINATION WITH POLLEN STREET
CAPITAL HOLDINGS LIMITED
The Remuneration Committee commissioned Aon
plc (“Aon”) to advise on the development of our
Directors’ Remuneration Policy and the design
of two new discretionary share plans appropriate
for the Combined business as part of the Board’s
preparation for the Combination with Pollen Street
Capital Holdings Limited. The Remuneration
Committee consulted with major shareholders on
the proposed policy prior to submitting it for formal
approval by shareholders at the general meeting on
1 June 2022.
The policy was approved at this meeting with strong
support from our shareholders and became effective
on the date of the general meeting approving the
Combination. On the date of completion of the
Combination, the Executive Directors were appointed
to the Board of the Company and the Remuneration
Committee took on oversight responsibility for
remuneration across the newly combined Group.
Financial Statement 2022
POLLEN STREET
98
SUMMARY OF THE DIRECTORS’
REMUNERATION POLICY
Our Directors’ Remuneration Policy is designed
to promote the delivery of sustainable long-term
performance and growth through the long-term
nature of the incentive plans (annual bonuses, bonus
deferral and the long-term incentive plan), the variety
of performance measures used, and the balanced
approach to target setting and performance
assessment.
Executive Directors receive a combination of base
salary, pension contributions, annual bonus and
other benefits. The annual bonus is based on a set
of financial and non-financial performance levels.
Each Executive Director has a target and maximum
opportunity level based upon performance criteria.
The criteria are reinforced by malus and clawback
provisions as outlined in the Remuneration Policy.
Non-Executive Directors receive a fixed fee based
on their role; however Gustavo Cardenas is not
independent and does not receive any fees.
Our Directors’ Remuneration Policy, and
accompanying procedures, is designed to take
into account market best practice, industry specific
considerations, comply with the Alternative Investment
Fund Management Directive’s (“AIFMD”) remuneration
code and the Financial Conduct Authority’s prudential
rules for MIFID firms (“MIFIDPRU”) remuneration code,
and guidelines from UK institutional shareholders and
advisory bodies. We are committed to a remuneration
structure that supports our strategy and helps deliver
positive client outcomes.
The full Directors’ Remuneration Policy may be found
on the Company’s website in the circular dated 10
May 2022 at https://spring.honeycombplc.com/.
REMUNERATION PAYABLE TO DIRECTORS
IN RESPECT OF 2022
The Annual Report on Remuneration sets out the
remuneration outcomes for the Directors for the year.
The Executive Directors received a combination of
salary, benefits, pension contributions and bonus
effective from their appointment on 30 September
2022. The bonus award was set based on a set
of performance criteria. These criteria were set in
advance of the period using a range of measures
of the financial results of the business. They
include growing AuM, delivering EBITDA, ensuring
risk management and compliance are effective
and delivering ESG outcomes. This ensures that
selective investing and careful portfolio management,
undertaken within the necessary risk and compliance
framework are considered when measuring
performance. Furthermore, our commitment to
ESG, including our continued focus on sustainability,
diversity, equity, and inclusion (“DEI”) and culture
are also carefully assessed. This approach reflects
the Board’s strong focus on not only the financial
performance of the company but also the way
in which business is conducted, and the role the
Company plays from an environmental, social and
governance perspective. Performance against these
criteria was broadly in line with the targets for 2022
and as such the bonus award was broadly in line
with target.
Although the Group’s long-term incentive plan
(“LTIP”) was approved by shareholders at the
general meeting on 1 June 2022, as explained in the
Directors’ Remuneration Policy, the Company will not
make any awards under the LTIP to the Executive
Directors or other employees for a period of two
years from completion of the Combination.
Prior to completion of the Combination the Executive
Directors were not employed by the Group.
Effective from the date of completion of the
Combination, the Chair of the Board received a fixed
fee at a rate equivalent to £170,000 per annum. The
other Non-Executive Directors received base fees
of £65,000 per annum plus £10,000 per annum for
each committee chair plus £10,000 per annum for
the Senior Independent Director, again effective from
completion of the Combination. These represent
increased fee levels compared to the fee levels that
were effective prior to the Combination. The increase
reflects the expanded scope of the Non-Executive
Directors’ roles as part of the enlarged Group. The
fees were set following a benchmarking exercise
of Non-Executive Director fees for comparable
businesses conducted by Aon. In addition to the
regular Board meetings, the Directors undertook
a significant number of additional formal Board
meetings as well as informal meetings in relation
to the Combination. They were paid an additional
amount for these meetings: £50,000 was paid to
the Chair of the Board and £40,000 for the other
Director’s Report
POLLEN STREET
99
Non-Executive Directors. Gustavo Cardenas was
appointed as a shareholder representative effective
from 1 November 2022 and is not paid remuneration.
The Remuneration Committee engaged with
shareholder and employees throughout its
preparation for the Combination to take into account
different stakeholders’ viewpoints and to ensure
that the remuneration structures were appropriate.
The Remuneration Committee concluded that the
remuneration awards were appropriate and did not
have to exercise its discretion to adjust the awards
calculated according to the performance targets.
The Annual Report on Remuneration sets out in full
the remuneration for Directors in respect of 2022
(see pages 103 to 111).
MEMBERSHIP
The Remuneration Committee comprises of Joanne
Lake, Robert Sharpe, Jim Coyle, and Richard
Rowney as four independent Non-Executive
Directors, all of whom have remuneration committee
experience due to the senior positions they hold or
have held in other listed or publicly traded companies
and/or similar large organisations. It is chaired by
Joanne Lake. The members biographies can be
found on page 65 to 70.
The Group’s Executive Directors are not members of
the Remuneration Committee but attend meetings at
the invitation of the Chair of the Committee together
with the Group’s Chief People Officer. Individuals are
not present when the Remuneration Committee is
discussing the individual’s salary.
Full details of the number of Remuneration
Committee meetings and attendance by individual
Remuneration Committee members can be found
on page 80.
THE ROLE OF THE
REMUNERATION COMMITTEE
The purpose of the Remuneration Committee is to
assist the Board in fulfilling its oversight responsibili-
ties related to the remuneration of Directors and em-
ployees of the Group. Its principal activities include:
• overseeing all remuneration matters across
the Group ensuring alignment with long-term
shareholder interests;
• ensuring the Directors’ remuneration is
implemented within the terms of the shareholder-
approved Directors’ Remuneration Policy;
• overseeing the choice of financial and non-
financial performance criteria for Executive
Directors’ annual bonus awards, taking account
of Group and individual performance, and wider
circumstances;
• reviewing incentives to ensure alignment with
company culture; and
• ensuring the contractual terms on termination of any
Executive Director, and any proposed payments, are
appropriate and fair to both the individual and the
Company, and underperformance is not rewarded.
Further details of the duties and responsibilities of the
Remuneration Committee can be found in the terms
of reference.
SIGNIFICANT MATTERS CONSIDERED
DURING THE YEAR
During the year under review, the Remuneration
Committee met four times. The Remuneration
Committee considered the following items during the
year under review:
• The establishment of a new Directors’
Remuneration Policy that would become effective
on the date of the general meeting approving the
Combination on 1 June 2022;
• The design of new discretionary share plans in the
early part of 2022 that would become effective
on the date of the general meeting approving the
Combination on 1 June 2022;
• The design of new service agreements for the
Executive Directors;
• The remuneration practices of Pollen Street
Capital Holdings Limited as part of diligence work
undertaken by the Board prior to the Combination;
• Reviewing and setting salary levels for the
Executive Directors following the Combination;
• Reviewing and setting fee levels for the Non-
Executive Directors following the Combination;
and
• Preparation for upcoming remuneration awards.
The Remuneration Committee commissioned
Aon to advise on the development of a Directors’
Remuneration Policy and the design of two
new discretionary share plans appropriate for
the Combined business as part of the Board’s
proposal for the Combination with Pollen Street
Capital Holdings Limited. Aon was selected and
Financial Statement 2022
POLLEN STREET
100
its fees were determined through a competitive
tender process. The Remuneration Committee was
satisfied that the advice provided was objective
and independent given Aon is an experienced firm
in this area and that no conflicts of interest were
identified. Aon provided no further services, and the
fees for the advice provided were at market rate and
amounted to £177,000.
EFFECTIVENESS
The Remuneration Committee’s effectiveness was
reviewed as part of the Board evaluation, with results
presented in November 2022, and it was concluded
that the Remuneration Committee was operating
effectively. Board effectiveness will continue to be
a priority for the Remuneration Committee and our
approach to evaluating effectiveness will continue to
evolve in accordance with our strategic objectives.
TERMS OF REFERENCE
The Remuneration Committee has formal terms of
reference which can be accessed on the Group’s
website at https://www.pollenstreetgroup.com/. The
terms of reference are reviewed by the Board on a
regular basis.
CONCLUSION
The Remuneration Committee was satisfied that the
Pollen Street had effective remuneration practices
across all levels of the organisation. Pollen Street’s
approach to remuneration is considered to be the
right balance of delivering corporate objectives
as well as attracting and retaining talent without
encouraging excessive risk taking. The Remuneration
Committee was satisfied that the Pollen Street had
effective remuneration practices across all levels of
the organisation.
APPROVAL
This report was approved by the Remuneration
Committee on 22 March 2023.
Joanne Lake
Chair of the Remuneration Committee
22 March 2023
101
Director’s Report
POLLEN STREET
ANNUAL REPORT
ON REMUNERATION
Director’s Report
POLLEN STREET
103
KPI Threshold Target Stretch 2022
Outcome
Weighting
EBITDA £32 million £36 million £40 million £36.8 million 40%
Average
Fee-Paying AuM
£2.0 billion £2.3 billion £2.6 billion £2.3 billion 40%
Risk & ESG On Target
Ahead of
Target
Ahead of
Target
20%
BUSINESS PERFORMANCE & EXECUTIVE
DIRECTOR REMUNERATION
The Remuneration Committee set a range of
stretching targets for the Executive Directors prior
to completion of the Combination to ensure that
variable remuneration was appropriately linked
to business performance. The targets took into
account remuneration practices across the Private
Equity and alternative investments sector as well as
Pollen Street’s remuneration of all employees. The
following table and notes summarise the applicable
performance criteria, how performance is measured,
the applicable weighting for each criteria and the
performance outcome for 2022.
The criteria operated as intended and the Remuneration Committee did not adjust the performance targets during the year or override any
of the outcomes.
Financial Statement 2022
POLLEN STREET
104
EBITDA
Performance measurement
EBITDA means the Group’s profit according to IFRS
reporting standards before interest, tax, depreciation
and amortisation, adjusted to exclude exceptional
items and start-up losses of the US business, but
including the full costs of the office leases despite
these costs being reported as depreciation of a right-
of-use asset and associated financing costs under
IFRS 16 as well as the debt costs for the group’s
debt facilities. EBITDA is calculated on a pro forma
basis as if the Combination occurred prior to the start
of the period, using a consistent approach with that
used in the circular and prospectus.
The target was set to be in line with the market
consensus for proforma results for the Group. The
stretch target was set to be approximately 10%
above target; similarly the threshold was set to be
approximately 10% below the target.
Performance for 2022
The EBITDA for 2022 was slightly ahead of the
market’s expectations, closing the year at £36.8
million. This is 20 per cent ahead of the target level
set by the Remuneration Committee, leading to
an outcome of 60 per cent of the maximum award
under this criteria.
AuM
Performance measurement
The AuM performance criteria was set as the Av-
erage Fee-Paying AuM for the period under review.
Average Fee-Paying AuM means, in respect of the
Group, the average of the opening and closing:
• Investor commitments for active fee-paying Private
Equity funds;
• Invested costs for other fee-paying Private Equity
funds;
• The total assets for the Company’s investment
portfolio; and
• The net invested amount for fee-paying private
Credit funds.
The target was set to be in line with the market
consensus. The stretch target was set to be approxi-
mately 10% above target; similarly, the threshold was
set to be 10% below the target.
Performance for 2022
AuM for 2022 was in line with the market’s
expectations, with Average Fee-Paying AuM at
£2.3 billion. This is at the target level set by the
Remuneration Committee leading to an outcome of
50 per cent of the maximum award under this criteria.
Risk & ESG
Performance measurement
The target was set as the following with perfor-
mance that fell short of this deemed to represent
the threshold:
• No undue regulatory interactions;
• No material adverse findings in the external audit
or internal audit;
• No material cyber incidents results in a material
loss to the firm or an investor; and
• ESG metrics collected on 80% of Private Equity
and Credit counterparties.
The stretch target was set as the following:
• No undue regulatory interactions including no
reporting of undue outcomes to the regulator;
• No material adverse findings in the external audit
or internal audit and recommendations being
addressed in line with appropriate timeframes;
• No cyber incidents resulting in any significant loss
to the firm or an investor;
• ESG metrics collected on 100% of counterparties;
and
• The Company achieving carbon neutral status by
year end.
Performance for 2022
During 2022 there were no materially adverse
interactions with any regulatory body or adverse
findings as the result of either internal or external
audits. Furthermore, there were no cyber incidents
resulting in any significant loss to the firm or an
investor. From an ESG perspective, over 90% of
counterparties have provided metrics as per the
proprietary scoring model introduced. Pollen Street
is also very proud of the work undertaken to ensure
it achieved carbon neutral status by the end of
2022. The Remuneration Committee concluded
that this performance measure should be assessed
as being ‘Ahead of Target’ for the period leading to
an outcome of 100 per cent of the maximum award
under this criteria.
Director’s Report
POLLEN STREET
105
Weighting
Each Executive Director bonus award is calculated
by weighting together the performance against
each KPI, with performance at the ‘threshold’ level
corresponding to a nil bonus, performance at the
‘target’ level corresponding to a bonus at 100%
of the Executive Director’s salary, performance
at the ‘stretch’ level corresponding to 200% of
the Executive Director’s salary and performance
between these levels calculated on a pro rata basis.
The results of the calculations are shown in the
annual bonus column in single total figure of
remuneration, above. In accordance with the
Directors’ Remuneration Policy, annual bonuses
will be paid in part upfront in cash, with 35% of any
bonus deferred into share-based awards granted
under the Deferred Bonus Plan (“DBP”). Accordingly,
£61,600 of the bonus awarded to Lindsey McMurray
and £39,200 of the bonus awarded to Julian Dale will
be deferred into awards of shares in the Company
granted under the DBP and will vest over a period
of three years from the date of grant, subject to the
terms of the DBP. Awards granted under the DBP will
be subject to malus and clawback provisions.
Director
Salary
& fees
Other
Benefits
Short-term
incentives
Robert
Sharpe
(8%) - -
Jim
Coyle
(11%) - -
Richard
Rowney
(12%) - -
PERCENTAGE CHANGE IN DIRECTORS’
REMUNERATION
The following table sets out the annual percentage
change in Directors’ remuneration for the year
ending 31 December 2022. Only Directors who were
employed during 2021 are shown in the table.
Director
Salary
& fees
Other
Benefits
Short-term
incentives
Robert
Sharpe
138% n/a n/a
Jim
Coyle
92% n/a n/a
Joanne
Lake
110% n/a n/a
Richard
Rowney
99% n/a n/a
The following table sets out the annual percentage
change in Directors’ remuneration for the year
ending 31 December 2021. Only Directors who were
employed during 2021 are shown in the table.
BENCHMARKING
We undertake a comprehensive annual benchmarking
exercise looking at data from a variety of peers across
a range of companies and sectors, including but
not limited to listed and non-listed alternative asset
managers, investment banks and consultancies.
We have commissioned a leading compensation
consultancy to provide us with relevant benchmarking
data for our Executive Directors. This data along with
additional data from a range of relevant private and
public companies has been carefully considered
when determining compensation levels.
Financial Statement 2022
POLLEN STREET
106
DIRECTORS’ INTERESTS (AUDITED)
The following table shows the interests of the
Directors and their connected persons in shares
in the Company as at 31 December 2022 and 31
December 2021.
During employment, Executive Directors are required
to build and maintain a shareholding equivalent to
200 per cent of their base salary. The shareholdings
of the CEO and CFO exceeded their requirement
on completion of the Combination. Any Executive
Director leaving the Group is required to maintain
shareholding equivalent to 200 per cent of their
previous base salary, or, if lower, their actual level of
shareholding on departure, for a period of two years
following departure in accordance with the Directors’
Remuneration Policy.
The Directors do not hold any scheme interests at
the reporting date. However, £61,600 of the bonus
awarded to Lindsey McMurray and £39,200 of the
bonus awarded to Julian Dale will be deferred into
awards of shares in the Company granted under
the DBP and will vest over a period of three years
from the date of grant, subject to their continued
employment. Awards granted under the DBP will be
subject to malus and clawback provisions.
Director Number of
shares held 31
December 2022
Shareholding
requirement
(% of salary)
Requirement met
Robert Sharpe - - No requirement
Lindsey McMurray 11,582,090 200% Yes
Jim Coyle - - No requirement
Gustavo Cardenas - - No requirement
Julian Dale 221,281 200% Yes
Joanne Lake 2,713 - No requirement
Richard Rowney - - No requirement
VOTING AT ANNUAL GENERAL MEETING
AND GENERAL MEETING
The table below sets out the votes cast on the
Directors’ Remuneration Report at the 2022 annual
general meeting held on 22 June 2022 and the
votes cast on the Directors’ Remuneration Policy at
a general meeting held on 1 June 2022. A number
of shareholders were not permitted to vote on the
Directors’ Remuneration Policy under the rules of the
Takeover Code. These are reported as abstentions in
the table below.
Votes for
(% of votes cast)
Votes against
(% of votes cast)
Abstentions
(number of votes)
Directors’
Remuneration Report
88.16% 11.84% 0
Directors’
Remuneration Policy,
the LTIP and the DBP
82.41% 17.59% 2,722,084
Director’s Report
POLLEN STREET
107
CEO PAY RATIO
UK regulations require companies with more than 250
UK employees to publish a ratio of the remuneration
of the Company’s chief executive officer to that of the
Group’s UK employees. Pollen Street has less than
250 employees, so it is not required to publish this
information, but it has elected to do so to promote
transparency. The table below outlines the ratio of
the CEO’s single total remuneration figure to the
remuneration of the Group’s UK workforce as at 31
December 2022, which is consistent with the period
used for the Single Figure Table of Remuneration
for the Directors. The numbers are presented on
an annualised basis. The Remuneration Committee
uses this information as part of its consideration of
remuneration awards.
There are different methodologies that companies
can adopt when calculating CEO pay ratio. Pollen
Street has elected to use the approach whereby
we calculate the pay and benefits of all of our UK-
based employees for the relevant period in order
to determine the total remuneration at the 25th
percentile, the median and the 75th percentile. This is
referred to as Method A. Employee pay data is based
upon full-time equivalent pay as at 31 December
2022. Pay for part-time workers and new joiners has
been calculated on a full-time and annualised basis,
in-line with the Single Figure methodology used for
calculating the CEO single total remuneration figure.
The CEO remuneration has been annualised for the
whole period.
Financial Year Method Lower Quartile Median Upper Quartile
31 December 2022 A 16:1 6:1 4:1
CEO Pay Ratio
Financial Year Lower Quartile Median Upper Quartile
Salary £70,000 £120,000 £160,000
Total pay and benefits £80,000 £215,000 £320,000
Remuneration of employees by quartile
The CEO pay ratio has not been presented for the
previous five years given the change in composition
of the Group following the Combination. This disclo-
sure will be expanded in future reports, in line with
applicable regulations.
Financial Statement 2022
POLLEN STREET
108
31 December 2022
Mean pay gap 37%
Mean bonus gap 64%
PERFORMANCE GRAPH AND TABLE
The graph below compares the total shareholder
return on the Company’s shares from the date of
listing to 31 December 2022 with that of the FTSE
Small Cap Index. The FTSE Small Cap Index is
considered an appropriate comparison because
Pollen Street is a constituent of the index.
RELATIVE IMPORTANCE OF SPEND ON PAY
The Directors do not consider there to be meaningful
information to present on the relative importance
of spend on pay given the Combination completed
towards to end of 2022. Full disclosure on the
remuneration paid to all employees, the shareholder
dividends and share buybacks and any other
significant relevant uses of profit or cash will be
provided in future annual reports.
GENDER PAY
We have elected to disclose the following gender
pay information as at 31 December 2022 to promote
transparency despite not being required to do so by law:
• Gender pay gap (mean and median)
• Gender bonus gap (mean and median)
Gender pay gap should not be confused with equal
pay gap which compares the pay of men and women
undertaking the same or similar role. We ensure equal
pay for equal work irrespective of gender. Gender
pay gap is a UK measure comparing the pay of all
men and all women regardless of role and seniority.
The Remuneration Committee uses this information
as part of its consideration of remuneration awards.
The following table shows the total remuneration of
the CEO for the period to 31 December 2022. In
accordance with the Directors’ Remuneration Policy,
no long-term incentive awards will be granted to the
CEO for a period of two years following completion
of the Combination.
CEO single figure total remuneration 176,000
Bonus (% of maximum opportunity) 64%
Long-term incentive (% of maximum opportunity) n/a
Pollen Street plc (ticker: POLN) Share Price Performance v FTSEsmallcap
Dec 15 Dec 16
0
50
100
150
Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Dec 22
FTSE smallcapPollen Street plc
Director’s Report
POLLEN STREET
109
PAYMENTS TO FORMER DIRECTORS AND
FOR LOSS OF OFFICE
No payments were made to former Directors of
the Company or in relation to loss of office during
the year. Further, there were no post-employment
awarded to staff.
DIRECTORS’ SERVICE AGREEMENTS
The Group’s policy is for Executive Directors to have
ongoing service contracts and the Group’s Non-
Executive Directors to have letters of appointed, which
are deemed appropriate for the nature of the Group’s
business. The Executive Director service agreements
have a notice period of 12 months and the Non-
Executive Director letters of appointment have a
notice period of three months from either party.
The Directors’ Remuneration Policy includes a
summary of the main terms of the Directors’ service
agreements. The policy may be found on the
Company’s website in the circular dated 10 May 2022
at https://spring.honeycombplc.com/
IMPLEMENTATION OF DIRECTORS’
REMUNERATION POLICY FOR 2023
The remuneration arrangements for Directors are not
expected to change materially for 2023.
Base salary and fees
The base salary and fees for Directors are set out in
the table below
Role Salary or Fee
CEO £550,000
CFO £350,000
Chair of the Board
£170,000
(inclusive of any
supplemental fee)
Non-Executive Basic
Board Fee
£65,000
Committee Chair
Supplemental Fee
£10,000
Senior Independent
Director Supplemental Fee
£10,000
Pension
Executive Directors remain eligible to participate in
the Group’s pension scheme. Under the scheme, the
Company contributions up to 3 per cent of salary.
The scheme is aligned with the wider workforce.
Other benefits
Executive Directors remain eligible to participate in
the Group’s private family medical insurance, life
insurance, permanent health insurance, an electric
vehicle scheme and other benefits. The benefits are
aligned with the wider workforce.
Annual bonus
The CEO and CFO are eligible to participate in the
annual bonus plan for 2023. The award is based
on KPIs similarly to the approach for 2022. These
KPIs take into account the profitability, AuM and
risk & ESG performance of the business. The
Remuneration Committee considers the prospective
disclosure of performance targets to be commercially
sensitive. There will be full retrospective disclosure
in next year’s Annual Report and Accounts. As
contained in the Directors’ Remuneration Policy,
the CEO and CFO will not be granted an award
under the LTIP for a period of two years following
completion of the Combination.
REMUNERATION COMMITTEE
The report of the Remuneration Committee includes
a description of the committee’s membership, its
role, the significant matters considered during the
year, its effectiveness and terms of reference.
CORPORATE GOVERNANCE CODE
The Company’s remuneration practices were
designed to comply with the six principles set out
the provision 40 of the UK Corporate Governance
Code, as summarised below. Further information is
available on the Company’s website in the circular
dated 10 May 2022.
Financial Statement 2022
POLLEN STREET
110
CLARITY
The Directors’ Remuneration Policy is as clear as possible and
full details are described in straightforward concise terms to
Shareholders and the workforce;
SIMPLICITY
Remuneration structures are as simple as possible and aligned to the
Private Equity and alternative investments sector, whilst at the same
time incorporating the necessary structural features appropriate for
a listed company to ensure a strong alignment to performance and
strategy and minimising the risk of rewarding failure;
RISK
PREDICTABILITY
The Directors’ Remuneration Policy has been shaped to discourage
inappropriate risk-taking through a weighting of incentive pay
towards long term incentives, the balance between financial and
nonfinancial measures in the relevant employee share plans and
in employment and post-employment shareholding requirements;
The Remuneration Committee maintains clear caps on incentive
opportunities and uses its available discretion if necessary;
PROPORTIONALITY
There is an industry-appropriate balance between fixed pay and
variable pay, and incentive pay is weighted to sustainable long-term
performance. Incentive plans are subject to performance targets
that consider both financial and non-financial performance linked
to strategy, and outcomes will not reward poor performance; and
ALIGNMENT TO CULTURE
The Remuneration Committee considers the Company’s culture
and wider workforce policies when shaping and developing
Executive Director remuneration policies to ensure that there is
coherence across the organisation. There is a strong emphasis on
the fairness of remuneration outcomes across the workforce.
Joanne Lake
Chair of the Remuneration Committee
22 March 2023
APPROVAL
This report was approved by the Remuneration
Committee on 22 March 2023.
Director’s Report
POLLEN STREET
111
STATEMENT OF
DIRECTORS’
RESPONSIBILITIES
IN RESPECT OF THE
FINANCIAL STATEMENTS
Listed companies are required by the Financial
Conduct Authority’s Disclosure Guidance and
Transparency Rules (the “Rules”) to include a
management report in their annual financial
statements. The information required to be in the
management report for the purpose of the Rules
is included in the Strategic Report (pages 4 and
63) and the Directors’ Report (pages 64 to 125).
Therefore, a separate management report has not
been included.
Financial Statement 2022
POLLEN STREET
112
DIRECTORS’ RESPONSIBILITIES
STATEMENT IN RELATION TO THE
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual
Report and Accounts and the financial statements in
accordance with applicable law and regulation.
Company law requires the Directors to prepare
financial statements for each financial year. Under
that law the Directors have prepared the Group and
the Company financial statements in accordance with
UK-adopted international accounting standards.
Under company law, Directors must not approve the
financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Group and Company and of the profit or loss of
the Group for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• state whether applicable UK-adopted international
accounting standards have been followed,
subject to any material departures disclosed and
explained in the financial statements;
• make judgements and accounting estimates that
are reasonable and prudent; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Group and Company will
continue in business.
The Directors are responsible for safeguarding the
assets of the Group and Company and hence for
taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are also responsible for keeping
adequate accounting records that are sufficient
to show and explain the Group’s and Company’s
transactions and disclose with reasonable accuracy
at any time the financial position of the Group and
Company and enable them to ensure that the financial
statements and the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for the maintenance
and integrity of the Company’s website. Legislation
in the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
DIRECTORS’ CONFIRMATIONS
Each of the Directors, whose names and functions
are listed in the Directors’ Report confirm that, to the
best of their knowledge:
• the Group and Company financial statements,
which have been prepared in accordance with
UK-adopted international accounting standards,
give a true and fair view of the assets, liabilities and
financial position of the Group and Company, and
of the profit of the group; and
• the management report, as represented by CEO
report, CFO report and other relevant elements of
the Strategic Report, includes a fair review of the
development and performance of the business
and the position of the Group and Company,
together with a description of the principal risks
and uncertainties that it faces.
Directors’ Statement Pursuant to the Disclosure and
Transparency Rules Each of the Directors, whose
names and functions are listed on pages 72 to 74
confirm that, to the best of each person’s knowledge:
A. the financial statements, prepared in accordance
with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities,
financial position and profit of the Company and the
undertakings included in the consolidation taken
as a whole; and B. the Strategic Report contained
in the annual report includes a fair review of the
development and performance of the business and
the position of the Company and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
Robert Sharpe
Chairman
22 March 2023
Director’s Report
POLLEN STREET
113
INDEPENDENT
AUDITORS’ REPORT TO
THE MEMBERS OF POLLEN
STREET PLC
OPINION
In our opinion, Pollen Street plc’s Group financial statements and Company financial statements (the “financial
statements”):
• give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2022
and of the Group’s profit and the Group’s and Company’s cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards as applied
in accordance with the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual
Report”), which comprise: the Consolidated and Company Statements of Financial Position as at 31
December 2022; the Consolidated Statement of Comprehensive Income, the Consolidated and Company
Statements of Changes in Shareholders’ Funds and the Consolidated and Company Statements of Cash
Flows for the year then ended; and the notes to the financial statements, which include a description of the
significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the
audit of the financial statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to
listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
We have provided no non-audit services to the Company or its controlled undertakings in the period under
audit.
Report on the Audit of the Financial Statements
Financial Statement 2022
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OUR AUDIT APPROACH
Overview
Audit scope
• The scope of our audit and the nature, timing and extent of audit procedures performed were determined
by our risk assessment and the financial significance of components.
• We performed audit procedures over components considered financially significant in the context of the
Group (full scope audit). For five other components, specific audit procedures were performed over selected
significant account balances
Key audit matters
• Valuation of the allowance for expected credit losses on credit assets at amortised cost (Group and
Company)
• Valuation of equity assets and carried interest assets at fair value (Group and Company)
• Goodwill (Group)
Materiality
• Overall Group materiality: £5,800,000 (2021: £3,600,000) based on 1% of net assets.
• Overall Company materiality: £5,800,000 (2021: £3,400,000) based on 1% of net assets.
• Performance materiality: £4,350,000 (2021: £2,700,000) (Group) and £4,350,000 (2021: £2,500,000)
(Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance
in the audit of the financial statements of the current period and include the most significant assessed risks
of material misstatement (whether or not due to fraud) identified by the auditors, including those which
had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters, and any comments we make on the results of our
procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Goodwill and the valuation of carried interest assets at fair value are new key audit matters this year.
Otherwise, the key audit matters below are consistent with last year.
Director’s Report
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115
Key audit matter How our audit addressed the key audit matter
Valuation of the allowance for expected credit
losses on credit assets at amortised cost
(Group and Company)
Credit assets recorded at amortised cost
amounted to £523,877k for the Group and
Company as at 31 December 2022. The amount
is net of the allowance for expected credit losses
(‘ECL’) in accordance with IFRS 9 of £9,281k
(Group and Company).
Determining ECL involves judgement and is
subject to a high degree of estimation uncertainty.
Various assumptions are required when
estimating ECL. The significant assumptions
that we focused on in our audit included those
with greater levels of judgement and for which
variations had the most significant impact on
ECL. These were the following:
• determination of forward looking economic
scenarios and their probability weightings; and
• quantitative and qualitative criteria used to
assess significant increases in credit risk
(‘SICR’).
The impact of the current economic conditions
is uncertain and judgements are used in
determining the severity and probability weighting
of macroeconomic forecasts to be applied across
the different economic scenarios used in ECL
models.
Refer to Report of the Audit Committee
‘Significant accounting matters’; Note 1
Principal accounting policies ‘Expected credit
loss allowance for financial assets measured at
amortised cost’; Note 2 Significant accounting
estimates and judgements ‘Expected credit
loss allowance for financial assets measured at
amortised cost’; and Note 10 Credit assets at
amortised cost.
We understood and evaluated the design of
controls over the estimation of ECLs over Credit
Assets at amortised cost.
We understood and assessed the ECL
methodology and assumptions applied by the
Group by reference to accounting standards
and industry practice and tested the techniques
used in estimating the ECL. We performed
substantive testing over the following, with the
assistance of our credit specialists:
• We tested the compliance of ECL
methodologies and assumptions applied
by the Group and Company with the
requirements of IFRS 9;
• We independently reperformed the ECL
calculations for a sample of credit assets.
• We critically assessed the appropriateness
of the significant assumptions and
methodologies used for models and
judgemental adjustments, including the
selection of key parameters such as
probabilities of default and the selection of
macroeconomic scenarios. In particular,
we challenged the appropriateness of the
downside scenarios.
• We tested the appropriateness and
application of the quantitative and qualitative
criteria used to assess significant increases in
credit risk.
• We performed stress testing to understand
the sensitivity of the ECL to a severe
downside economic scenario.
• We further considered whether the
judgements made in selecting the significant
assumptions would give rise to indicators of
possible management bias.
We evaluated and tested the disclosures over
credit assets recorded at amortised cost made
in the financial statements.
Based on the procedures performed and the
evidence obtained, we found management’s
judgements used in the determination of the
ECLs to be reasonable, and the financial
statement disclosures to be materially compliant
with the requirements of IFRS.
Financial Statement 2022
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Key audit matter How our audit addressed the key audit matter
Valuation of equity assets and carried interest
assets at fair value through profit and loss
(Group and Company)
Equity assets held at fair value amounted to
£16,449k for the Group and £15,659k for the
Company and carried interest assets at fair value
amounted to £6,495k at 31
December 2022 (Group) (Compant: nil).
These investments are unlisted and, as such,
the valuation requires the use of inputs which are
not readily observable in the market. Determining
unobservable inputs in fair value measurement
involves judgement and is subject to a high degree
of estimation uncertainty.
Refer to Report of the Audit Committee ‘Significant
accounting matters’; Note 2 Significant accounting
estimates and judgements ‘Equity asset valuation’
and ‘Carried interest’; Note 7 Investment assets at
fair value through profit or loss and Note 8 ‘Carried
interest’.
We understood and evaluated the design
of controls over estimating the fair value of
equity assets and carried interest assets.
With the assistance of our valuation experts,
we understood and assessed the valuation
methodology applied by reference to accounting
standards and industry practice and tested the
techniques used in determining the fair value.
We performed substantive testing over the
following:
• On a sample basis, we corroborated the
accuracy and reasonableness of inputs
used in valuations, including comparison to
recent relevant transactions and other market
performance information.
• We tested the appropriateness of underlying
investment company financial information and
the impact and sensitivity of the valuation to
other plausible scenarios.
• We obtained the fund and carried interest
partnership agreements and tested the
calculation to ensure that carried interest was
allocated to the Group appropriately.
We further considered whether the judgements
made in selecting the significant assumptions
would give rise to indicators of possible
management bias.
We evaluated and tested the disclosures over
equity assets and carried interest assets made
in the financial statements.
Based on the procedures performed and the
evidence obtained, we found management’s
judgements used in the valuation of equity
assets and carried interest assets at fair value
to be reasonable, and the financial statement
disclosures to be materially compliant with the
requirements of IFRS.
Director’s Report
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Key audit matter How our audit addressed the key audit matter
Goodwill (Group)
On 30 September 2022, the Group acquired the
entire shareholding of Pollen Street Capital Holdings
Limited (“PSCH”) via an all share transaction.
The total consideration paid was £235,781k.
This purchase price was allocated to the assets
acquired and the remaining balance was
recognised as goodwill of £227,691k.
Determining the completeness and fair value
of the intangible assets acquired as at 30
September 2022 required judgement and the use
of inputs which were not readily observable in the
market.
The goodwill balance was £227,691k as at
31 December 2022. Management performed
an impairment assessment and estimated a
recoverable amount using a value in use (‘VIU’)
approach. The recoverable amount was in excess
of the carrying value and no impairment was
recognised as at 31 December 2022.
The methodology used to estimate the VIU
is dependent on various assumptions, both
short-term and long-term in nature. These
assumptions, which are subject to estimation
uncertainty, are derived from a combination of
management’s judgement and market data.
The significant assumptions with greater levels
of management judgement and for which
variations had the most significant impact on the
recoverable amount included:
• Forecast cash flows of the acquired business
over three years;
• Long term growth rates; and
• Discount rates applied to the cash flow
forecasts.
Refer to Report of the Audit Committee
‘Significant accounting matters’; Note 1
Principal accounting policies ‘Goodwill’; Note 2
Significant accounting estimates and judgements
‘Impairment assessment for goodwill’; Note 3
‘Business Combination’ and Note 4 ‘Goodwill
and Intangible assets’.
We understood and evaluated the design of
controls over determining the recoverable amount
of the goodwill balance.
With the assistance of our valuation experts,
we understood and assessed the methodology
applied by reference to the accounting standards
and common industry practice used when
determining a purchase price allocation and
recoverable amount for goodwill.
We performed substantive testing, with the
assistance of our valuation experts, over the
following:
• We agreed the price of the assets to
supporting documentation such as purchase
agreements, or recent transactions where
available.
• We critically assessed the completeness
of assets acquired in the purchase price
allocation;
• We inspected the model used to estimate
the goodwill VIU and recalculated the VIU to
confirm the calculations used were accurate.
• We challenged the achievability of
management’s forecast cash flows by
reference to historical performance;
• We determined a reasonable range for the
discount rate and long term growth rate used
within the VIU model and compared it to the
rates used by management.
• We recalculated the sensitivity of the VIU
to reasonable variations in significant
assumptions.
Based on the procedures performed and the
evidence obtained, we found management’s
judgements used in determining the carrying
value of the goodwill to be reasonable, and the
financial statement disclosures to be materially
compliant with the requirements of IFRS.
Financial Statement 2022
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Financial statements - Group Financial statements - Company
Overall materiality £5,800,000 (2021: £3,600,000). £5,800,000 (2021: £3,400,000).
How we determined it 1% of net assets 1% of net assets
Rationale for
benchmark applied
We have applied this benchmark,
which is a generally accepted
auditing practice for investment
trust companies.
We have applied this benchmark,
which is a generally accepted
auditing practice for investment
trust companies.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial statements as a whole, taking into account the structure of the Group and the Company, the
accounting processes and controls, and the industry in which they operate.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement
in the financial statements. We performed a risk assessment, giving consideration to relevant external and
internal factors, including climate change, economic risks and the Group’s strategy. We also considered our
knowledge and experience obtained in the prior year audits. In particular, we looked at where the directors
made subjective judgements, for example in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of
climate risk on the Group’s and Company’s financial statements, and we remained alert when performing our
audit procedures for any indicators of the impact of climate risk. Our procedures did not identify any material
impact as a result of climate risk on the Group’s and Company’s financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds
for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures on the individual financial statement line items and
disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
For each component in the scope of our Group audit, we allocated a materiality that is less than our over-
all Group materiality. The range of materiality allocated across components was between £5,510,000 and
£543,000. Certain components were audited to a local statutory audit materiality that was also less than our
overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance
materiality in determining the scope of our audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality
was 75% (2021: 75%) of overall materiality, amounting to £4,350,000 (2021: £2,700,000) for the Group finan-
cial statements and £4,350,000 (2021: £2,500,000) for the Company financial statements.
Director’s Report
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119
In determining the performance materiality, we considered a number of factors - the history of misstatements,
risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the
upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit
above £300,000 (Group audit) (2021: £200,000) and £300,000 (Company audit) (2021: £200,000) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
CONCLUSIONS RELATING TO GOING CONCERN
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the
going concern basis of accounting included:
• Performing a risk assessment to identify factors that could impact the going concern basis of accounting.
• Obtaining and evaluating management’s going concern assessment.
• Reviewing the basis on which the directors have made their assertion that the discontinuation vote to be
held at the next Annual General Meeting will not be passed, including obtaining evidence gathered from
shareholders who have indicated their intention to vote against the resolution for discontinuation
• Understanding and evaluating the Group’s financial projections and the Group’s stress testing of the projected
cash flows, including the severity of the stress scenarios that were used.
• Validation of year end financial resources such as cash and interest rate borrowings.
• Obtaining and evaluating debt compliance certificates and covenants testing.
• Evaluating the adequacy of the disclosures made in the financial statements in relation to going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s and the Company’s ability
to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to
the Group’s and the Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements
about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements
and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify
Financial Statement 2022
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120
an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement
of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Director’s report, we also considered whether the disclosures
required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report
certain opinions and matters as described below.
Strategic report and Director’s report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic
report and Director’s report for the year ended 31 December 2022 is consistent with the financial statements
and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic report and Director’s report
Directors Remuneration
In our opinion, the part of the Annual report on remuneration to be audited has been properly prepared in
accordance with the Companies Act 2006.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term
viability and that part of the corporate governance statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with
respect to the corporate governance statement as other information are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the financial statements and our knowledge
obtained during the audit, and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal
risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the
going concern basis of accounting in preparing them, and their identification of any material uncertainties to the
Group’s and Company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this
assessment covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary qualifications or assumptions.
Director’s Report
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121
Our review of the directors’ statement regarding the longer-term viability of the Group and Company was
substantially less in scope than an audit and only consisted of making inquiries and considering the directors’
process supporting their statement; checking that the statement is in alignment with the relevant provisions of
the UK Corporate Governance Code; and considering whether the statement is consistent with the financial
statements and our knowledge and understanding of the Group and Company and their environment obtained in
the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for the members to assess the Group’s and
Company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal
control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the
Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the
Code specified under the Listing Rules for review by the auditors.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors’ responsibilities in respect of the financial statements,
the directors are responsible for the preparation of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Com-
pany’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group or the
Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design proce-
dures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregu-
larities, including fraud. The extent to which our procedures are capable of detecting irregularities, including
fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compli-
ance with laws and regulations related to the rules of the Financial Conduct Authority, and we considered
the extent to which non-compliance might have a material effect on the financial statements. We also con-
sidered those laws and regulations that have a direct impact on the financial statements such as the Com-
panies Act 2006 and UK tax legislation, including the Company’s qualification as an investment trust under
Financial Statement 2022
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122
the Corporation Tax Act 2010. We evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of controls), and determined that the
principal risks were related to posting inappropriate journal entries to increase revenue, and management
bias in accounting estimates. Audit procedures performed by the engagement team included:
• Discussions with management and the Audit Committee, including consideration of known or suspected
instances of non-compliance with laws and regulation and fraud;
• Assessment of the Company’s compliance with the requirements of Section 1158 of the Corporation Tax
Act 2010, including recalculation of the various numerical aspects of the eligibility conditions;
• Reviewing Board meeting and other relevant Committee minutes to identify any significant or unusual trans-
actions or other matters that could require further investigation;
• Challenging assumptions and judgements made by management in determining significant accounting
estimates, in particular in relation to the valuation of equity assets and carried interest assets at fair value,
allowance for expected credit losses on amortised cost assets, and accounting for goodwill (see related
key audit matters above);
• Identifying and testing journal entries meeting specific fraud criteria, including those posted with certain
descriptions or to certain account combinations, backdated journals or posted by unexpected users
.
• Obtaining confirmations from third parties to confirm the existence of a sample of balances; and
• Incorporating unpredictability in the selection of the nature, timing and extent of audit procedures performed.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly
using data auditing techniques. However, it typically involves selecting a limited number of items for testing,
rather than testing complete populations. We will often seek to target particular items for testing based on their
size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about
the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s directors as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in
giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly agreed by our prior consent in
writing.
Director’s Report
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123
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Annual report on remuneration to be audited are not
in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the directors on 16 May
2016 to audit the financial statements for the thirteen months ended 31 December 2016 and subsequent
financial periods. The period of total uninterrupted engagement is seven years, covering the periods ended 31
December 2016 to 31 December 2022.
OTHER MATTERS
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule
4.1.14R, these financial statements will form part of the ESEF-prepared annual financial report filed on the
National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory
Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual
financial report will be prepared using the single electronic format specified in the ESEF RTS.
Claire Sandford (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
22 March 2023
Financial Statement 2022
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124
Director’s Report
POLLEN STREET
125
REPORT
03.
FINANCIAL
STATEMENTS
127
For the year ended
31 December 2022
For the year ended
31 December 2021
Notes Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Management fee income 5 6,212 - 6,212 - - -
Carried interest & performance fee income 8 1,578 - 1,578
Interest income on Credit Assets held at
amortised cost
5 51,986 - 51,986 56,484 - 56,484
Gains on Investment Assets held at fair value 7 3,909 - 3,909 1,874 (1,337 ) 537
Total income 63,685 - 63,685 58,358 (1,337 ) 57,021
Credit impairment release 10 206 - 206 844 - 844
Third-party servicing costs (2,511 ) - (2,511 ) (2,810 ) - (2,810 )
Net operating income 61,380 - 61,380 56,392 (1,337 ) 55,055
Administration costs 5 (19,468 ) (117 ) (19,585 ) (11,720 ) (158 ) (11,878 )
Finance costs 9 (14,517 ) - (14,517 ) (12,859 ) - (12,859 )
Operating profit 27,395 (117 ) 27,278 31,813 (1,495 ) 30,318
Depreciation 13, 14 (322 ) - (322 ) - - -
Amortisation 4 (160 ) - (160 ) - - -
Profit before tax 26,913 (117 ) 26,796 31,813 (1,495 ) 30,318
Tax 11 (435 ) - (435 ) - - -
Profit after tax 26,478 (117 ) 26,361 31,813 (1,495 ) 30,318
Earnings per share (basic and diluted) 12 62.4 0.3 62.1 90.2 4.2 86.0
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
The total column of this statement represents the statement of
comprehensive income prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of
the Companies Act 2006 as applicable to companies reporting
under those standards. The revenue return and capital columns are
supplementary to this and are prepared under guidance published
by the Association of Investment Companies (“AIC”). All items in the
above statement derive from continuing operations.
No operations were discontinued during the year.
The Company does not have any income or expense that is not
included in net profit for the year. Accordingly, the net profit for the
year is also the total comprehensive Income for the year, as defined
in IAS1 (revised). There is no other comprehensive income for the
year.
The notes on pages 134 to 206 form an integral part of the financial
statements.
Financial Statements
POLLEN STREET
127
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Notes 31 December 2022
£’000
31 December 2021
£’000
Non-current assets
Credit Assets at amortised cost 10 523,877 565,994
Investment Assets held at fair value through profit or loss 7 64,506 48,770
Fixed assets 13 1,414 -
Goodwill and intangible assets 4 231,031 -
Lease assets 14 4,776 -
Carried interest 8 7,052 -
Total non-current assets 832,656 614,764
Current assets
Cash and cash equivalents 22 23,303 12,948
Receivables 15 12,870 6,554
Total current assets 36,173 19,502
Total assets 868,829 634,266
Current liabilities
Payables 16 19,221 7,159
Lease payables 14 1,201 -
Current tax payable 11 2,158 -
Derivative liabilities held at fair value through profit or loss 18 916 108
Interest-bearing borrowings 9 60,598 49,339
Total current liabilities 84,094 56,606
Total assets less current liabilities 784,735 577,660
Non-current liabilities
Lease payables 14 4,067 -
Deferred tax liability 94 -
Interest-bearing borrowings 9 203,035 218,318
Total non-current liabilities 207,196 218,318
Net assets 577,539 359,342
Shareholders’ funds
Ordinary share capital 24 689 352
Share premium 299,599 299,599
Revenue reserves 2,363 4,790
Capital reserves (2,361 ) (2,244 )
Other reserves 25 277,249 56,845
Total shareholders’ funds 577,539 359,342
Net asset value per share (pence) 26 900.2 1,019.1
Financial Statement 2022
POLLEN STREET
128
COMPANY STATEMENT
OF FINANCIAL POSITION
The notes on pages 134 to 206 form an integral part of the financial
statements.
Advantage has been taken of the exemption under section 408 of
the Companies Act 2006 and accordingly the Company has not
presented a Statement of Comprehensive Income for the Company
alone. The profit on ordinary activities after taxation of the Company
for the year ended 31 December 2022 was £28.1 million (2021:
Notes 31 December 2022
£’000
31 December 2021
£’000
Non-current assets
Credit Assets at amortised cost 10 523,877 565,994
Investment Assets held at fair value through profit or loss 7 62,853 48,770
Investments in subsidiaries 19 239,027 -
Total non-current assets 825,757 614,764
Current assets
Cash and cash equivalents 22 18,229 10,500
Receivables 15 3,831 6,554
Total current assets 22,060 17,054
Total assets 847,817 631,818
Current liabilities
Payables 16 5,174 6,860
Derivative liabilities held at fair value through profit or loss 18 916 108
Deemed loan 23 29,227 32,118
Interest-bearing borrowings 9 30,141 15,072
Total current liabilities 65,458 54,158
Total assets less current liabilities 782,359 577,660
Non-current liabilities
Deemed loan 23 63,809 50,208
Interest-bearing borrowings 9 139,226 168,110
Total non-current liabilities 203,035 218,318
Net assets 579,324 359,342
Shareholders’ funds
Ordinary share capital 24 689 352
Share premium 299,599 299,599
Revenue reserves 4,148 4,790
Capital reserves (2,361) (2,244)
Other reserves 25 277,249 56,845
Total shareholders’ funds 579,324 359,342
Net asset value per share (pence) 27 902.2 1,019.1
£30.3 million). The financial statements on pages 127 to 133 were
approved by the Board of Directors of Pollen Street plc (a public
limited company incorporated in England and Wales with company
number 09899024) and authorised for issue on 22 March 2023.
They were signed on its behalf by:
Robert Sharpe, Chairman
Financial Statements
POLLEN STREET
129
Ordinary
Share
Capital
(1)
£’000
Share
Premium
£’000
Revenue
Reserves
£’000
Capital
Reserves
£’000
Special
Distribut-
able
Reserves
(1)
£’000
Merger
Reserves
£’000
Total
Equity
£’000
Shareholders’ funds at
1 January 2022
Ordinary shares issued 295 - - - - 235,486 235,781
Transaction costs for share issuance
(10,216 ) (10,216 )
Ordinary shares bought back 42 - - - (4,866 ) (4,824 )
Profit / (Loss) after taxation - - 26,478 (117 ) -
Dividends paid in the year - - (28,905 ) - -
(28,905 )
Shareholders’ funds at
31 December 2022
For the year ended 31 December 2022
Ordinary
Share
Capital
£’000
Share
Premium
£’000
Revenue
Reserves
£’000
Capital
Reserves
£’000
Special
Distribut-
able
Reserves
£’000
Merger
Reserves
£’000
Total
Equity
£’000
Shareholders’ funds at
1 January 2021
Profit after taxation - - 31,813 (1,495 ) - - 30,318
Dividends paid in the year - - (28,208 ) - - - (28,208 )
Shareholders’ funds at
31 December 2021
For the year ended 31 December 2021
CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS’ FUNDS
The notes on pages 134 to 206 form an integral part of the financial statements.
(1)
Includes £0.04 million of Ordinary Share Capital transferred to the Special Distributable Reserves for buybacks that occurred prior to
January 2022
Financial Statement 2022
POLLEN STREET
130
For the year ended 31 December 2022
For the year ended 31 December 2021
For both year ended 2021 and 2022, the Company’s capital
reserve arising on investments sold and revenue reserve may be
distributed by way of a dividend. The portion of capital reserve
arising on investments held is non-distributable. There may be
factors that restrict the value of the reserves that can be distributed
and these factors may be complex to determine. Amounts fully
distributable may therefore not be the total of the revenue reserve
and the portion of the capital reserve arising on investments sold.
The notes on pages 134 to 206 form an integral part of the
financial statements.
COMPANY STATEMENT OF CHANGES
IN SHAREHOLDERS’ FUNDS
Ordinary
Share
Capital
(1)
£’000
Share
Premium
£’000
Revenue
Reserves
£’000
Capital
Reserves
£’000
Special
Distribut-
able
Reserves
(1)
£’000
Merger
Reserves
£’000
Total
Equity
£’000
Shareholders’ funds at
1 January 2022
352 299,599 4,790 (2,244) 56,845 - 359,342
Ordinary shares issued 295 - - - - 235,486 235,781
Transaction costs for share issuance
-
-
- - -
(10,216) (10,216)
Ordinary shares bought back 42 - - - (4,866) - (4,824)
Profit / (Loss) after taxation - - 28,263 (117) -
-
28,146
Dividends paid in the year - - (28,905) - -
-
(28,905)
Shareholders’ funds at
31 December 2022
689 299,599 4,148 (2,361) 51,979 225,270 579,324
Ordinary
Share
Capital
£’000
Share
Premium
£’000
Revenue
Reserves
£’000
Capital
Reserves
£’000
Special
Distribut-
able
Reserves
£’000
Merger
Reserves
£’000
Total
Equity
£’000
Shareholders’ funds at
1 January 2022
352 299,599 1,185 (749) 56,845 - 357,232
Profit after taxation - - 31,813 (1,495) -
-
30,318
Dividends paid in the year - - (28,208) - -
-
(28,208)
Shareholders’ funds at
31 December 2021
352 299,599 4,790 (2,244) 56,845 - 359,342
(1)
Includes £0.04 million of Ordinary Share Capital transferred to the Special Distributable Reserves for buybacks that occurred prior to
January 2022
Financial Statements
POLLEN STREET
131
Notes 31 December 2022
£’000
31 December 2021
£’000
Cash flows from operating activities:
Profit after taxation 26,361 30,318
Adjustments for:
(Advances) / repayments of Investments at amortised cost 42,322 (22,883 )
Purchase of Investments at fair value (12,237 ) (31,309 )
Receipt of Investments at fair value 1,033 9,726
Change in expected credit loss 10 (206 ) (844 )
Net change in unrealised (gains)/losses (1,804 ) (801 )
Finance costs 9 14,517 12,859
Foreign exchange revaluation (2,263 ) (53 )
Corporation tax (2,480 ) -
Change in carried interest (1,593 ) -
Depreciation of fixed assets 322 -
Amortisation of intangible assets 4 160 -
(Increase) / decrease in receivables 2,668 219
Decrease / (increase) in derivatives 808 130
Increase in payables 1,744 (13 )
Net cash inflow from operating activities 69,352 (2,651 )
Cash flows from investing activities:
Cash acquired from Pollen Street Capital Holdings 2,662 -
Purchase of fixed assets (269 ) -
Net cash (outflow) / inflow from investing activities 2,393 -
Cash flows from financing activities:
Redemption of shares (4,824 ) -
Transaction costs for issuance of shares (9,120 ) -
Drawdown of interest-bearing borrowings 22 76,925 27,000
Repayments of interest-bearing borrowings 22 (82,291 ) (34,375 )
Interest paid on financing activities (13,175 ) (11,366 )
Dividends paid in period 9 (28,905 ) (28,208 )
Net cash (outflow) from financing activities (61,390 ) (46,949 )
Net change in cash and cash equivalents 10,355 (49,600 )
Cash and cash equivalents at the beginning of the year 12,948 62,548
Cash and cash equivalents 22 23,303 12,948
CONSOLIDATED STATEMENT
OF CASH FLOWS
For the year ended 31 December 2022
The notes on pages 134 to 206 form an integral part of the financial statements.
Financial Statement 2022
POLLEN STREET
132
Notes 31 December 2022
£’000
31 December 2021
£’000
Cash flows from operating activities:
Profit after taxation 28,146 30,318
Adjustments for:
(Advances) / repayments of Investments at amortised cost 42,322 (22,883)
Purchase of Investments at fair value (12,145) (31,309)
Receipt of Investments at fair value 1,033 9,726
Change in expected credit loss 10 (206) (844)
Net change in unrealised (gains)/losses (1,804) (801)
Finance costs 9 10,950 9,678
Foreign exchange revaluation (2,262) (53)
Business combination expenses (3,246) -
Decrease in receivables 19 2,723 219
Decrease in derivatives 808 130
(Decrease) / Increase in payables (1,686) 91
Net cash inflow from operating activities 64,633 (5,728)
Cash flows from financing activities:
Redemption of shares (4,824) -
Transaction cost for issuance of shares (9,120) -
Receipt of deemed loans 22,789 981
Repayment of deemed loans (12,079) (22,374)
Drawdown of interest-bearing borrowings 22 35,000 27,000
Repayments of interest-bearing borrowings 22 (50,000) (12,000)
Interest paid on financing activities (9,765) (8,844)
Dividends declared and paid 9 (28,905) (28,208)
Net cash (outflow) from financing activities (56,904) (43,445)
Net change in cash and cash equivalents 7,729 (49,173)
Cash and cash equivalents at the beginning of the year 10,500 59,673
Cash and cash equivalents 22 18,229 10,500
COMPANY STATEMENT
OF CASH FLOWS
For the year ended 31 December 2022
The notes on pages 134 to 206 form an integral part of the financial statements.
Financial Statements
POLLEN STREET
133
NOTES TO THE
FINANCIAL STATEMENTS
Financial Statement 2022
POLLEN STREET
134
Financial Statements
POLLEN STREET
135
Financial Statement 2022
POLLEN STREET
136
Financial Statements
POLLEN STREET
137
Financial Statement 2022
POLLEN STREET
138
Financial Statements
POLLEN STREET
139
Financial Statement 2022
POLLEN STREET
140
• Whether the borrower is in breach of financial
Financial Statements
POLLEN STREET
141
Financial Statement 2022
POLLEN STREET
142
Financial Statements
POLLEN STREET
143
Financial Statement 2022
POLLEN STREET
144
Financial Statements
POLLEN STREET
145
Financial Statement 2022
POLLEN STREET
146
Financial Statements
POLLEN STREET
147
Financial Statement 2022
POLLEN STREET
148
Financial Statements
POLLEN STREET
149
Financial Statement 2022
POLLEN STREET
150
Financial Statements
POLLEN STREET
151
Financial Statement 2022
POLLEN STREET
152
Financial Statements
POLLEN STREET
153
Financial Statement 2022
POLLEN STREET
154
Financial Statements
POLLEN STREET
155
Financial Statement 2022
POLLEN STREET
156
Financial Statements
POLLEN STREET
Financial Statement 2022
POLLEN STREET
158
Financial Statements
POLLEN STREET
159
Financial Statement 2022
POLLEN STREET
160
Financial Statements
POLLEN STREET
161
5. Operating Segments
The Company has two operating segments: the
Asset Manager segment and the Investment
Company segment.
The Asset Manager segment is the activities of
the Group that provide investment management
and investment advisory services to a range of
funds under management within Private Equity
and Credit strategies. The primary revenue
streams for the Asset Manager segment consist
of management fees and performance fees or
carried interest. Fund management services are
also provided to the Investment Company segment,
however fees from these services are eliminated
from the Group consolidated financial statements.
Fund Management EBITDA in Strategic Report
is equivalent to the operating profit of the Asset
Manager segment adjusted for the depreciation of
the right of use asset.
The Investment Company segment holds the
investment assets of the Group. The primary
revenue stream for this segment is interest income
and fair value gains on the Investment Asset
portfolio. The Income on Net Investment Assets of
the Investment Company segment represents the
operating profit of the segment and is referred to as
the Net Investment Income in the Strategic Report.
Group 2022 Asset Manager Investment
Company
Central Group
£’000 £’000 £’000 £’000
Management fee income
7,750 - (1,538)
6,212
Carried interest and performance
fee income
2,411 - (833)
1,578
Interest income on Credit Assets
held at amortised cost
- 51,986 -
51,986
Gains on Investment Assets held
at fair value
- 3,909 - 3,909
Total income 10,161 55,895 (2,371) 63,685
Credit impairment release - 206 - 206
Third-party servicing costs - (2,511) - (2,511)
Net operating income 10,161 53,590 (2,371) 61,380
Administration costs (7,224) (10,821) (1,540) (19,585)
Finance costs - (14,517) - (14,517)
Operating profit 2,937 28,252 (3,911) 27,278
Depreciation (322) - - (322)
Amortisation - - (160) (160)
Profit before tax 2,615 28,252 (4,071) 26,796
Financial Statement 2022
POLLEN STREET
162
Group
2021
Asset
Manager
Investment
Company
Central Group
£’000 £’000 £’000 £’000
Management fee income - - - -
Carried interest and performance fee
income
- - - -
Interest income on Credit Assets held
at amortised cost
- 56,484 - 56,484
Gains on Investment Assets held at
fair value
- 537 - 537
Total income - 57,021 - 57,021
Credit impairments release - 844 - 844
Third-party servicing costs - (2,810) - (2,810)
Net operating income - 55,055 - 55,055
Administration costs - (11,878) - (11,878)
Finance costs (12,859) - (12,859)
Operating profit - 30,318 - 30,318
Depreciation - - - -
Amortisation - - - -
Profit before tax - 30,318 - 30,318
Income
Management fee income, represents all income in
the form of management fees arising in the Asset
Manager. Carried interest and performance fee
income includes income earned by the Asset Manager
that is in the form of a performance fee or a carried
interest share from the funds under management.
Interest income relates to income earned by the
Investment Company on loans provided to third
parties. Gains/(Losses) on Investment Assets held at
fair value include revenue earned by the Group on its
Investment Asset portfolio.
The Carried interest income in 2022 was unrealised.
The Gains on Investment assets at fair value includes
both realised and unrealised income.
Expenses
Credit impairments relate to any charges (releases)
on the assets held at amortised cost within the
Investment Company. Administrative costs include
employee expenses such as salaries, bonuses and
any employee benefits costs incurred by the Asset
Manager.
The following table shows the fees payable to
the Group auditor PricewaterhouseCoopers LLP
(“PwC”):
Financial Statements
POLLEN STREET
163
Central
The ‘Central’ column consists primarily of the
elimination of inter-segment fees, costs associated
with the acquisition of the share capital of Pollen
Street Capital Holdings Limited, losses from the US
operations of Pollen Street Capital Holdings Limited
and the amortisation of intangibles acquired as part
of the business combination.
Geographical analysis
The Group and Company had the following geo-
graphical exposures of its Credit Assets at amor-
tised cost and Investment Assets held at fair value
through profit or loss in GBP equivalent:
Group
2022 2021
Company
2022 2021
£’000 £’000 £’000 £’000
UK 524,181 603,553 522,528 603,553
Europe 42,961 2,097 42,961 2,097
USA 21,241 9,114 21,241 9,114
Total 588,383 614,764 586,730 614,764
The majority of revenue was obtained in the UK. The Group earned revenues from Irish and US investment
assets of GBP equivalent 3,783,000.
Financial Statement 2022
POLLEN STREET
164
Financial Statement 2022
POLLEN STREET
166
Financial Statements
POLLEN STREET
167
Financial Statement 2022
POLLEN STREET
168
Financial Statements
POLLEN STREET
169
Financial Statement 2022
POLLEN STREET
170
Financial Statements
POLLEN STREET
171
24
TNAV is defined as “Tangible Net Asset Value”
25
TNAV is defined as “Tangible Net Asset Value”
Financial Statement 2022
POLLEN STREET
172
9. Interest-Bearing Borrowings
The table below sets out a breakdown of the Group’s interest-bearing borrowings.
The table below sets out a breakdown of the Company’s interest-bearing borrowings.
Group 31 December 2022
£’000
31 December 2021
£’000
Current Liabilities
Credit facility 60,379 49,435
Interest and commitment fees payable 415 195
Prepaid interest and commitment fees (196) (291)
Total current liabilities 60,598 49,339
Non-Current Liabilities
Credit facility 204,234 220,545
Interest and commitment fees payable - -
Prepaid interest and commitment fees (1,199) (2,227)
Total non-current liabilities 203,035 218,318
Total interest-bearing borrowings 263,633 267,657
Company 31 December 2022
£’000
31 December 2021
£’000
Current Liabilities
Credit facility 30,000 15,000
Interest and commitment fees payable 141 72
Prepaid interest and commitment fees - -
Total current liabilities 30,141 15,072
Non-Current Liabilities
Credit facility 140,000 170,000
Interest and commitment fees payable - -
Prepaid interest and commitment fees (774) (1,890)
Total non-current liabilities 139,226 168,110
Total interest-bearing borrowings 169,367 183,182
Financial Statements
POLLEN STREET
173
At 31 December 2022 the Company’s main debt
facility was £170 million provided by Goldman
Sachs, being a £140 million term loan and £30 million
revolving credit facility. At 31 December 2022 both
the term loan and revolving element were fully drawn
with interest charged at SONIA plus a margin, with
the facility maturing in September 2025.
In December 2020, the Group entered into a £35
million debt facility secured against a structured SME
facility. The debt facility charges synthetic LIBOR plus
a margin and is an amortising term loan with the full
£35 million drawn on day one. The facility has a 49-
year term.
In October 2022, the Group extended a debt facility
and entered into a two-year facility to finance three
residential mortgage portfolios, two commercial
mortgage pools and a small unsecured consumer
pool. These portfolios were previously leveraged
through the Company-level debt facility but getting
assets specific leverage on these provides a lower
cost of funding at a higher advance rate. The total
debt raised on day one of this facility was £82.0
million. Interest is charged at SONIA plus a margin.
Group 2022
£’000
2021
£’000
Interest and commitment fees payable 12,920 11,022
Other finance charges 1,597 1,837
Total finance costs 14,517 12,859
Company 2022
£’000
2021
£’000
Interest and commitment fees payable 9,813 8,577
Other finance charges 1,137 1,103
Total finance costs 10,950 9,680
The table below shows the related debt costs incurred by the Group during the year:
The table below shows the related debt costs incurred by the Company:
The table below shows the movements in interest-bearing borrowings of the Group:
Group 2022
£’000
2021
£’000
Opening balance 267,657 273,539
Drawdown of interest-bearing borrowings 76,925 27,000
Repayments of interest-bearing borrowing (82,291) (34,375)
Finance costs 14,517 12,859
Interest paid on financing activities (13,175) (11,366)
Closing balance 263,633 267,657
Financial Statement 2022
POLLEN STREET
174
Financial Statements
POLLEN STREET
175
The below table analyses the Company’s financial liabilities into relevant maturity groupings based on the
remaining period at the reporting date to the final scheduled maturity date.
2022
Company
< 1 year
£’000
1 – 5 years
£’000
More than 5
years
£’000
Total
£’000
Credit facility 30,000 140,000 - 170,000
Interest and
commitment fees
payable
141 (774) - (633)
Total exposure 30,141 139,226 - 169,367
2021
Company
< 1 year
£’000
1 – 5 years
£’000
More than 5
years
£’000
Total
£’000
Credit facility 15,000 170,000 - 185,000
Interest and
commitment fees
payable
72 (1,890) - (1,818)
Total exposure 15,072 168,110 - 183,182
Financial Statement 2022
POLLEN STREET
176
Financial Statements
POLLEN STREET
177
Financial Statement 2022
POLLEN STREET
178
Financial Statements
POLLEN STREET
179
Financial Statement 2022
POLLEN STREET
180
Financial Statements
POLLEN STREET
181
Financial Statement 2022
POLLEN STREET
182
Financial Statements
POLLEN STREET
183
Financial Statement 2022
POLLEN STREET
184
Financial Statements
POLLEN STREET
185
Financial Statement 2022
POLLEN STREET
186
Financial Statements
POLLEN STREET
187
Financial Statement 2022
POLLEN STREET
188
Financial Statements
POLLEN STREET
189
Financial Statement 2022
POLLEN STREET
190
Financial Statements
POLLEN STREET
191
Financial Statement 2022
POLLEN STREET
192
Financial Statements
POLLEN STREET
193
Financial Statement 2022
POLLEN STREET
194
Financial Statements
POLLEN STREET
195
Financial Statement 2022
POLLEN STREET
196
Financial Statements
POLLEN STREET
197
Financial Statement 2022
POLLEN STREET
198
Financial Statements
POLLEN STREET
199
Financial Statement 2022
POLLEN STREET
200
Financial Statements
POLLEN STREET
201
Financial Statement 2022
POLLEN STREET
202
23. Deemed Loan
The Company has two deemed loans as at 31
December 2022 (two as at 31 December 2021).
Deemed loans only relate to the Company as they
relate to loans originated by the Company and
subsequently sold to a special purpose entity. As at
the 31 December 2022 the Company had the below
deemed loans:
Company 2022
£’000
2021
£’000
Opening balance as at 1 January 82,326 103,719
Novations/(Redemptions) 10,710 (21,393)
Closing balance as at 31 December 93,036 82,326
Financial Statements
POLLEN STREET
203
Financial Statement 2022
POLLEN STREET
204
26. Net Asset Value per Ordinary Share
The Group net asset value per ordinary share as at
31 December 2022 is based on net assets at the
year-end of £578 million and on 64,209,597 ordinary
shares in issue at the year-end. The net asset value
per ordinary share as at 31 December 2021 is based
on net assets at the year-end of £357.2 million and on
35,259,741 ordinary shares in issue at the year-end.
Group 31 December 2022 31 December 2021
Net asset value per ordinary share pence 899.5p 1,019.1p
Net assets attributable £’000 577,539 359,342
Company 31 December 2022 31 December 2021
Net asset value per ordinary share pence 902.2p 1,019.1p
Net assets attributable £’000 579,324 359,342
Financial Statements
POLLEN STREET
205
Financial Statement 2022
POLLEN STREET
206
REPORT
04.
SHAREHOLDERS’
INFORMATION
209
DIRECTORS
Robert Sharpe
Lindsey McMurray
Jim Coyle
Gustavo Cardenas
Julian Dale
Joanne Lake
Richard Rowney
all at the registered office below
REGISTERED OFFICE
6th Floor
65 Gresham Street
London EC2V 7NQ
England
INVESTMENT MANAGER AND AIFM
Pollen Street Capital Limited
11 – 12 Hanover Square
London W1S 1JJ
England
FINANCIAL ADVISERS AND BROKERS
Barclays Bank plc
1 Churchill Place
Canary Wharf
London E14 5H
England
Liberum Capital Limited
Level 12, Ropemaker Place
25 Ropemaker Place
London EC2Y 9LY
England
CUSTODIAN
Sparkasse Bank Malta PLC
101 Townsquare
Sliema SLM3112
Malta
WEBSITE
http://www.pollenstreetgroup.com/
ADMINISTRATOR
Apex Fund Services (UK) Ltd
6th Floor, Bastion House
140 London Wall
London EC2Y 5DN
England
DEPOSITARY
Indos Financial Limited
The Scalpel, 18
th
Floor, 52 Lime Street
London EC3M 7AF
England
REGISTRAR
Computershare Investor Services PLC
The Pavilions, Bridgewater Road
Bristol BS99 6ZZ
England
COMPANY SECRETARY
Link Company Matters Limited
6th Floor
65 Gresham Street
London EC2V 7NQ
England
SHARE IDENTIFIERS
ISIN: GB00BYZV3G25
Sedol: BYZV3G2
Ticker: POLN
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
England
DIRECTORS, ADVISERS &
SERVICE PROVIDERS
Shareholders’ Information
POLLEN STREET
209
Website
The Company’s website can be found at www.
pollenstreetgroup.com. The site provides visitors
with Company information and literature downloads.
The Company’s profile is also available on third-
party sites such as www.trustnet.com and www.
morningstar.co.uk.
Annual and half-yearly reports
Copies of the annual and half–yearly reports may be
obtained from the Company Secretary by calling 020
7954 9552 or by visiting www.pollenstreetgroup.com.
Share prices and Net Asset Value information
The Company’s ordinary shares of 1p each are
quoted on the London Stock Exchange:
• SEDOL number: BYZV3G2
• ISIN number: GB00BYZV3G25
• EPIC code: POLN
The codes above may be required to access trading
information relating to the Company on the internet.
Electronic communications with the Company
The Group’s Consolidated Annual Report & audited
financial statements, half-yearly reports and
other formal communications are available on the
Company’s website. To reduce costs the Company’s
half-yearly financial statements are not posted to
shareholders but are instead made available on the
Company’s website.
Whistleblowing
The Company has established a whistleblowing
policy. The Audit Committee reviews the
whistleblowing procedures of the Group to ensure
that the concerns of their staff may be raised in a
confidential manner.
Warning to shareholders – share fraud scams
Fraudsters use persuasive and high-pressure tactics
to lure investors into scams. They may offer to sell
shares that turn out to be worthless or non-existent,
or to buy shares at an inflated price in return for an
upfront payment. While high profits are promised, if
you buy or sell shares in this way, you will probably
lose your money.
How to avoid share fraud
• Keep in mind that firms authorised by the FCA are
unlikely to contact you out of the blue with an offer
to buy or sell shares
• Do not get into a conversation, note the name of
the person and firm contacting you and then end
the call
• Check the Financial Services Register from www.
fca.org.uk to see if the person and firm contacting
you is authorised by the FCA
• Beware of fraudsters claiming to be from an
authorised firm, copying its website or giving you
false contact details
• Use the firm’s contact details listed on the Register
if you want to call it back
• Call the FCA on 0800 111 6768 if the firm does not
have contact details on the Register or you are told
they are out of date
• Search the list of unauthorised firms to avoid at
www.fca.org.uk/scams
• Consider that if you buy or sell shares from an
unauthorised firm you will not have access to
the Financial Ombudsman Service or Financial
Services Compensation Scheme.
• Think about getting independent financial and
professional advice before you hand over any
money
• Remember: if it sounds too good to be true, it
probably is!
5,000 people contact the Financial Conduct Authority
about share fraud each year, with victims losing an
average of £20,000.
Report a scam
If you are approached by fraudsters, please tell the
FCA using the share fraud reporting form at fca.
org.uk /scams, where you can find out more about
investment scams.
You can also call the FCA Consumer Helpline on
0800 111 6768.
If you have already paid money to share fraudsters,
you should contact Action Fraud on 0300 123 2040.
Financial Statement 2022
POLLEN STREET
210
REPORT
05.
DEFINITIONS AND
RECONCILIATION
TO ALTERNATIVE
PERFORMANCE
MEASURES
213
DEFINITIONS
Alternative Investment
Fund Manager (“AIFM”)
An Alternative Investment Fund Manager, as defined in the AIFM
Directive. Pollen Street Capital Limited undertakes this role on behalf
of the Company
Alternative Investment
Fund (“AIF”)
An AIF, as defined in the AIFM Directive 2011/61/EU on Alternative
Investment Fund Managers
Asset Manager
The business segment of the Group that is responsible for managing
third-party AuM and the Investment Company’s assets. All activities
of this segment reside in Pollen Street Capital Holdings Limited and
its subsidiaries.
AuM
The assets under management of the Group, defined as:
• investor commitments for active Private Equity funds;
• invested cost for other Private Equity funds;
• the total assets for the Investment Company; and
• investor commitments for Private Credit funds.
Average Fee-Paying AuM
The fee-paying asset under management of the Group, defined as:
• investor commitments for active fee-paying Private Equity funds;
• invested cost for other fee-paying Private Equity funds;
• the total assets for the Investment Company; and
• net invested amount for fee-paying private Credit funds.
The average is calculated using the opening and closing balances
for the period
Combination
The acquisition of 100 per cent of the share capital of Pollen Street
Capital Holdings Limited by Honeycomb Investment Trust plc with
newly issued shares in Company as the consideration that completed
on 30 September 2022
Credit Assets
Loans, together with similar investments, made by the Group to
counterparties
Direct Portfolio
Portfolios of loans owned directly by the Group, typically secured
on property
Discount
If the share price of the Company is lower than the NAV per share,
the Company’s shares are said to be trading at a discount. The
discount is shown as a percentage of the NAV
Equity Assets
Equity investments made by the Group that are aligned with the
strategy and that present opportunities to enhance the Group’s
returns from its investments. Carried interest receivable by the Group
is not classified as an Equity Asset.
Fair Value
The amount that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants
Fund Management
Administration Costs
The administration expenses of the Group’s Asset Manager
according to IFRS reporting standards excluding exceptional items
and start-up losses of the US business, but including the full cost of
the office leases despite these costs being reported as depreciation
of a right-of-use asset and financing costs under IFRS 16
Fund Management EBITDA Fund Management Income less Fund Management Administration Costs
Fund Management
Income
The income of the Group’s Asset Manager according to IFRS
reporting standards
Definitions and Reconciliation to Alternative Performance Measures
POLLEN STREET
213
Fund Management
EBITDA Margin
The ratio of the Fund Management Adjusted EBITDA and the Fund
Management Income, expressed as a percentage
Group Pollen Street plc and its subsidiaries
Investment Asset The Group’s portfolio of Credit Assets and Equity Assets
Investment Company
The business segment of the Group that holds the Investment
Asset portfolio and the debt facilities. The activities of this
segment predominately reside within Pollen Street plc, Sting
Funding Limited and Bud Funding Limited. The Investment
Assets held within Pollen Street Capital Holdings Limited and its
subsidiaries also form part of this segment.
Investment Manager
Pollen Street Capital Limited, which is a subsidiary of the Group and
acts as Pollen Street plc’s AIFM and investment manager
Management Fee Rate
The ratio of the Fund Management Income attributable to management
fees and the Average Fee-Paying AuM, expressed as a percentage
Net asset value (“NAV”)
Net asset value represents the total value of the Group’s or
Company’s assets less the total value of its liabilities. For valuation
purposes, it is common to express NAV on a per share basis
Net Investment Assets The Investment Assets plus surplus cash net of debt
Net Investment Asset
Return
The ratio of the income from Investment Company to the Net
Investment Assets, expressed as an annualised ratio
Ongoing Charges
Ongoing charges are calculated as a percentage of annualised ongoing
charge over average reported NAV. Ongoing charges are those
expenses of a type which are likely to recur in the foreseeable future
Performance Fee Rate
The ratio of the Fund Management Income attributable to
performance fees and the total Fund Management Income,
expressed as a percentage
Premium
If the share price of the Company is higher than the NAV per share, the
Company’s shares are said to be trading at a premium. The premium is
shown as a percentage of the NAV
Private Credit The Group’s strategy for managing Credit Assets within its private funds
Private Equity The Group’s strategy for managing Equity Assets within its private funds
Proforma EBITDA
(and other income metrics)
The EBITDA (and other income metrics) for the period as if the
Combination had occurred prior to 1 January 2021
Registrar
An entity that manages the Company’s shareholder register. The
Company’s registrar is Computershare Investor Services PLC
Sterling Overnight Interbank
Average Rate (“SONIA”)
The effective overnight interest rate paid by banks for unsecured
transactions in the British sterling market
Structured Loan
Credit Asset whereby the Group typically has senior secured loans to
speciality finance companies, with security on the assets originated
by the speciality finance company and first loss protection deriving
from the speciality finance company’s equity. Corporate guarantees
are also typically taken
Financial Statement 2022
POLLEN STREET
214
RECONCILIATION
TO ALTERNATIVE
PERFORMANCE
MEASURES
The alternative performance measures are used to
improve the comparability of information between
reporting periods, either by adjusting for uncontrollable
or one-off factors that impact upon IFRS measures
or, by aggregating measures, to aid the user to
understand the activity taking place. Alternative
performance measures are not considered to be a
substitute for IFRS measures but provide additional
insight on the performance of the business.
GROWTH IN CREDIT AUM
PROFORMA OPERATING PROFIT
2022
(£’000)
2021
(£’000)
Opening Credit AuM 1,212,000 718,000
Closing Credit AuM 1,647,000 1,212,000
Growth 36% 69%
The growth in Credit AuM is calculated as the year-on-year percentage change Credit AuM.
The Statutory Fund Management EBITDA for the Asset Manager is calculated as the statutory operating profit for the Asset Manager less
the right of use asset depreciation. The proforma operating profit is calculated as the total of the Statutory Fund Management EBITDA for
the Asset Manager plus the Statutory income on Net Investment Assets for the Investment Company plus the Fund Management EBITDA
of the Asset Manager occurring between 1 January & 30 September 2022.
Group 2022
Proforma
(£’000)
Statutory operating profit for Asset Manager 2,937
Right of use asset depreciation (266)
Statutory Fund Management EBITDA for Asset
Manager (occurring between 1 October & 31
December 2022)
2,671
Statutory Income on Net Investment Assets
(occurring between 1 January & 31 December 2022)
28,252
Fund Management EBITDA for Asset Manager
(occurring between 1 January & 30 September 2022)
5,861
Proforma operating profit 36,784
Definitions and Reconciliation to Alternative Performance Measures
POLLEN STREET
215
PERFORMANCE FEE RATE
MANAGEMENT FEE RATE
Group 2022
(£’000)
2022
(£’000)
Proforma Statutory
Statutory management fee income for Asset Manager
(occurring between 1 October & 31 December 2022)
7,750 7,750
Management fee income for Asset Manager (occurring
between 1 January & 30 September 2022)
21,230 -
Proforma management fee income for Asset Manager
(occurring between 1 January & 31 December 2022)
28,980 7,750
Average Fee-Paying AuM over 2022 2,281,161 2,395,056
Management Fee Rate (%) 1.27% 1.28%
The Proforma Management Fee Rate is calculated by dividing the Proforma management fee income for the Asset Manager by the
Proforma Average Fee-Paying AuM. The Statutory Management Fee Rate is calculated by dividing the Statutory management fee income
for the Asset Manager by the Statutory Average Fee-Paying AuM. The Statutory Management Fee Rate is annualised given that it only
incorporates management fee income for the period from 1 October to 31 December 2022.
The Proforma Performance Fee Rate is calculated by dividing the Proforma carried interest and performance fee income for the Asset
Manager by the Proforma Fund Management Income for the Asset Manager. The Statutory Performance Fee Rate is calculated by
dividing the Statutory carried interest and performance fee income for the Asset Manager by the Statutory Fund Management Income
for the Asset Manager.
Group 2022
(£’000)
2022
(£’000)
Proforma Statutory
Statutory carried interest and performance fee income for Asset
Manager (occurring between 1 October & 31 December 2022)
2,411 2,411
Carried interest and performance fee income for Asset
Manager (occurring between1 January & 30 September 2022)
6,040 -
Proforma carried interest & performance fee income
for Asset Manager (occurring between 1 January
& 31 December 2022)
8,451 2,411
Statutory Fund Management Income for Asset Manager
(occurring between 1 October & 31 December 2022)
10,161 10,161
Fund Management Income for Asset Manager
(occurring between 1 January & 30 September 2022)
27,271 -
Proforma Fund Management Income for Asset Manager
(occurring between 1 January & 31 December 2022)
37,432 10,161
Performance Fee Rate (%) 23% 24%
Financial Statement 2022
POLLEN STREET
216
DEBT TO TANGIBLE EQUITY RATIO
Group 31 December 2022
(£’000)
31 December 2021
(£’000)
Net Asset Value 577,539 359,342
Goodwill & intangible Assets 231,031 -
Tangible Net Asset Value 346,508 359,342
Interest-Bearing Borrowings 263,633 267,657
Debt to tangible equity ratio 76.1% 74.5%
Cash and cash equivalents 23,303 12,948
Net debt to tangible equity ratio 69.4% 70.9%
The Proforma Fund Management EBITDA Margin is calculated by dividing the Proforma Fund Management EBITDA by the Proforma Fund
Management Income. The Statutory Fund Management EBITDA Margin is calculated by dividing the Statutory Fund Management EBITDA
by the Statutory Fund Management Income.
The debt to tangible equity ratio is calculated as the Group’s interest-bearing debt divided by the tangible net asset value, expressed as a
percentage. The net debt to tangible equity ratio is calculated as the Group’s interest-bearing debt less cash and cash equivalents, divided
by the tangible net asset value expressed, as a percentage.
FUND MANAGEMENT EBITDA MARGIN
Group 2022
(£’000)
2022
(£’000)
Proforma Statutory
Statutory operating profit 2,937 2,937
Right of Use asset depreciation (266) (266)
Statutory Fund Management EBITDA for Asset Manager
(occurring between 1 October & 31 December 2022)
2,671 2,671
Fund Management EBITDA for Asset Manager
(occurring between 1 January & 30 September 2022)
5,861 -
Proforma Fund Management EBITDA for Asset Manager
(occurring between 1 January & 31 December 2022)
8,532 2,671
Statutory Fund Management Income for Asset Manager
(occurring between 1 October & 31 December 2022)
10,161 10,161
Fund Management Income for Asset Manager (occurring for
Asset Manager between 1 January & 30 September 2022)
27,271 -
Proforma Fund Management Income for Asset Manager
(occurring between 1 January & 31 December 2022)
37,432 10,161
Fund Management EBITDA Margin (%) 23% 26%
Definitions and Reconciliation to Alternative Performance Measures
POLLEN STREET
217
ONGOING CHARGES
DIVIDEND RETURN
Company 2022
(£’000)
2021
(£’000)
Auditors’ remuneration 584 319
Administrator’s fees 179 179
Directors’ fees 329 227
Management fee 5,853 6,349
Other costs 1,308 1,417
Average net asset value 400,952 360,793
Ongoing Charges 2.0% 2.4%
Group & Company 2022 2021
Dividend declared (pence per share) 72.0 80.0
IPO issue price (pence per share) 1,000.0 1,000.0
Dividend Return 7.2% 8.0%
The dividend return is calculated as the total dividends in pence per share declared for the period divided by IPO issue price.
The ongoing charges ratio is calculated using the Association of Investment Companies (“AIC”) recommended methodology. It is calculated
as a percentage of annualised ongoing charge over average reported Net Asset Value. The average net asset value is calculated as the
average of the quarterly net asset values. Ongoing charges are those expenses of a type which are likely to recur in the foreseeable future,
whether charged to capital or revenue, and which relate to the operation of the Investment Company as a collective fund, excluding
the costs of acquisition/disposal of investments, financing charges, gains/losses arising on investments and costs incurred in the
Asset Manager. Ongoing charges are based on costs incurred in the year as being the best estimate of future costs. The AIC excludes
performance fees from the Ongoing Charges calculation.
Financial Statement 2022
POLLEN STREET
218
2022
Investment yield 9.4%
Investment yield is calculated as interest income on
Credit Assets at amortised cost, plus income on
Credit Assets at fair value through profit and loss,
less third-party servicing costs, divided by Monthly
Average Credit Assets
Impairments and write-offs -
Impairments and write-offs is calculated as credit im-
pairment release over Monthly Average Credit Assets
Risk adjusted yield 9.4% Credit asset return is a total of the above items
Equity and working capital (0.6%)
The impact of equity and working capital is calculated
as the income amounts noted above, plus income on
Equity Assets at fair value through profit and loss di-
vided by Monthly Average Investment Assets, without
deduction of the carrying value of the debt, plus cash
less the impact of items already disclosed above
Effect of leverage 2.2%
Effect of leverage is calculated as the above income
amounts less finance costs divided by Average Net
Investment Assets, less the impact of items already
disclosed above
Investment manager fees (2.5%)
Calculated as management fee and performance fee
divided by Monthly Average Investment Assets
Fund Operating Expenses (0.5%)
Calculated as fund expenses, divided by Monthly
Average Investment Assets
Net Investment Return 8.0% Calculated as a total of the above
NET INVESTMENT RETURN BRIDGE
The Net Investment Return Bridge is calculated for the Investment Company alone and does not including any
income of balance information from the Asset Manager.
Group 2022
(£’000)
Monthly Average Credit Assets 568,721
Monthly Average Investment Assets 584,380
Average Credit Assets is the mean of the aggregate of the Credit Assets at amortised cost, Credit Assets held at fair value through profit or
loss and derivative assets and liabilities held at fair value through profit or loss for each month end from 31 December 2021 to 31 December
2022, inclusive.
Average Net Investment Assets is the mean of the carrying value of the Investment Assets plus cash and cash equivalents less the carrying
value of debt of the Group for 31 December 2021 and 31 December 2022.
Definitions and Reconciliation to Alternative Performance Measures
POLLEN STREET
219