comply with the requirements of the Companies (Jersey) Law 1991.

(b) Basis of measurement

These financial statements have been prepared on the historical cost basis except for the

revaluation of financial assets held at fair value through profit or loss and ordinary shares that

are held at amortised cost.

nearest Euro.

and Uncertainties on page 21, and as set out in the ESG Committee Report on pages 47 to 49.

(f) Standards and amendments to existing standards effective from 1 January 2023

There are no standards, amendments to standards or interpretations that are effective for annual

periods beginning on 1 January 2023 that have a material effect on the financial statements of

the Company.

2. Accounting policies (continued)

2.1 Basis of preparation (continued)

Significant accounting judgements (continued)

Classification of ordinary shares as a financial liability (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

(g) Standards, amendments and interpretations issued but not yet effective

Standards, amendments and interpretations that become effective in future accounting periods

and have not been adopted by the Company:

Under the amendments to IAS 1 Presentation of Financial Statements the classification of certain

liabilities as current or non-current may change (e.g. convertible debt). In addition, companies

may need to provide new disclosures for liabilities subject to covenants. The Directors believe

that the application of this amendment will not have an impact on the Company’s financial

statements.

IFRS 16 Leases ended sale-and-leaseback transactions as an off-balance sheet financing

proposition. The deals themselves are often highly structured and can be material, especially for

seller-lessees, and accounting for them can be complex. Assessing whether a transaction qualifies

for sale-and-leaseback accounting under IFRS 16 is a key judgement. The Directors believe that the

application of this amendment will not have an impact on the Company’s financial statements.

In response to investors’ calls for more transparency of supplier finance arrangements’ impacts

on the financial statements, IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments:

Disclosures was amended. The amendments introduce additional disclosure requirements for

companies that enter into these arrangements. The Directors believe that the application of this

amendment will not have an impact on the Company’s financial statements.

A number of amendments and interpretations to existing standards have been issued, but are not

yet effective, that are not relevant to the Company’s operations. The Directors believe that the

application of these amendments and interpretations will not impact the Company’s financial

The Directors have reviewed the Company’s budget and cash flow forecast for the next 12 months

from the date of approval of the financial statements and also considered information regarding

climate-related matters in conjunction with other uncertainties. On the basis of this review, and

after making due enquiries, the Directors have a reasonable expectation that the Company has

adequate resources to continue in operational existence for the period to 27 March 2025, a period

of twelve months from the date of approval of the financial statements, being the period of

assessment covered by the Directors. The Directors are also satisfied that no material climate-

related matters or uncertainties exist that cast significant doubt over the Company’s ability

to continue as a going concern. In making this assessment, the Directors have considered the

impact that Russia’s invasion of Ukraine and the conflict in the Middle East may have on the

Company. Accordingly, they continue to adopt the going concern basis in preparing the financial

Transactions in foreign currencies are translated to Euro at the foreign exchange rate on the

transaction date. Monetary assets and liabilities denominated in foreign currencies at the

Statement of Financial Position date are translated to Euro at the foreign exchange rate ruling at

that date. Foreign exchange differences arising on translation are recognised in the Statement of

investment mix and fair value hierarchy.

Operating expenses, placing programme costs and share issue costs are recognised on an accruals

Dividends are recognised as finance costs in the Statement of Comprehensive Income on the

In accordance with IAS 32 – Financial Instruments: Presentation, the ordinary shares are classified

as a financial liability rather than equity due to the redemption mechanism of the ordinary shares,

in addition to there being two share classes which have different characteristics. Refer to note

2.1(d) for detail on significant accounting judgements regarding the classification of ordinary

Investment revenue primarily relates to quarterly income distributions received from the Investment

Vehicle based on income returns and capital appreciation from a diversified portfolio of sub-

investment grade debt instruments. The Company is entitled to receive income distributions every

quarter, which will equate to not less than 75% of the net income of the Company’s investment

in the Investment Vehicle. Investment revenue is recognised in the Statement of Comprehensive

Cash and cash equivalents include cash in hand and deposits held at call with banks. Cash

equivalents are short-term, highly liquid investments, with original maturities of three months

or less that are readily convertible to known amounts of cash and are subject to an insignificant

The Directors view the operations of the Company as one operating segment, being the investment

business. All significant operating decisions are based upon analysis of the Company’s investments

as one segment. The financial results from this segment are equivalent to the financial results

of the Company as a whole, which are evaluated regularly by the Board with insight from the

Profits arising in the Company for the 2023 year of assessment will be subject to Jersey tax at the

The Board defines capital as financial resources available to the Company. The Company’s

capital as at 31 December 2023 comprises its net assets attributable to shareholders at a total of

€249,949,328 (2022: €236,839,070).

The Company’s objectives when managing capital are to:

z

safeguard the Company’s ability to continue as a going concern;

z

provide returns for shareholders; and

z

maintain an optimal capital structure to minimise the cost of capital.

The Board monitors the capital adequacy of the Company on an ongoing basis and the Company’s

objectives regarding capital management have been met.

Under the Code of Practice for Alternative Investment Funds and AIF Services Business, the

Company, as a self-managed AIF is required to have an initial capital of at least €300,000. If the

NAV of the Company falls below €75 million, it will trigger the requirement for the Directors to

convene an extraordinary general meeting to propose an ordinary resolution that the Company

continues its business as a closed-ended investment company. Except for the aforementioned,

Non-audit fees paid to the Auditor relate to interim review services.

Advisor fees

CVC Credit Partners Investment Services Management Limited (the “Corporate Services Manager”)

provided the services of Mr Justin Atkinson to assist with the marketing and promotion of the

Company’s shares (the “Advisor fees”). The agreement was terminated effective 31 August 2023.

The Corporate Services Manager recharged the Company for Mr Atkinson’s costs until termination.

During 2023, Cadarn Capital Ltd were engaged to provide distribution and investor relations

services to the Company.

Trustee fees

Trustee fees relate to fees paid to the trustee of the Trust which facilitates the conversion of

treasury shares as further described in note 12. As the Trust was not engaged to convert treasury

shares during the year ended 31 December 2023, the Trust did not earn any commission fee income

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an

obligation or commitment that it has entered into with the Company. The Board has in place

monitoring procedures in respect of counterparty risk which is reviewed on an ongoing basis.

The Company’s credit risk is attributable to its financial assets at fair value through profit or loss,

financial assets receivable and cash and cash equivalents.

In the opinion of the Board, the carrying amounts of financial assets best represent the maximum

credit risk exposure to the Company. The Company’s financial assets exposed to credit risk

amounted to the following:

7. Financial assets held at fair value through profit or loss (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

The Company is indirectly exposed to credit risks associated with the investments held by the

Investment Vehicle. These credit risks include (among others): (i) the possibility that earnings of

an underlying issuer may be insufficient to meet its debt service obligations; (ii) an underlying

issuer’s assets declining in value; (iii) the declining creditworthiness of the Investment Vehicle’s

financial counterparties; and (iv) the declining creditworthiness, default and potential for

insolvency of issuers during periods of rising interest rates and/or economic downturn. An

economic downturn and/or rising interest rates could severely disrupt the leveraged finance

market and adversely affect the value of the Investment Vehicle’s investments and the ability

of issuers to repay principal and interest. In turn, this may adversely affect the performance of

the Investment Vehicle and, by extension, the Company’s business, financial condition, results of

operations, NAV and/or the market prices of the ordinary shares.

The Board discusses the creditworthiness of the Investment Vehicle’s underlying portfolio

constituents and banking counterparties (e.g., banks, money market funds and the issuers of

the debt securities) with CVC Credit Partners on a periodic basis.

The Investment Vehicle’s investment portfolio exposure categorised according to the credit rating

of the issuers, is: BB 9%, B 63%, CCC 18% and not rated 10% (31 December 2022: BB 6%, B 65%,

CCC 19% and not rated 10% ). Cash and cash equivalents exposure is with institutions rated A+

100% (31 December 2022: A+ 100%). Derivative financial instruments market value exposure is

with institutions rated A+ 38% and A- 62% (31 December 2022: A+ 100%).

Cash amounts are placed with BNP Paribas S.A., Jersey Branch and Santander Financial Services

plc, Jersey Branch. BNP Paribas S.A., Jersey Branch, is a wholly owned subsidiary of BNP Paribas

Securities Services S.A. which is publicly traded and a constituent of the S&P 500 Index with a

long-standing credit rating of A+ (2022: A+) from Standard & Poor’s. Santander Financial Services

plc, Jersey Branch, is a wholly owned subsidiary of Santander International with a long-term

credit rating of A1 (2022: A1) from Moody’s.

Liquidity risk is the risk that the Company will encounter difficulties in realising assets or otherwise

raising funds to meet financial commitments. Given that the PECs issued by the Investment

Vehicle and held by the Company are not traded on a stock exchange, the Company relies on

the periodic redemption mechanism provided by the Investment Vehicle in order to realise its

investments in the Investment Vehicle, and on mechanisms operating in accordance with their

contracted terms. The Company does not have any control over the redemption mechanism

operated by the Investment Vehicle.

Refer to Principal Risks and Uncertainties on pages 18 to 21 and note 12 for detail regarding the

option available to ordinary shareholders to tender their shares, and the applicable restrictions

around that tender mechanism.

The Company may redeem PECs in accordance with its contracted rights. However, if the

Investment Vehicle receives applications to redeem Investment Vehicle interests in respect of

any redemption date and it determines (in its sole judgement) that there is insufficient liquidity

to make redemptions without prejudicing existing investors in the Investment Vehicle, then the

Investment Vehicle is entitled to suspend or scale down the redemption requests on a pro rata

basis so as to only carry out redemptions that will not prejudice remaining investors.

8. Financial risk management (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

As such, in circumstances where the Company wishes to redeem part or all of its holdings in the

Investment Vehicle, it may not be able to achieve this on a single redemption date. This may also

result in restrictions on the Company’s ability to complete or to conduct the tender mechanism.

In certain circumstances, whether prior to or following a NAV determination date, (being the

Investment Vehicle valuation date), the Investment Vehicle directors may, at their discretion,

suspend all calculations, payments and redemptions of the outstanding Investment Vehicle

interests (including the Company’s Investment Vehicle interests).

In the event of a material adverse event occurring in relation to the Investment Vehicle or the

market in which it operates generally, the ability of the Company to realise its investment and

prevent the possibility of further losses could, therefore, be limited by its restricted ability to realise

its investment in the Investment Vehicle. This delay could materially affect the value of the PECs

and the timing of when the Company is able to realise its investments in the Investment Vehicle,

which may adversely affect the Company’s business, financial condition, results of operations,

NAV and/or the market prices of the ordinary shares.

The table below shows the worst case scenario of the residual contractual maturity of the

Company’s financial liabilities and the best case scenario for the financial assets:

1

The Company has classified financial assets held at fair value through profit or loss into maturity bands based on the

annual maximum redeemable PECs set by the Investment Vehicle Manager at 50% (2022: 50%) after the expected income

distribution which amounted to €19,872,228 (2022: €14,862,427).

2

The Company has classified the ordinary shares into maturity bands based on the approved limits of the shares redeemable

by the shareholders with the maximum annual limit set at 25% (2022: 25%). Details of the Company’s financial liabilities

in relation to the ordinary shares, which are carried at amortised cost, are set out in note 12. The ordinary shares above

include the lifetime decrease in net assets attributable to the Sterling and Euro shares.

8. Financial risk management (continued)

8.2 Liquidity risk (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)