Odyssean Investment Trust PLC
Annual Report 2020

Plain-text annual report

Annual Report and Financial Statements for the year ended 31 March 2020 INVESTMENT TRUST PLCAbout Us Odyssean Investment Trust PLC (the “Company”, the “Trust” or “OIT”) is an investment trust which is listed on the premium segment of the Official List of the FCA and admitted to trading on the premium segment of the main market for listed securities of the LSE. The Company had total net assets of £80m as at 31 March 2020. The Board of the Company comprises four non-executive Directors, all of whom are independent of the portfolio manager, Odyssean Capital LLP (“Odyssean” or the “Portfolio Manager”). ODYSSEAN INVESTMENT TRUST PLCContents OVERVIEW 2 3 4 Objective Investment Policy Financial Summary STRATEGIC REPORT 6 9 21 22 23 29 Chairman’s Statement Portfolio Manager’s Report Portfolio of Investments Distribution of Investments Strategic Overview Risk Management GOVERNANCE 34 35 37 42 45 49 Board of Directors Directors’ Report Corporate Governance Statement Audit Committee Report Directors’ Remuneration Report Statement of Directors’ Responsibilities FINANCIAL STATEMENTS 51 56 57 58 59 60 Independent Auditor’s Report Statement of Comprehensive Income Statement of Changes in Equity Balance Sheet Cash Flow Statement Notes to the Financial Statements ADDITIONAL INFORMATION 76 77 80 Shareholder Information Glossary Corporate Information 1 ODYSSEAN INVESTMENT TRUST PLCInvestment Objective The investment objective of the Company is to achieve attractive total returns per share principally through capital growth over a long- term period. 2 ODYSSEAN INVESTMENT TRUST PLCInvestment Policy The Company primarily invests in smaller company equities quoted on markets operated by the LSE, which the Portfolio Manager believes are trading below intrinsic value and where this value can be increased through strategic, operational, management and financial initiatives. It is expected that the majority of the portfolio by value will be invested in companies too small to be considered for inclusion in the FTSE 250 Index, although there are no specific restrictions on the market capitalisation of issuers into which the Company may invest. The portfolio will typically consist of up to 25 holdings, with the top 10 holdings accounting for the majority of the Company’s aggregate NAV, across a range of industries. The Company may hold cash in the portfolio from time to time to maintain investment flexibility. There is no limit on the amount of cash which may be held by the Company from time to time. Where the Company owns an influencing stake, it will engage with other stakeholders to help improve value. The Company may, at times, invest in securities quoted on other recognised exchanges and/or unquoted securities. Investment restrictions – No exposure to any investee company will exceed 15% of NAV at the time of investment. – The Company may invest up to 20% of gross assets at the time of investment in unquoted securities where the issuer has its principal place of business in the UK. – The Company may invest up to 20% of gross assets at the time of investment in quoted securities not traded on the LSE. – The Company will not invest more than 10%, in aggregate, of gross assets at the time of investment in other listed closed-ended investment funds. Borrowings The Company does not intend to incur borrowings for investment purposes, although the Company may, from time to time, utilise borrowings over the short term for working capital purposes up to 10% of NAV at the time of borrowing. Derivatives and hedging The Company will not use derivatives for investment purposes. It is expected that the Company’s assets will be predominantly denominated in Sterling and, as such, the Company does not intend to engage in hedging arrangements. However, the Company may do so if the Board deems it appropriate for efficient portfolio management purposes. General The Company will not be required to dispose of any asset or to rebalance the portfolio as a result of a change in the respective valuations of its assets. The Company intends to conduct its affairs so as to qualify as an investment trust for the purposes of section 1158 of the Corporation Tax Act 2010. Any material change to the Company’s investment policy set out above will require the approval of shareholders by way of an ordinary resolution at a general meeting and the approval of the FCA. Non-material changes to the investment policy may be approved by the Board. 3 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCFinancial Summary Results for the year 31 March 2020 31 March 2019* Change Shareholders’ funds NAV per share Share price per share Share price (discount)/premium to NAV# £80.1m 90.8p 90.0p (0.9)% £85.0m 96.3p 99.3p 3.1% (5.8)% (5.7)% (9.4)% Revenue earnings per ordinary share Capital earnings per ordinary share Total earnings per ordinary share High/low NAV Share price – high – low – high – low Share price premium to NAV – high – low Year ended 31 March 2020 Period ended 31 March 2019* 0.6p (6.2)p (5.6)p (0.6)p (1.4)p (2.0)p Year ended 31 March 2020 Period ended 31 March 2019* 116.5p 81.6p 117.0p 76.0p 3.1% (15.3)% 99.8p 93.4p 107.5p 95.3p 9.7% (1.3)% Performance Year ended 31 March 2020 Period ended 31 March 2019* NAV Total Return per share# NSCI ex IC plus AIM Total Return Index#† (5.7)% (23.2)% (2.1)% (9.0)% Cost of running the Company Year ended 31 March 2020 Period ended 31 March 2019* Annualised ongoing charges# 1.7% 1.6% * The period from incorporation of the Company on 21 December 2017 to 31 March 2019. The Company commenced trading and listed on the LSE on 1 May 2018. # Alternative Performance Measures (see Glossary on page 77). † Comparator Benchmark (see Glossary on page 77). Past performance is not a guide to future performance. 4 ODYSSEAN INVESTMENT TRUST PLC Strategic Report STRATEGIC REPORT Chairman’s Statement 6 Portfolio Manager’s Report 9 21 Portfolio of Investments 22 Distribution of Investments Strategic Overview 23 29 Risk Management Chairman’s Statement Introduction I am pleased to present the Annual Report and Financial Statements for the Company covering the period from 1 April 2019 to 31 March 2020. Since IPO, OIT’s NAV has decreased by 7.7%, this compares to the fall in the Comparator Index of more than 30% over the same period. This differentiated performance outcome gives the Board great confidence in the Portfolio Manager’s investment strategy, approach and execution. Performance The net assets of the Company decreased by £5m to £80m and represented a decline in net asset value per share (“NAV”) of 5.7%. Whilst the decline is disappointing, it represents an extremely resilient performance during a very challenging period for UK equities. Over the same period, the comparator NSCI ex IC plus AIM Total Return Index (the “Comparator Index”) fell by 23.2% and the FTSE All-Share declined by 18.5%. the concentrated nature of Given the portfolio, performance has been driven largely by individual stocks. Portfolio companies Consort Medical and Huntsworth were bid for during the period, accelerating returns. The Portfolio Manager’s conservative approach to investment (namely, running with a net cash balance) helped to defend the NAV during the challenging markets at the end of the period. Our NAV outperformed the Comparator Index in each month from January to March 2020. At the end of the period, the Company was 90% invested in 19 quoted smaller companies, one of which is quoted outside the UK. The takeover of Huntsworth completed in May 2020, converted this 6% position into cash. The Company ended the period with considerable resources to deploy into new investments. The team continues to identify potential new investment opportunities as well as engaging with the ongoing due diligence and monitoring of existing holdings. It has been pleasing to see some of the results of the team’s engagement becoming visible. Discount and premium management The share price has remained resilient since IPO and at the period end was trading at less than a 1% discount to NAV. The average discount across the sector at the end of the period was c.14.5%. The Board believes that the Company’s rating is driven by a number of factors, including but not limited to: – – – efforts undertaken at the Company’s launch to build the right shareholder base who share the Company’s view that patient investors will be rewarded in the longer term; the differentiated investment performance; the shareholder friendly measures in place to allow all shareholders to opt for a cash exit at a price based around NAV every seventh year following the Company’s launch, allied with the commitment to repurchase shares following a corporate action, as set out below. The Board and Portfolio Manager have been aware of the discount volatility experienced over the recent quarter. The takeover of Huntsworth gave rise to profits of c.£2.1m compared with where the shares were trading the day immediately before the bid announcement. The 2018 prospectus included a provision to make available 50% of any profits made following a corporate action to buy back shares in OIT, should the average discount exceed 5% over a 60-day period prior to exit. The discount narrowly exceeded 5% over this period and as a result, £1.05m will be used at the Board's discretion to buy back shares at a wider discount than 5%. Subsequent to the year end, we have used this discretion as set out on page 35 of the report. 6 ODYSSEAN INVESTMENT TRUST PLCChairman’s Statement (continued) The Portfolio Management fee is charged on the lower of NAV or market capitalisation. As a result, if the Company’s shares trade at a discount to NAV, the management fee and ongoing costs to shareholders fall. This mechanism helps reduce fee drag in challenging markets where the Company’s shares are likely to trade at a discount, as well as ensuring the Portfolio Manager’s interests are aligned with shareholders. Dividend The Directors expect that returns for shareholders will be primarily driven by capital growth of the shares rather than dividend income. The Board is not proposing to pay a final dividend. Service Providers The Board has reviewed its service providers and following the recent review at the Management Engagement Committee meeting of 21 May 2020, it has agreed to appoint Frostrow Capital LLP as its company secretary, administrator and marketing facilitator. The Company will release an announcement upon their formal appointment which is expected to take effect from mid-July 2020. The Board would like to thank Link for their work and support at the time of the IPO and to date. Growth of the Company The Board is aware that liquidity is important for investors and in order to remain relevant, the Company will need to grow. The Board believes that OIT’s investment strategy and strong performance will have broad appeal among investors which will enable it to grow over time, however, the current market environment presents near-term challenges in achieving this objective. OIT’s strong relative rating should enable us to pursue issuance in due course and the Board continues to consider growth options. Annual General Meeting The Company’s AGM is scheduled for 22 September 2020 at the offices of Odyssean Capital LLP, 6 Stratton Street, Mayfair, London W1J 8LD at 10.30 am. The Board looks forward to meeting shareholders. In due course, a notice of AGM will be circulated in accordance with the requirements of the Company’s Articles of Association. to Due the current COVID-19 outbreak, many companies have either postponed their AGMs or made alternative arrangements for conducting these meetings. We hope that by 22 September 2020 the Company will be able to hold its AGM in the usual manner. However, given the uncertain nature of this situation, should the Company need to alter its AGM arrangements, it will communicate these changes to shareholders through a regulatory announcement. This information will also be made available on the Company’s website www.oitplc.com. Shareholders are advised to check the website to ensure they have the most up-to-date information available regarding the AGM. Outlook The coming weeks and months will determine what sort of recovery domestic and international economies, and individual companies, will experience following the lockdown actions taken by numerous governments. In spite of the considerable fiscal and monetary support, it is highly unlikely that corporate earnings will suddenly bounce back to historic peak levels experienced in 2019. It is possible that the considerable change people are experiencing, both in terms of their work and also their consumption habits, will lead to changes in living and buying behaviours. Agile management teams managing high quality companies will benefit from these changes. Less robust business models and businesses are likely to suffer permanent damage. One of the attractions of investing in smaller quoted companies is that the larger number of companies affords more choice than investing in a basket of the FTSE100. Allied to that, the Company’s differentiated investment approach with a concentrated portfolio enables the Portfolio Manager to be extremely selective when considering where to deploy the Company’s capital. investment the differentiated The closed-ended nature of the Company is a key enabler of strategy. Inflows/ outflows are more measured and controlled by the Board, in consultation with the Portfolio Manager, than a daily dealing open-ended investment fund, enabling the Portfolio Manager to take a long-term view and also maintain cash balances should it wish to do so. In addition, the portfolio is not subject to the UCITS concentration 7 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCChairman’s Statement (continued) rules that open-ended investment companies must follow. Both of these factors enable the Portfolio Manager to invest in less liquid smaller companies for the long term and engage effectively with the portfolio companies as an aligned long-term stakeholder. The Portfolio Management team has many years’ relevant experience, which will help navigate the Company’s existing portfolio through these difficult times. This experience, allied with their longstanding knowledge of many of the other quoted smaller companies eligible for investment, and their stakeholders, means that they have a clear plan and strategy of how to hone the portfolio as well as selectively deploy capital over the coming weeks and months. The Portfolio Manager’s conservative approach to gearing since launch and price discipline has led to the Company having considerable cash and near cash resources to deploy into the current dislocated market. Notwithstanding the short-term uncertainties and volatility, long-term returns from this point are likely to reward holders well. As the COVID-19 crisis emerged in the UK, the Portfolio Manager enacted its Business Continuity Plan and the team has been working from home since 11 March 2020. The Portfolio Manager’s remote systems are working as planned and day-to-day portfolio management is unaffected. With face-to-face meetings not possible, the Portfolio Manager has been using conference and video calls to engage with the management teams of portfolio companies. There has continued to be regular dialogue between the Board and the Portfolio Manager regarding the portfolio and matters impacting the Company. We are very grateful for the support shown by the shareholders over the past year and their continuing support through these unprecedented times. Jane Tufnell Chairman 8 June 2020 8 ODYSSEAN INVESTMENT TRUST PLCStuart Widdowson Ed Wielechowski Portfolio Manager’s Report Details of the Portfolio Manager The Company’s Portfolio Manager is Odyssean Capital LLP. The Portfolio Manager was founded in 2017 by Stuart Widdowson and Harwood Capital Management Limited, an independently owned investment group, and is jointly owned by both parties. The Chairman of the Portfolio Manager is Ian Armitage, former CEO and Chairman of HgCapital. investment The Portfolio Manager’s team, Stuart Widdowson and Ed Wielechowski, identify and undertake research on potential investee companies as well as managing the portfolio. They draw on the experience of a three-strong Panel of Advisors, who have run and invested in multiple quoted and unquoted smaller companies. In addition, the investment team draws on the expertise and experience of Mr Armitage and Mr Christopher Mills, who sits on Odyssean's Board as a Non-Executive Director. Mr Armitage and Mr Mills have more than 87 years' combined investment experience in quoted and unquoted smaller companies. Stuart Widdowson Stuart has spent the last 20 years investing in public and private UK small and mid-size corporates and a further two years providing investment advisory services in the same field. Prior to founding the Portfolio Manager, Stuart was at GVQ Investment Management (“GVQ”), where he held the position of fund manager and head of strategic investments for more than seven years. During his time at GVQ, Stuart led the transformation of the performance of Strategic Equity Capital plc (“SEC”) and significantly improved shareholder value. Stuart led SEC to win several industry awards and was recognised as Fund Manager of the Year at both the PLC and QCA awards in 2015. Stuart began his career as a strategy consultant undertaking commercial due diligence and strategy projects for private equity and corporate clients. In 2001, he joined HgCapital and spent five years working on small and mid-cap leveraged buyouts in the UK and Germany. During this time, he worked on a number of public to private transactions of UK quoted companies. Ed Wielechowski Ed joined the Portfolio Manager in December 2017 as a Fund Manager. Prior to joining Odyssean, Ed was a Principal in the technology team at HgCapital. He joined HgCapital in 2006 and worked on numerous completed deals, including multiple bolt-on transactions made by portfolio companies. He has additional quoted market experience, having led the successful IPO of Manx Telecom plc in 2014, as well as having evaluated and executed public to private transactions. Ed started his career as an analyst in the UK mergers and acquisitions department of JPMorgan in 2004. 9 ODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) The investment approach Our investment approach applies the core elements of the private equity investment philosophy – highly focused, long-term, engaged ‘ownership’ style investment - to public markets. We believe that this approach creates a portfolio unlike that of many typical public equity funds and that, well executed, can offer attractive, differentiated, risk- adjusted returns. – Highly concentrated portfolio: We look to build a highly concentrated portfolio of no more than 25 investee companies where we carry out intensive diligence, only investing behind our highest conviction ideas. – Narrow focus: We are focused on smaller companies typically too small for inclusion in the FTSE 250 index. We believe this market is less efficient, offering more opportunities to find mis-pricings. Further, we believe the best investment decisions are made from a base of knowledge and experience, and we will make the majority of investments in industry sectors that we and our advisors, know well (TMT, Services, Industrials and Healthcare). – Targeting long-term holding periods: We will evaluate each investment opportunity over a three to five-year investment horizon. We have structured our business to reflect this belief and do not intend to run any capital which is redeemable over short time periods. To think like an ‘owner’ of a business we believe your capital should behave like one too. – Engaged investment style: We are engaged investors. We like investing in companies which, whilst good, are underperforming their potential and where we see the opportunity for constructive corporate engagement to unlock improved sustainable returns for all stakeholders. The Company’s investment objective is to deliver long- term capital growth rather than outperform a specific index. Our differentiated investment approach is likely to lead to periods of NAV per share performance materially different to those of the broader market. We fully anticipate this potential short-term performance variance and will focus on comparative investment performance on a rolling three-year basis. The absolute return mentality of the strategy, allied with the desire to avoid being a forced seller, may lead to net cash 10 balances being held. We anticipate a core range of 5-15% over the long term. Net cash balances will not be used as an attempt to market time, but to enable us to invest where blocks of stock are available rather than being required to sell a less liquid holding on short notice. Implementing the investment strategy There are three key factors we look for when we analyse a potential investment: 1) a valuation opportunity; 2) in a higher-quality company; and 3) with improvement potential. Our view is that buying at a fair price and supporting improved performance generates capital growth, while our quality filters mitigate losses in the event of unexpected headwinds. Valuation We look for two valuation factors in every investment. Firstly, what we refer to as “static value” - does the company trade at a discount to its current value? This is not only judged by traditional public market ratios. We also seek to model every company through the lens of a private equity buyer as well as evaluating its attractiveness to strategic trade buyers. Secondly, we are looking for companies which can grow their value over time – “dynamic value”. We particularly look for situations where there are multiple, independent drivers of value creation present, and where management actions can unlock these. We believe seeking multiple value drivers makes an investment case more secure and less exposed to single areas of uncertainty or misjudgement. Quality We assess every potential investment against qualitative and quantitative criteria. The quality assessment is important to mitigate the risk of permanent capital destruction from investments which fail to achieve their value potential. In our experience, higher quality companies are likely to maintain a minimum value through difficult times and are able to attract high calibre management teams to rectify underperformance. ODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) Improvement potential and engagement We particularly like companies that are in some way underperforming relative to their potential, and where the current valuation does not price in improvement. Once invested, constructive corporate engagement can help to unlock value. Our mantra is to buy good businesses and sell excellent businesses. The spectrum of areas which can be improved is broad and includes operating performance, asset utilisation, overly complex business structures/ organisation, strategic direction, poor M&A, investor relations and finally, governance and pay. Integration of ESG into our investment process We have historically focused on evaluating and engaging on corporate governance (“G”) and financial performance as part of our investment process. However, we have considered Environmental (“E”) and Social (“S”) performance and sustainability of investee companies informally for some time. After consulting with shareholders, we have decided to integrate E&S formally into our investment process and engagement approach. In common with our approach to governance, we will not use negative screening. However, our investment approach tends to avoid companies which screen badly for E&S factors – e.g. resources; sub prime lending, and we aim to avoid business models which are unsustainable or performing extremely badly on E&S issues. We intend to take a pragmatic approach to E&S given the more resource constrained nature of smaller quoted companies, largely focusing on how boards approach sustainability, where the scope for improvement is, how progress is evaluated and how it is reported to investors. Progress and performance in the past year The past year has seen UK equity markets show the extremes of sentiment. Greed after the decisive UK election result. Fear through March 2020 as investors began to process the likely impact that COVID-19, and global governments’ reactions to containing it, would have on company earnings. For investors, the year has been the equivalent to experiencing four seasons in one day. As an example of this changing sentiment, the NSCI ex IC plus AIM Total Return Index rallied 12.6% during Q4 2019, before falling almost 33% in Q1 2020. To put these sharp moves into perspective, from 1955 to the end of March 2020, the annualised returns from the larger NSCI Index have been c.14% per annum (source: Numis Securities). Over the year to March 2020, the NAV of the Company decreased by 5.7%, compared with the NSCI ex IC plus AIM Total Return Index (which we use as a comparator but not a benchmark) which fell by a much more significant 23.2% across the period. The portfolio was on average 88% invested across the period. During the many years of managing this strategy in differing market conditions, we have typically found that most relative outperformance is generated in periods of down or sideways markets, whereas the NAV tends to lag, or just about keep up, during periods when the markets are exuberant. This has been our experience over the past year and indeed since the Company was launched. We believe that there are a number of factors behind this differentiated performance profile, including but not limited to (a) the maintenance of a net cash position in the portfolio, (b) the investment process and stock selection criteria, and (c) the focus on seeking absolute returns rather than relative returns. The latter approach led us to increase our cash position during the first half of Q1 2020, not because we saw the oncoming turmoil driven by COVID-19, but because a number of portfolio companies had generated strong returns through Q4 2019. This performance was largely driven by re-ratings, and future value growth was unlikely to meet our absolute return requirements other than by further material re-ratings, which appeared too optimistic. As a result, the portfolio had considerable liquidity and cash resources as the market turmoil accelerated. At the end of the period, the Company was 90% invested into a portfolio of 19 companies. Over the last year, six new positions were added and two smaller positions exited. Three of the new positions were added during Q1 2020, through the market turmoil. Two full disposals were made during the period, including the takeover of Consort Medical, which completed in February 2020. Both investments delivered total returns in excess of 40%, with holding periods of less than a year. In March 2020, Huntsworth announced a recommended bid from a highly regarded US private equity house, at a 50% premium to the closing share price. Whilst a welcome uplift in current markets, we felt that the bid was opportunistic and at a reasonable discount to intrinsic 11 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) value. Nevertheless, we were somewhat satisfied with a c.38% IRR which was a good result given current market conditions. diligence supported an increased position, and actively topping up names on share price weakness where the investment thesis remained robust. We believe that the two takeovers validate our investment approach. Whilst we do not select investments anticipating them being acquired, over the years many investee companies have been taken over by trade and financial buyers. We see this as either an accelerated return, or alternatively a safety parachute when either a company has a short term set back or is struggling to attract an appropriate rating as a public company. Towards the end of the period, the likely disruption from COVID-19 became apparent. In February, we evaluated the portfolio for likely direct and indirect impacts of the lock down in China. As March progressed, we widened this analysis, focusing on portfolio companies’ balance sheets, debt facilities and available liquidity. In the vast majority of cases, whilst short-term earnings may be impacted, we concluded that the balance sheets in the main were strong enough to tide over a sudden sharp deterioration in sales. Where balance sheets were less strong, but the business models robust and the competitive positions strong, we have indicated a desire to back any equity raises if needed. From the beginning of the current financial year, we have also decided to formally integrate Environmental and Social engagement with portfolio companies into our investment process. Whilst we have informally considered “E&S” alongside our typical focus on Governance and Financial Performance, we believe that now is the appropriate time to broaden our engagement. This has been supported by a number of the Company’s largest shareholders. Portfolio development The portfolio was largely stable through the period with few major changes. £28m was invested into stock purchases. Six new positions were started for a total investment of £13m, we see scope to grow these over time as we continue our diligence. The remaining £15m was invested into existing positions, both growing weightings in those names where Up until the end of 2019, our focus had been on investing in less cyclical companies with strong balance sheets. Two of the three new investments made during March 2020 were in more cyclical companies, where the share prices were extrapolating a pessimistic short and long-term view of trading. The other investment was a more highly geared non-cyclical company which had de-rated materially on, we believed, overblown concerns around the level of gearing. We do not think it needs to raise equity to strengthen its balance sheet and believe it has very strong underlying cashflows, operates in a growth market and has robust earnings. It was purchased at a forward P/E of less than 7x earnings, compared with a long-term trading range of 9-23x. Whilst a small position, the takeover of our holding in Consort Medical was welcomed. We were part way through our due diligence to build the position and one of our hesitations, despite valuation, was, whether the two disparate divisions would attract a trade bidder. We could find multiple buyers for each business and considered whether the company should be broken up to release value. We also evaluated the significant de-rating that had occurred in the months prior to our investment. The company had experienced disrupted manufacturing and had limited short-term earnings growth potential. This was allied with limited free cashflow due to substantial investments. It was notable that the company did not attract a competing bid, despite the takeover being made at a share price below the recent peak. As indicated in the interim results, we have also spent more time seeking to drive value from portfolio companies. It is pleasing to note some early progress in this area, particularly around investor relations and stakeholder management. We believe that many of the portfolio companies have multiple opportunities for improvement. 12 ODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) Portfolio At the end of the period under review, the portfolio comprised 19 companies, the largest positions being NCC, SDL, Equiniti and Chemring. Backgrounds to our investment thesis for each company have been detailed in our prior reports and key updates through the period are detailed below: NCC Group % NAV: 13% Sector: TMT independent Leading software provider of escrow and cyber security consulting provided the through Assurance division. services Performance in period NCC performed well during the period with trading updates broadly supporting delivery of the key points of our investment thesis. The Assurance division delivered strong organic growth (notably in the US market) with consultant numbers growing strongly and consultant attrition reducing across the period. The Escrow business performance was more disappointing. Revenues showed moderate decline, predominantly driven by internal challenges at NCC, which have since been addressed. With investment in the sales team and the launch of the new ‘escrow as a service’ product, the company is confident that this division will return to growth. The self-help programme being driven by management continues to progress, reflected by ongoing improvements in margins which rose 200bps in the Assurance division in FY19. Significant investment has been made in back office functions and systems. We see these as key enablers to the group in further accelerating growth and improving margins. Outlook The COVID-19 crisis will impact NCC’s divisions differently. The highly recurring Escrow business is expected to continue with limited impact. The Assurance division is more exposed to delays in projects as end clients look to reduce spend. This impact should be short lived and management are actively managing through this difficult time. The current situation of increased remote working may also stimulate new business opportunities. For example, it was recently reported that NCC had been hired to help video conferencing company Zoom improve its cyber security. We believe that NCC has a robust balance sheet and will trade through this period. The markets in which it operates enjoy long-term secular growth drivers, there remains a large self- help opportunity to be delivered and the unique assets in the group have significant value. The long-term prospects for the company appear attractive. SDL % NAV: 12% Sector: TMT leader in Global content provision of translation services and also develops and sells a range of software products that support the content translation workflow linguists for and enterprises. Performance in period SDL continued its robust performance through the period, driving further confidence in our investment thesis. The group delivered strong trading updates with organic revenue growth of 5%, 90bps increase in margins and strong cash generation in FY19. More importantly, the group demonstrated continued delivery against its self-help programme. Use of the group’s internally developed Helix workflow platform increased to 84% of addressable volume, supporting further efficiency gains in the core Language Services division, driving improved margins and increased customer satisfaction. Significant R&D investment into the group’s software offering (and machine translation capabilities) are beginning to bear fruit with key products being delivered in the year and successfully sold to clients. Finally, the integration of the acquired US-based business, ‘Donnelly Language Services’ is largely complete and supported a significant mix shift in group revenues to higher margin, premium industry verticals. 13 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) Outlook SDL is well placed to weather headwinds from COVID-19, with net cash on balance sheet and recent back office investments supporting efficient remote working. Although demand from end customers may slow, SDL is positioned to benefit in what remains a fragmented market where smaller, less well capitalised competitors may struggle. SDL’s combination of a leading position in a growth market, clear margin improvement potential and strong cash generation have the potential to generate good returns from here over the long term. Performance in period Equiniti’s performance has been mixed over the period. On the positive side, the group demonstrated improved cash conversion with fewer exceptional costs, good progress on delivery of $10m synergies from its US acquisition and signs of improvement in the long challenged pensions business. Offsetting this were headwinds from lower UK corporate activity driven by Brexit concerns and cuts in interest rates by both the Bank of England and the Federal Reserve. Resultant organic growth of 1.4% in FY19 was below ambitions of 3%-7%, with revenue mix holding back the expected progression in margins. Outlook Equiniti is exposed to a number of short-term impacts from COVID-19. Falling interest rates, dividends being cancelled and reduced corporate activity will all impact revenues. There is prospect of recovering some of this lost revenue if there are widespread rights issues amongst FTSE350 companies through the rest of the year. The company is looking to manage costs and cash in light of this challenge. The business carries reasonable leverage but has liquidity headroom and a robust, recurring base of core revenue to trade through the near-term disruption. Longer term, we continue to view the attractions of the business model as undervalued by the market. Equiniti is a market leader, with high recurring revenue, strong cash generation and the opportunity to accelerate organic growth, through turnaround of the pensions business and leveraging its recently acquired US footprint. The loss of interest income caused by the cut in rates may lead to Equiniti and its peers revisiting their pricing models for certain services. Other activities that are suffering from the current market conditions are likely to recover as 2020 progresses. Performance in period Chemring showed good progress across the period – with the new CEO bedding in well. The business completed the disposal of its lower quality commoditised energetics businesses, leaving the continuing group focused on higher value-add products. The company saw a successful re-start of the explosion-impacted facility in Salisbury, strengthening end demand in the countermeasures market and continuing progress in its Sensors division against a pipeline of key projects. Full year results were ahead of market expectations with revenue up 13%, improving margins, strong cash generation and a growing order book providing solid support for FY20. Post the period end, the company has confirmed it will pay its final dividend. Equiniti % NAV: 11% Sector: Business Services Leading provider of a range of services that support complex and processes. regulatory These include shareholder registration, remediation services and pension administration. Chemring Group % NAV: 8% Sector: Industrials produces Chemring for counter-measures sophisticated aircraft, and sensor products, devices energetic rocket including and components provides contracted R&D for governments – primarily serving the defence sector. 14 ODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) Outlook Chemring’s defence market exposure leaves it well placed to trade through any near term COVID pressure. The bulk of revenue comes from already approved defence budgets. With the exception of possible delays in customers physically signing off on orders, there is limited expected impact on demand, and to date, Chemring has seen little disruption of its facilities or supply chains. Longer term, we see the disposal of the commodity energetics businesses as leaving a higher quality group, well placed to benefit from recent investments in ramping up capacity to serve counter-measures to the growing global F-35 fleet. We also see further upside from the pipeline of large contracts with US Department of Defense where key decision points are expected in the next 12-24 months. We have six mid-sized investments in Huntsworth, Volution, Flowtech, Devro, Benchmark, and Clinigen. Clinigen is a new position, built during the past six months. Our investment thesis is detailed below. The investment cases for the other names have been described in prior reports. Huntsworth % NAV: 6% Sector: Healthcare on Huntsworth is primarily focused the provision of healthcare c o m m u n i c a t i o n s services. The group marketing provides and technical medical c o m m u n i c a t i o n s services to healthcare clients across all steps of drug development to commercial sale. Volution % NAV: 5% Sector: Industrials Volution leading is a designer, assembler and marketer of ventilation fans and systems for use in domestic households commercial and environments. The group has operations across Europe and Australasia. Performance in period The key news through the period was the announcement of a bid for the company by private equity house CD&R in March. The offer price of 108p, although a 50% premium to the then share price, was slightly below our view of fair value. Despite this, the bid offered an attractive return (c.38% IRR) in a relatively short period, which when combined with the ongoing uncertainty in markets we viewed as attractive. Performance in period Volution showed a year of good progress. Operationally, the highlight of the year was the completed relocation of two UK facilities into a single new site in Reading. Following a period of execution challenges, this success allowed the group to focus on delivering benefits from the increased capacity this investment offers. Pleasingly, full year trading showed solid organic growth of 3.5% in the year ended July 2019, boosted further by acquisitions in the Nordics and Australasia. Margins, which dipped slightly at full year, showed a solid 70bps uplift in the first half of FY20 as the benefits from restructuring at the Reading facility and the streamlining of back office functions came through. Key governance developments were a new CFO being brought on board in August 2019 and a new Chairman in January 2020. We look forward to their continuing the steady stewardship of what is a well-run business. 15 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) Outlook Volution’s reliance on construction and refurbishment spend has left it exposed in the near term to the sudden drop in activity due to COVID-19. The group has limited gearing and sufficient liquidity to cover a protracted period of minimal revenue, positioning it well to trade through the current issues. More positively, we see significant opportunity for Volution to win share through the crisis at the expense of smaller, more challenged competitors. It has become a more geographically balanced business since the 2008-9 downturn, which provides more resilience to earnings. Over the longer term, we are excited by the prospects for Volution. Regulatory drivers for improved energy efficiency in homes are driving increased need for ventilation, which Volution is well placed to serve. After a period of operational investment, the company should now see improving margins, supporting strong ongoing cash generation. With a track record of successful bolt-on M&A in a market which remains highly fragmented there are multiple routes to value growth open to the business. Performance in period Throughout calendar year 2019, Flowtech faced a deteriorating end market as Brexit concerns drove softness in its key industrial end sectors. This slowdown accelerated into the end of the year driving downgrades to market expectations. In addition, it is one of the portfolio companies most impacted by the COVID-19 related lockdown. Against this disappointing backdrop, we are pleased to note a number of actions taken by the company in response to these challenges. Firstly, the business has announced a focus on delivering efficiencies through better integration of legacy acquisitions. We believe there is opportunity for cost savings through rationalising multiple separate warehousing and picking sites into fewer, more efficient centres, alongside further savings from bringing together multiple back office processes. In the context of the group, we believe the total potential quantum of savings is material. Secondly, there have been recent governance changes at the company with the appointment of a new Chairman. We view these changes as positive and supportive of delivering the operational transformation ongoing at the group over the next few years. Outlook Demand in Flowtech’s end markets has been and will be impacted by the current COVID-19 lockdown, driving a likely material short-term impact on revenues. The group will benefit from government support schemes and has suspended dividends which will support short-term liquidity. The group also intends to accelerate the cost savings identified as part of managing through current issues. On a positive side, many of Flowtech’s competitors are much smaller and are likely to struggle to conduct business in the current environment. It would not be a surprise if Flowtech gains considerable market share through this period. Fundamentally, we believe Flowtech occupies a unique position in its market with significant potential to create value. The shift to a proactive focus on delivering cost savings, has the potential to drive a material uplift in earnings as well as create a stronger operating platform from which the group can continue to build on its market leadership position through M&A. We remain excited by the medium to long-term prospects for the business. Flowtech Fluidpower % NAV: 5% Sector: Business Services Leading UK distributor of and hydraulic pneumatic components. 16 ODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) Devro % NAV: 5% Sector: Consumer artificial Devro is a global market leader in the production collagen- of based for sausages and other snack products. casings Benchmark Holdings % NAV: 4% Sector: Healthcare Benchmark has leading positions in key parts of the growing global aquaculture market. The group is a leading provider genetics of services to the salmon market, production of early stage nutrition products primarily for the shrimp market and a developer of health products for the salmon market. Performance in period Devro had a solid year of performance broadly in line with expectations. The business reported flat volumes and a small revenue decline in 2019, with profit largely maintained by the successful delivery of cost savings identified as part of management’s efficiency plan. Pleasingly, strong cash generation saw net debt reduce through the period. The management continues to impress by focusing on reducing costs and streamlining what was historically a highly autonomous group of local operations. This was further demonstrated by the announcement during the year of the planned rationalisation of one UK site with a potential £5m p.a. cost saving as a result – further supporting a key leg of our investment case. Delivery of sustained organic volume growth remains the key challenge for Devro, significant investment in the commercial function in 2019, alongside roll out of the new ‘Fine Ultra’ product range, were key actions to start delivery against this goal. Outlook Being largely a supplier into food manufacture, Devro is reasonably insulated from the demand shocks other companies have seen from COVID-19. The business should benefit from demand shifting from foodservice to retail. In addition, to date it has seen little supply side disruption, although there are raw material risks relating to the supply of collagen, a by-product of the production of leather, for which the two largest uses are the cyclical automotive and footwear markets. We believe the group should trade through the current turmoil, and with capex likely to trail depreciation for several years, cash generation should be resilient. Beyond the current short-term situation, our view on the potential for Devro remains unchanged. The group is a clear leader in stable end markets, with a strong management team, delivering cost reductions and strong cash generation. Successful execution on cost savings alongside a return to volume growth would underpin a change in perception of the equity story and support an uplift in its rating. Performance in period Benchmark has had a mixed year. The ongoing headwind from the deepest recession in the shrimp market for 30 years impacted performance in the Nutrition business. Concurrently, the early successful completion of customer funded trials of the group’s new sea lice treatment impacted revenue in the Health business. Combined, these drove material downgrades through the period and increasing leverage. A well supported £43m equity raise in February 2020, reduced leverage and offered improved liquidity. On the positive side, the difficulties detailed above have driven a welcome acceleration of the various corporate actions we have long seen as crucial to the Benchmark investment case. Wholesale management changes have been made with a new CEO and a new CFO appointed in the past six months, a bottom-up review of group operations identified a number of ‘non-core’ activities, which are in the process of being sold or shut down, and a detailed review of the R&D pipeline is expected to reduce spend and focus down onto the most commercially attractive near-term opportunities. We view all of these changes as positive steps in releasing value in what remains a highly strategic asset. 17 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) Clinigen Group % NAV: 4% Sector: Healthcare provides a Clinigen range of services to the pharmaceutical market, focused on ensuring that hard to access medicines reach the right patients at the right time. The group supports distribution of unlicensed medicines into smaller or hard to access markets, supports c o m m e r c i a l i s a t i o n licensed products of globally and supports clinical trials. Outlook Benchmark has flagged that both its Healthcare and Genetics operations are well placed to trade through the current COVID-driven uncertainty, but that the Nutrition division may continue to be impacted by weakness in the shrimp market. The recent equity raise, alongside a highly flexible financing structure (via a Norwegian bond), offers considerable flexibility on liquidity. Near-term COVID impacts aside, and despite the challenging year, the recent actions taken at Benchmark augur well for the future. The group now appears to be on the right path towards focusing on its core areas of market leadership, with new management driving increased discipline on both capital and operating cost investment. With the key new sea lice treatment expected to receive commercial approval in the next 12 months, we see a potential step change in the value of this key player in the growing global aquaculture market. Clinigen is a market leader in a range of niche pharmaceutical services and products. The group has built a market leading position in (i) Unlicensed Medicines – providing medical professionals access to drugs currently undergoing trial or which are unlicensed in a particular jurisdiction; (ii) Clinical Services – Clinigen is a leader in sourcing comparator drugs for use in clinical trials and other related service areas; and (iii) Commercial Medicines – Clinigen has a portfolio of owned and licenced medicines where it can accelerate sales through accessing pockets of demand and jurisdictions typically too small for larger pharma companies to target. The markets in which Clinigen operates are large and typically growing at mid to high single digits, driven by secular tail winds from the increasing volume and diversity of new medicine launches, and the trend for increased outsourcing across the industry. Clinigen has built leading global platforms in its chosen markets and has strong, long-term, blue-chip clients in markets where reach and reputation are crucial and represent significant barriers to entry. The end markets which Clinigen addresses are well insulated from COVID-19 and the group has seen little impact on operations to date. Our investment case sees multiple levers for value growth. We believe the group is well placed to grow organically at above market rates as it gains share from competitors and benefits from recently completed M&A. Further, we believe after the recent period of building the group through acquisition, there exists significant opportunity to improve margins through better integrating the group – a journey which is just being started by the current management team. Finally, although geared today, the group should generate strong free cash flow going forward post completion of certain earnout obligations. We believe that part of the recent de-rating has been driven by the level of gearing on the balance sheet. Given how cash generative the group is, we see leverage reducing substantially over the next 18 months. Provided achieved earnings are near current market forecasts, this de-gearing should catalyse a material re-rating of the equity. We believe that Clinigen is a higher quality, cash generative business with a complex story, somewhat misunderstood by the investors. This is demonstrated by a rating which has been more volatile than the earnings profile would suggest. This presented an opportunity for us to make our investment at a value below where we see potential strategic (or private equity) interest. The remaining nine investments represent between c.1% and 3% of NAV each. These are spread across our core focus sectors and all offer scope to scale, subject to further due diligence and pricing remaining attractive. 18 ODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) Outlook The new financial year has begun in an equity bear market, driven by one of the sharpest equity market corrections on record. The current circumstances are very unusual, with a near simultaneous global recession triggered by simultaneous supply and demand shocks. There are few precedents to draw upon. Share prices are always a leading indicator of economic and corporate earnings, and they are giving a very strong signal of the broad impact that companies and the global economy will experience in 2020. Concerns about Brexit pale into insignificance. Despite the unprecedented fiscal and monetary stimulation by many governments, few companies are likely to escape unscathed. Companies with weak business models, weak competitive positions and weak balance sheets are unlikely to survive. We see many more similarities to the early 1990s recession than the Great Financial Crisis of 2008-9. We have no strong view about whether the markets have already hit the bottom. It is also becoming clearer week- by-week that a snap back in earnings in 2021 to levels previously achieved in 2019 is increasingly unlikely. Earnings forecasts are mostly irrelevant, with many companies withdrawing guidance. One Chairman told us it was “just impossible” to give any sensible guidance. As a result, valuing companies has become more challenging. We have always considered EV/Sales as being a less volatile valuation metric than earnings or profit multiples. In addition, particularly in asset rich companies, price to book multiples tend to offer good indicators of compelling long-term value opportunities. Due to these factors, there appears to be good long-term upside within the existing portfolio. We continue to engage with the portfolio companies, especially where we had already highlighted scope for improvement potential prior to COVID-19 impacting trading. Whilst the near-term focus will be on crisis/cash management, at some point it will be appropriate to engage on how they capitalise on the opportunities that the crisis will present. In one example, a portfolio company which is a market leader, is the only one of its close peers still open for business. We would not be surprised if a number of its smaller, less well capitalised peers either do not re-open, or alternatively run out of cash when the market recovers. These types of situations offer scope for organic market share gains and/or bargain acquisition targets. We intend to continue investing using our established criteria, namely seeking out new investments in market leaders with strong business models, with improvement potential, international earnings and high barriers to entry. We will continue to avoid resource companies and are reluctant to invest in companies which have direct exposure to discretionary consumer expenditure. Equally, we are not focused on deep value “option” stocks. Given our good knowledge of our investment universe, we already have a strong view of the new investments we are likely to make during the rest of this year. The focus now is on completing our due diligence and determining the optimal price and timing for investment. Over the next 6-12 months, we expect portfolio turnover to be higher than typical, as we will probably make more new investments than usual. We may also realise some of our existing holdings which, despite serving us well through the difficult recent months, offer a less compelling risk/reward balance than alternative investments that we can find in the market. The net cash balance, 10% at the period end (or 16% including the holding in Huntsworth, which became cash in April 2020) is likely to fall progressively through 2020. We will not attempt to market time but will invest gradually over the period as and when suitable situations and liquidity arise. We anticipate that there will be many companies seeking to raise new equity to repair their balance sheets, or position themselves to capitalise on the opportunities that the turmoil has caused. Currently there appears to be widespread investor support for these fundraisings, but this could wane if open-ended funds are subject to outflow requests, and managers use their cash balances up. We believe that there will be multiple attractive investment opportunities to recapitalise quoted UK small companies in the second half of 2020. We have identified a number of these companies and believe, subject to an appropriate entry price, that they have the potential to generate compelling medium to long-term investments for the Company's shareholders. 19 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCPortfolio Manager’s Report (continued) We are fortunate to manage our investments via a closed-ended fund structure. This allows us high visibility on the existing assets under our control, to think and act for the long term and be less concerned by limited day-to- day liquidity of the shares of portfolio companies. Allied with our own combined investment experience of more than three decades, we are also fortunate to be able to draw on the insights and advice of the non-executives of the Company and of our own Fund Management company, as well as our three-strong panel of advisors. Whilst these factors do not guarantee success, they provide us with additional tools in our toolkit to navigate these uncharted waters. Stuart Widdowson | Ed Wielechowski Odyssean Capital LLP 8 June 2020 AGM will be held at the offices of Odyssean Capital LLP, 6 Stratton Street, Mayfair, London W1J 8LD at 10.30 am on Tuesday, 22 September 2020 Glossary – page 77 20 ODYSSEAN INVESTMENT TRUST PLCPortfolio of Investments as at 31 March 2020 Company Sector Country of Listing Valuation £’000 % of Net Assets TMT TMT Business Services Industrials TMT Industrials Business Services Consumer Healthcare Healthcare United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Top 10 Investments NCC Group SDL Equiniti Chemring Group Huntsworth Volution Flowtech Fluidpower Devro Benchmark Holdings Clinigen Group Other equity investments* Total equity investments Cash and other net current assets Net assets 10,181 9,339 8,797 6,575 4,633 4,194 3,921 3,725 3,381 3,138 14,382 72,266 7,829 80,095 12.7 11.7 11.0 8.2 5.8 5.2 4.9 4.7 4.2 3.9 17.9 90.2 9.8 100.0 * Sum of equity investments in companies where the investment in each company is less than 3% of its net assets. The Company has not disclosed the names of any investment where the holding is below 3% of its net assets on the grounds that the Company is continuing to build positions in these portfolio companies, disclosure of which is deemed to be commercially sensitive information. 21 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCDistribution of Investments as at 31 March 2020 (% of net assets) Portfolio holdings % holding by sector 9.8% 12.7% 11.7% 11.0% 4.9% 5.2% 5.8% 8.2% 17.9% 3.9% 4.2% 4.7% NCC Group SDL Equiniti Chemring Group Huntsworth Volution Flowtech Fluidpower Devro Benchmark Holdings Clinigen Group Other equity investments Cash and other net current assets 2.0% 4.7% 9.8% 10.6% 35.1% 21.1% 16.7% TMT Industrials Business Services Healthcare Consumer Other equity investments Cash and other net current assets Geographical revenue exposure (% of invested capital) Market capitalisation (% of invested capital) 15.2% 18.0% 2.8% 10.9% 42.1% UK US Europe Other RoW Below £150m £150m-£750m Over £750m 24.7% 86.3% As at 31 March 2020, the net assets of the Company were £80m. 22 ODYSSEAN INVESTMENT TRUST PLCStrategic Overview Business model Status of the Company The Company was incorporated on 21 December 2017 and the IPO took place on 1 May 2018. It is registered in England and Wales as a public limited company and is an investment company within the terms of section 833 of the Companies Act 2006. The principal activity of the Company is to carry on business as an investment trust. The Company has been approved by HM Revenue & Customs as an authorised investment trust under sections 1158 and 1159 of the Corporation Tax Act 2010, subject to there being no subsequent serious breaches of regulations. In the opinion of the Directors, the Company is directing its affairs so as to enable it to continue to qualify for such approval. The Company’s shares have a listing on the premium segment of the Official List of the FCA and trade on the LSE’s main market for listed securities. The Company is a member of the AIC, a trade body which promotes investment companies and also develops best practice for its members. Purpose The purpose of the Company is to achieve predominantly capital growth in our shareholders’ wealth over time. It aims to achieve this by using its closed-ended structure to invest in a concentrated number of less liquid, higher- quality smaller quoted companies, which the Portfolio Manager believes are undervalued and could be generating higher returns for their shareholders. The long-term nature of the Company’s capital enables the Portfolio Manager to undertake constructive corporate engagement with the underlying portfolio companies and their stakeholders, on financial and operating performance, strategy and sustainability, specifically ESG practices. Sustainable improvement in a smaller quoted company’s financial and operational performance, and ESG practices, not only benefit the shareholders of the Company, but also the shareholders and stakeholders in the underlying portfolio companies. Investment objective The investment objective of the Company is to achieve attractive total returns per share principally through capital growth over a long-term period. Investment policy The Company’s full investment policy is set out on page  3 and contains information on the policies which the Company follows, including in relation to borrowings, derivatives and hedging. The Company invests primarily in smaller company equities quoted on markets operated by the LSE, where the Portfolio Manager believes the securities are trading below intrinsic value and where this value can be increased through strategic, operational, management and/or financial initiatives. Any material change to the Company’s investment policy would require the approval of shareholders by way of an ordinary resolution at a general meeting and the approval of the FCA. Non-material changes to the investment policy may be approved by the Board. Portfolio analysis A detailed review of how the Company’s assets have been invested is contained in the Chairman’s Statement on pages 6 to 8 and the Portfolio Manager’s Report on pages 9 to 20. A list of all the Company’s investments is contained in the Portfolio of Investments on page 21. Section 172 statement Overview 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 Company as set out in Section 172 of the Companies Act 2006. In doing so, directors must take into consideration the interests of the various stakeholders of the Company, the impact the Company has on the community and the environment, take a long-term view on consequences of the decisions they make as well as aim to maintaining a reputation for high standards of business conduct and fair treatment between the members of the Company. Fulfilling this duty naturally supports the Company in achieving its investment objective and helps to ensure that all decisions are made in a responsible and sustainable way. In accordance with the requirements of the Companies the (Miscellaneous Reporting) Regulations 2018, Company 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. Induction and access to training is provided for 23 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCStrategic Overview (continued) new Directors. 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 schedule of Matters Reserved for the Board, as well as the Terms of Reference of its committees are reviewed on an annual basis and further describe Directors’ responsibilities and obligations and include any statutory and regulatory duties. The Audit Committee has the responsibility for the ongoing review of the Company’s risk management systems and internal controls and, to the extent that they are applicable, risks related to the matters set out in Section 172 are included in the Company’s risk register and are subject to periodic and regular reviews and monitoring. Stakeholders A company’s stakeholders are normally considered to comprise of its shareholders, its employees, its customers, its suppliers as well as the wider community in which the company operates and impacts. The Company is different in that as an investment trust it has no employees and, significantly, its customers are synonymous with its shareholders. In terms of suppliers, the Company receives professional services from a number of different providers, principal among them being the Portfolio Manager. The Board believes that the wider community in which the Company operates encompasses its portfolio of investee companies and the communities in which they operate. During the period under review, the Board discussed which parties should be considered as stakeholders of the Company. Following a comprehensive review, it was concluded that, as the Company is an externally managed investment company and does not have any employees or customers, its key stakeholders comprise its shareholders, its portfolio companies and its service providers, primarily the Portfolio Manager. Details of how the Board considers the needs and priorities of the Company’s stakeholders and how these are taken into account during all its discussions and as part of its decision-making are detailed below. All discussions involve careful considerations of the longer- term consequences of any decisions and their implications for stakeholders. Stakeholder Board Engagement Shareholders Continued shareholder support and engagement are critical to existence of the business and the delivery of the long- term strategy of the Company. 24 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. These include: – Annual General Meeting – The Company welcomes and encourages attendance, voting and participation from shareholders at the AGM, during which the Directors and the Portfolio Manager are available to discuss issues affecting the Company and answer any questions. The Portfolio Manager provides a presentation at the AGM on the Company’s performance and its future outlook. The Company values any feedback and questions it may receive from shareholders ahead of and during the AGM; – Publications – The Annual and Interim Reports of the Company are made available on its website and the Annual Report is circulated to shareholders. These reports provide shareholders with a clear understanding of the Company’s portfolio and financial position. This information is supplemented by a quarterly factsheet and a quarterly presentation which are available on the website. Feedback and/or questions the Company receives from the shareholders help the Company evolve its reporting, aiming to render the reports and updates transparent and understandable; – Shareholder meetings – The Portfolio Manager and the Company’s Broker are in regular contact with major shareholders. The Chairman and the other Directors are available to meet with shareholders to understand their views on governance and the Company’s performance where they wish to do so. Shareholders are able to meet with the Portfolio Manager throughout the year. The results from all meetings between the Portfolio Manager, the Broker and the shareholders, and the views of the shareholders are reported to the Board on a regular basis; ODYSSEAN INVESTMENT TRUST PLCStrategic Overview (continued) Stakeholder Board Engagement The Portfolio Manager The Portfolio Manager’s performance is critical for the Company to successfully deliver its investment strategy and its objective to meet shareholders provide with total attractive return over a long-term period. – – 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. Other members of the Board are also available to shareholders if they have concerns that have not been addressed through the normal channels. Shareholders wishing to communicate directly with the Board should contact the Company Secretary at the registered office address on page 80; and Investor relations updates – At every Board meeting, the Directors receive updates from the Company’s Broker on the share trading activity, share price performance and any shareholders’ feedback, as well as an update from the Portfolio Manager on any publications. To gain a deeper understanding of the views of its shareholders and potential investors, the Portfolio Manager also meets regularly with shareholders. Any pertinent feedback is taken into account when Directors discuss the share capital and any possible fundraisings. The Chairman also wrote to the major shareholders of the Company following the publication of OIT's first annual financial results in May 2019. The willingness of the shareholders, including the partners and staff of the Portfolio Manager, to maintain their holdings over the long-term period is another way for the Board to gauge how the Company is meeting its objectives and suggests a presence of a healthy corporate culture. The management of the Company’s portfolio is delegated to the Portfolio Manager, which manages the assets in accordance with the Company’s objectives and policies. At each Board meeting, representatives from the Portfolio Manager are in attendance to present reports to the Directors covering the Company’s current and future activities, portfolio of assets and its investment performance over the preceding period. Maintaining a close and constructive working relationship with the Portfolio Manager is crucial as the Board and Odyssean both aim to continue to achieve consistent, long-term returns in line with its investment objective. Important components in the collaboration with the Portfolio Manager, representative of the Company’s culture, are: – Operating in a fully supportive, co-operative and open environment and maintaining ongoing communication with the Board between formal meetings; – Encouraging open discussion with the Portfolio Manager, allowing time and space for original and innovative thinking; – Recognising that the interests of shareholders and the Portfolio Manager are for the most part well aligned, adopting a tone of constructive challenge, balanced with robust negotiation of the Portfolio Manager’s terms of engagement if those interests should not be fully united; – Drawing on Board members’ individual experience and knowledge to support the Portfolio Manager in its monitoring of and engagement with portfolio companies; and – Willingness to make the Board members’ experience available to support the Portfolio Manager in the sound long-term development of its business and resources, recognising that the long-term health of the Portfolio Manager is in the interests of shareholders in the Company. 25 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCStrategic Overview (continued) Stakeholder Board Engagement Portfolio companies Company The invests into available opportunities, allocating capital across different portfolio companies to the Company’s meet objectives investment within the pre-defined portfolio limits and with a focus on portfolio level diversification. Other service providers In order to function as an investment trust with a premium listing on the LSE, the Company relies on a diverse range of reputable advisors for support in meeting all relevant obligations. The relationship with the Portfolio Manager is fundamental to ensuring the Company meets its purpose. Day-to-day engagement with portfolio companies is undertaken by the Portfolio Manager. Details of how Odyssean carries out portfolio management, as well as information on its differentiated investment approach and the structuring of investments can be found in the Portfolio Manager’s report on pages 9 to 20. The Board receives updates at each scheduled Board meeting from the Portfolio Manager on specific investments including regular valuation reports and detailed portfolio and returns analyses. Odyssean’s engagement with portfolio companies incorporates recurring due diligence reviews, active voting at their annual general meetings, discussions with their stakeholders (including but not limited to executives, non-executives, other shareholders and corporate advisors) and on-site visits. The Company’s main functions are delegated to a number of service providers, each engaged under separate contracts. The Board maintains regular contact with its key external providers and receives regular reporting from them, both through the Board and committee meetings, as well as outside of the regular meeting cycle. Their advice and views are routinely taken into account. The Audit Committee reviews and evaluates the financial reporting control environments in place at each service provider. Through its Management Engagement Committee, the Board formally assesses their performance, fees and continuing appointment annually to ensure that the key service providers continue to function at an acceptable level and are appropriately remunerated to deliver the expected level of service. Post year end, the Board has approved the change of its service providers for the provision of administration and company secretarial services from Link to Frostrow Capital LLP. This change is expected to take effect from mid-July 2020. Frostrow Capital LLP’s marketing and distribution capabilities will enhance the Portfolio Manager’s existing marketing initiatives. The above mechanisms for engaging with stakeholders are kept under review by the Directors and will be discussed on a regular basis at Board meetings to ensure that they remain effective. Culture The Directors agree that establishing and maintaining a healthy corporate culture among the Board and in its interaction with the Portfolio Manager, shareholders and other stakeholders will support the delivery of its purpose, values and strategy. The Board seeks to promote a culture of openness, debate and integrity through ongoing dialogue and engagement with its service providers, principally, the Portfolio Manager. The Board strives to ensure that its culture is in line with the Company’s purpose, values and strategy. As detailed in the Corporate Governance Statement, the Company has a number of policies and procedures in place to assist with maintaining a culture of good governance including those relating to diversity, Directors’ conflicts of interest and Directors’ dealings in the Company’s shares. The Board assesses and monitors compliance with these policies as well as the general culture of the Board through Board meetings and in particular, during the annual evaluation process which is undertaken by each Director (for more information see the performance evaluation section on page 40). The Board is cognisant of the nature of companies that the Company invests in and notes that their performance could fluctuate while the Portfolio Manager actively engages with them. This requires a culture of patience from the Board, supported by an orderly, disciplined investment management process by the Portfolio Manager. The Board pays particular attention to Odyssean’s corporate engagement initiatives and proxy voting policies. Additional information on the Board’s approach to ESG matters is detailed on page 28. 26 ODYSSEAN INVESTMENT TRUST PLCStrategic Overview (continued) The Board seeks to appoint the best possible service providers and evaluates their remit, performance and cost effectiveness on a regular basis. The Board considers the culture of the Portfolio Manager and other service providers, including their policies, practices and behaviour, through regular reporting from these stakeholders and, in particular, during the annual review of the performance and continuing appointment of all service providers through its Management Engagement Committee. Key performance indicators At each Board meeting, the Directors consider several performance measures to assess the Company’s success in achieving its objective. The key performance indicators used to measure the progress and performance of the Company over time are established industry measures. These are as follows: Net asset value The NAV at 31 March 2020 was 90.8p per ordinary share, compared to 96.3p per ordinary share at the end of the previous period, a decrease of 5.7%. The NAV total return* since the launch of the Company on 1 May 2018 to 31 March 2020 was (7.7)%. The total return from the NSCI ex IC plus AIM Total Return Index* was (23.2)% for the same period. A full description of the Company’s performance for the year ended 31 March 2020 can be found in the Portfolio Manager’s Report on pages 9 to 20. Share price The Company’s share price at the previous period end was 99.3p and decreased to 90.0p as at 31 March 2020, resulting in a return of (9.4)% during the year. Share price premium/(discount) to NAV* The share price discount to NAV changed from 3.1% at the previous period end to (0.9)% as at 31 March 2020. During the year ended 31 March 2020, the shares traded at an average discount to NAV of 2.4%. Revenue return per ordinary share In the year to 31 March 2020, the revenue return per ordinary share increased from (0.6)p to 0.6p. Ongoing charges* The Company’s ongoing charges ratio for the year ended 31 March 2020 was 1.7% (period ended 31 March 2019: 1.6%). * Alternative Performance Measures (see Glossary on page 77). Main trends and future development A review of the main features of the year ended 31 March 2020, the outlook for the current year and the factors likely to affect the future development, performance and position of the business, can be found in the Chairman’s Statement on pages 6 to 8 and the Portfolio Manager’s Report on pages 9 to 20. The Board’s main focus is on the investment return and strategy, with attention paid to the integrity and success of the investment approach and on the factors which may have an impact on this. Management arrangements The Company is an internally managed investment company for the purposes of the Alternative Investment Fund Managers Directive and is its own alternative investment fund manager. The Board is therefore responsible for the portfolio management and risk management functions of the Company. Pursuant to the terms of the Portfolio Management Agreement, the Board has delegated responsibility for discretionary portfolio management functions to Odyssean Capital LLP as Portfolio Manager, subject always to the overall supervision and control of the Board. The Portfolio Manager is entitled to receive an annual management fee equal to the lower of: (i) 1% of the NAV (calculated before deduction of any accrued but unpaid management fee and any performance fee) per annum; or (ii) 1% per annum of the Company’s market capitalisation. The annual management fee is calculated and accrues daily and is payable quarterly in arrears. In addition, the Portfolio Manager is entitled to a performance fee in certain circumstances. Further details can be found in note 3 to the financial statements. The Portfolio Manager is also entitled to reimbursement for all costs and expenses properly incurred by it in the performance of its duties under the Portfolio Management Agreement. The initial term of the Portfolio Management Agreement is three years commencing on the date of the Company’s launch (the “Initial Term”). The Company may terminate the Portfolio Management Agreement by giving the Portfolio Manager not less than six months’ prior written notice such notice not to be served prior to the end of the Initial Term. The Portfolio Manager may terminate the Portfolio Management Agreement by giving the Company 27 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCStrategic Overview (continued) not less than six months’ prior written notice, such notice not to be served prior to the end of the Initial Term. Further details of the Company’s diversity policy are set out on page 40. Continuing appointment of the Portfolio Manager The Board keeps the ongoing performance of the Portfolio Manager under continual review and the Management Engagement Committee conducts an annual appraisal of the Portfolio Manager’s performance and makes a recommendation to the Board about the continuing appointment of the Portfolio Manager. The Management Engagement Committee has reviewed Odyssean’s performance, with respect to their provision of portfolio management and other services. Due consideration was given to the quality and continuity of its personnel, succession planning and investment processes. Alongside the performance review, the Committee completed an appraisal of the terms of the Portfolio Management Agreement to ensure that the terms remained competitive and in the interest of the Company. The Portfolio Manager has executed the investment strategy according to the Board’s expectations and it is the opinion of the Directors that the continuing appointment of the Portfolio Manager on the terms agreed is in the interests of shareholders as a whole. Employees, human rights, social and community issues The Board recognises the requirement under Companies Act 2006 to detail information about human rights, employees and community issues, including information about any policies it has in relation to these matters and the effectiveness of these policies. These requirements do not apply to the Company as it has no employees, all the Directors are non-executive and it has outsourced all its functions to third party service providers. The Company has therefore not reported further in respect of these provisions, however, it does expect its service providers and portfolio companies to respect these requirements. Environmental, social and governance issues The Company has no employees, property or activities other than investments, so its direct environmental impact is minimal. In carrying out its activities and in its relationships with service providers, the Company aims to conduct itself responsibly, ethically and fairly. The Board is comprised entirely of non-executive Directors and the day-to-day management of the Company’s business is delegated to the Portfolio Manager. The Portfolio Manager aims to be a responsible investor and believes it is important to invest in companies that act responsibly in respect of environmental, ethical and social issues. The Portfolio Manager is specifically looking to invest in companies which have average or above average ESG characteristics or practices, but where improvement potential exists. Being mindful of the smaller company nature of many of the portfolio companies, the Portfolio Manager has a pragmatic engagement approach, focused on dialogue with portfolio companies around their performance, disclosure and general practices compared with best-in-class peers, and seeking positive changes in specific areas. The Directors believe that proxy voting is an important part of the corporate governance process. It is the policy of the Company to vote at all shareholder meetings of investee companies, and the Board has delegated voting activities to the Portfolio Manager. The Portfolio Manager follows relevant regulatory requirements with an aim to make voting decisions which will best support growth in shareholder value and will commonly take into account best practices regarding corporate governance, board composition, remuneration and ESG issues. The Portfolio Manager also provides the Directors with a six-monthly update regarding the voting decisions made in respect of the investee companies. Board diversity As at 31 March 2020, the Board of Directors of the Company comprised two male and two female Directors. The Board firmly believes in the benefits of cognitive diversity and remains committed to ensuring that the Company’s Directors bring a wide range of skills, knowledge, experience, backgrounds and perspectives. Modern slavery While the Company is not within the scope of the Modern Slavery Act 2015 and it is not, therefore, obliged to make a slavery and human trafficking statement, the Company considers its supply chains to be of low risk as its principal service providers are the professional advisers set out in the Corporate Information section on page 80. 28 ODYSSEAN INVESTMENT TRUST PLCRisk Management Role of the Board for risk The Directors have overall responsibility management and internal control within the Company. They recognise that risk is inherent in the Company’s operation and that effective risk management is an important element in the success of the organisation. The Directors have delegated responsibility for the assurance of the risk management process and the review of mitigating controls to the Audit Committee. The Directors, when setting the risk management strategy, also determine the nature and extent of the significant risks and its risk appetite in implementing this strategy. The principal risks and uncertainties which the Company faces are set out on pages 30 and 31. Internal control review The Board is responsible for the internal controls relating to the Company, including the reliability of the financial reporting process, and for reviewing their effectiveness. An ongoing process, in accordance with the FRC Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, has been established for identifying, evaluating and managing the principal risks faced by the Company. This process, which is regularly reviewed, together with key procedures established with a view to providing effective financial control, has been in place throughout the year ended 31 March 2020 and up to the date of this Report. The internal control systems are designed to ensure that proper accounting records are maintained, that the financial information on which business decisions are made and which are issued for publication is reliable and that the assets of the Company are safeguarded. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of failure to achieve the Company’s investment objective. It should be recognised that such systems can only provide reasonable, not absolute, assurance against material misstatement or loss. The Directors have carried out a review of the effectiveness of the Company’s risk management and internal control systems as they have operated over the period and up to the date of approval of this Report. There were no matters arising from this review that required further investigation and no significant failings or weaknesses were identified. Internal control assessment process Robust risk assessments and reviews of internal controls are undertaken regularly in the context of the Company’s overall investment objective. The Board, through the Audit Committee, has categorised risk management controls under the following key headings: corporate strategy; published information, compliance with laws and regulations; relationships with service providers; and investment and business activities. In arriving at its judgement of what risks the Company faces, the Board has considered the Company’s operations in the light of the following factors: – – – – – the nature and extent of risks which it regards as acceptable for the Company to bear within its overall business objective; the threat of such risks becoming reality; the Company’s ability to reduce the incidence and impact of risk on its performance; the cost to the Company and benefits related to the review of risk and associated controls of the Company; and the extent to which the third parties operate the relevant controls. A risk matrix has been produced so that the risks identified and the controls in place to mitigate those risks can be monitored. The risks are assessed on the basis of the likelihood of them happening, the impact on the business if they were to occur and the effectiveness of the controls in place to mitigate them. This risk register is reviewed by the Audit Committee regularly. Most of the day-to-day management functions of the Company are sub-contracted, and the Directors therefore obtain regular assurances and information from key third party suppliers regarding the internal systems and controls operating in their organisations. In addition, each of the third parties is requested to provide a copy of its report on internal controls each year, which is reviewed by the Audit Committee. 29 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCRisk Management (continued) Principal risks and uncertainties The Company is exposed to a variety of risks and uncertainties that could cause its asset price or the income from the investment portfolio to reduce, possibly by a sizeable percentage in the most adverse circumstances. The Board, through delegation to the Audit Committee, has undertaken a robust assessment and review of the principal and emerging risks facing the Company, together with a review of any new risks which may have arisen during the year, including those that would threaten its business model, future performance, solvency or liquidity. These risks are formalised within the Company’s risk matrix. The Company’s risk matrix is formally reviewed twice a year at each Audit Committee meeting. The Directors formally discuss emerging risks at the other Board meetings held during the year. COVID-19 has had a material negative impact on the valuation of the Company’s assets and on the performance of a number of its underlying holdings. The Portfolio Manager has taken steps to assess the anticipated effects on each holding, particularly in terms of liquidity and balance sheets. The principal financial risks and the Company’s policies for managing these risks and the policy and practice with regard to financial instruments are summarised in note 12 to the financial statements. The Board has also identified the following additional risks and uncertainties: Risk How the risk is managed Investment performance is not comparable to the expectations of investors Consistently poor performance could lead to a fall in the share price and a widening of the discount. The success of the Company depends on the Portfolio Manager’s ability to identify, acquire and realise investments in accordance with the Company’s investment policy. This, in turn, depends on the ability of the Portfolio Manager to apply its investment processes and identify suitable investments. The Board reviews and discusses the Company’s performance against its investment objective and policy, as well reviewing performance in comparison to industry peers and the broader comparative market. The Board also keeps the performance of the Portfolio Manager under continual review, along with a review of significant stock decisions and the overall rationale for holding the current portfolio. In addition, the Management Engagement Committee conducts an annual appraisal of the Portfolio Manager. Share price performance The market price of the Company’s shares, like shares in all investment companies, may fluctuate independently of the NAV and thus may not reflect the underlying NAV of the shares. The shares could trade at a discount or premium to NAV at different times, depending on factors such as market conditions, investors’ perceptions of the merits of the Company’s objective and investment policy, supply and demand for the shares and the extent investors value the activities of the Company and/or the Portfolio Manager. The Board monitors the relationship between the share price and the NAV, including regular review of the level of discount relative to that of companies in the sector. The Company has taken powers to re-purchase shares and will consider doing so to reduce the volatility of any share price discount. The Company has also taken powers to issue shares (only at a premium to NAV) to provide liquidity to the market to meet investor demand by way of issue of further shares. In addition, in the seventh year following the IPO (and every seventh year thereafter), the Board will provide shareholders with an opportunity to realise their shares at the applicable NAV. 30 ODYSSEAN INVESTMENT TRUST PLCRisk Management (continued) Portfolio Manager – loss of personnel or reputation Risk How the risk is managed and identification selection of The investment opportunities and the management of the day-to-day activities of the Company depends on the diligence, skill, judgement and business contacts of the Portfolio Manager’s investment professionals and the information and deal flow they generate during the normal course of their activities. The Company’s future success depends on the continuing ability of these individuals to provide services and the Portfolio Manager’s ability to strategically recruit, retain and motivate new talented personnel as required. The departure of some or all of the Portfolio Manager’s investment professionals could prevent the Company from achieving its investment objective and give rise to a significant public perception risk regarding the potential performance of the Company. The Board maintains a good level of communication and has a good relationship with the Portfolio Manager, and regularly reviews the Portfolio Manager’s performance at Board meetings. The Portfolio Manager’s Compliance Officer also reports to the Board regularly and the Portfolio Manager would report to the Board immediately in the event of any change in key personnel. Stuart Widdowson was on compassionate leave for part of 2019 and the Board is pleased that he resumed his role as Key Man of the Company on 31 December 2019. The measures put in place by the Portfolio Manager to cover Mr Widdowson’s period of absence ensured that the portfolio continued to be managed in accordance with the principles and investment strategy set out at the time of the Company’s launch. Material changes within the Portfolio Manager’s organisation Material changes could occur within the Portfolio Manager’s organisation or its affiliates which are to the detriment of the Company’s standing in respect of its competitors and its profitability. The Portfolio Manager has advance notice of any material changes within its organisation and would report to the Board immediately in the event of any such changes, including within its organisation and affiliates or to its key personnel. Valuation of unquoted investments The Company may invest in unquoted companies from time to time. Such investments, by their nature, involve a higher degree of valuation and performance uncertainties and liquidity risks than investments in listed and quoted securities and they may be more difficult to realise. Reliance on the performance of third-party service providers The Company has no employees and the Directors have been appointed on a non-executive basis. The Company is reliant upon the performance of third-party service providers for its executive function. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a material adverse effect on the operation of the Company. All financial information is reviewed by the Board at regular meetings. The Board and/or Chairman of the Audit Committee will approve the valuation of unquoted investments prior to their reflection in the Company’s NAV. No unquoted investments were held by the Company during the year. The Board has appointed third party service providers with relevant experience. Each third party service provider is monitored by the Board and their roles are evaluated at least annually by the Management Engagement Committee. The Board has considered the operational risks associated with COVID-19 relating to the functioning of all of the service providers to the Company. Each service provider has continued to operate with its employees working remotely and service has not been disrupted. The Board continues to monitor the performance of all service providers given the current requirements for employees to work remotely where they are able to do so. 31 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCThe Board has also considered the Company’s financial position and its ability to liquidate its portfolio to meet expenses or other liabilities as they fall due. In considering this, the Board notes that: – – – the Company primarily invests in companies listed and traded on stock exchanges. These are actively traded and, whilst perhaps less liquid than larger quoted companies, the portfolio is well diversified; the Company’s portfolio currently includes a large position in cash. Cash balances can be varied due to changes in market conditions, but positive cash levels are expected to be maintained over the period; and the expenses of the Company are predictable and modest in comparison to the assets in the portfolio. There are no commitments that would change that position. Based on this assessment, the Directors are confident that the Company’s investment approach, portfolio management and balance sheet approach will ensure that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three years. Approval This Strategic Report has been approved by the Board of Directors and signed on its behalf by: Jane Tufnell Chairman 8 June 2020 Risk Management (continued) Going concern The Directors assessed the going concern of the Company in light of its current trading performance. They looked at the forecasts for the coming year and applied stress tests for adverse scenarios. As a result, it was determined that the Company has sufficient liquidity to cover all anticipated payments during that period. The Directors also considered the regulatory capital of the Company and determined that, based on the latest approved forecasts, the Company will have sufficient regulatory capital for the same period. The Directors have considered the impact of COVID-19 on the Company’s financial position and have considered a detailed assessment of the Company’s ability to meet its liabilities as they fall due. This included stress and liquidity tests which modelled the effects of further substantial market falls, and significantly reduced market liquidity, to that experienced to date in connection with the coronavirus pandemic. At the time of approving the financial statements, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Viability statement The Board has assessed the prospects of the Company over a three-year period. This assessment period has been chosen as the Board believes it represents an appropriate period given the long-term investment horizons of the Company. In considering the viability of the Company, the Directors have conducted a robust assessment of each of its principal risks and uncertainties (as set out on pages 30 and 31), specifically Key Man risk, and the impact on the Company’s portfolio of a significant fall in the UK markets. The Directors do not expect there to be any significant change in the current principal risks and adequacy of the mitigating factors in place over the period of this assessment and therefore, believe the going concern and viability period assessment remains appropriate. The effect of Brexit on the Company and the portfolio has been considered. Whilst it is challenging to quantify any impact that should arise from a change in the UK’s relationship with the EU, it is not believed that there will be a fundamental bearing on the business. Any change arising from Brexit will likely bring investment opportunities as well as headwinds and the Company’s investment strategy will remain appropriate in such an environment. 32 ODYSSEAN INVESTMENT TRUST PLCGovernance GOVERNANCE Board of Directors and Portfolio Manager 34 35 Directors’ Report 37 Corporate Governance Statement 42 Audit Committee Report 45 Directors’ Remuneration Report 49 Statement of Directors’ Responsibilities Board of Directors as at 31 March 2020 34 Jane Tufnell Chairman Jane started her career in 1986 joining County NatWest, firstly in corporate finance and then moving to fund management where she jointly ran the NatWest pension fund's exposure to UK smaller companies. In 1994, Jane co-founded Ruffer Investment Management Limited where she worked for over 20 years to build the business to an AUM of £20 billion, before leaving in 2014. Jane now has a variety of directorships including Schroder UK Public Private Trust plc and Record plc, the currency management specialist. She is also a non-executive director and chair-designate of ICG Enterprise Trust plc. She was previously a director of The Diverse Income Trust plc and JPM Claverhouse Investment Trust plc. Date of appointment: 21 December 2017 Arabella Cecil Senior Independent Director Arabella began working in finance in 1987, training in Milan and Paris before CL-Laing in London, where she headed the firm's Extel-rated food producers research team. From 1996, she worked as a freelance photojournalist and filmmaker, and in 1998, she founded a media company which specialised in the IMAX® format. Between 2008 and 2012, she worked for Culross Global Management, ultimately as a member of the firm’s Investment and Risk Committees. In 2012, she co-founded BACIT Limited serving as Chief Investment Officer, and from 2015, as a non-executive director until the company became Syncona. She served as Chief Investment officer of Syncona’s fund portfolio until April 2019, and in May 2019, established Hyde Capital Partners. Date of appointment: 31 January 2018 Peter Hewitt Chairman of the Management Engagement Committee Peter has 35 years’ investment management experience. In 1983, he joined Ivory & Sime managing first US equities and then moving onto UK smaller companies from 1987 to 1992. He then focussed on management of UK pension fund accounts until 1996. He moved to Murray Johnstone as Head of UK Equities with a focus on UK income funds. In 2000, he re-joined Friends Ivory & Sime and specialised in management of investment trust funds and products. In 2008, he launched BMO Managed Portfolio Trust (formerly F&C Managed Portfolio Trust) onto the LSE and remains the current investment manager of the company. He is currently a director of Global Equities at BMO Global Asset Management Limited. Date of appointment: 31 January 2018 Richard King Chairman of the Audit Committee Richard spent 35 years with Ernst and Young LLP (EY) becoming deputy managing partner of UK & Ireland and a member of both the Europe, Middle East, India and Africa (EMEIA) Board and Global management group. Since leaving EY, Richard has been involved either as chairman or non-executive director on a variety of private and public companies and has been involved in company disposals in excess of £400 million. Richard is a non-executive director of GYG plc. He is also on the advisory board of Frogmore Property Group and is the chair of trustees for the Willow Foundation. Date of appointment: 21 December 2017 ODYSSEAN INVESTMENT TRUST PLCDirectors’ Report The Directors are pleased to present the Annual Report and Financial Statements for the year ended 31 March 2020. In accordance with Companies Act 2006 (as amended), the Listing Rules and the Disclosure Guidance and Transparency Rules, the Corporate Governance Statement, Directors' Remuneration Report, Report from the Audit Committee and the Statement of Directors' Responsibilities should be read in conjunction with one another, and the Strategic Report. As permitted by legislation, some of the matters normally included in the Directors’ Report have instead been included in the Strategic Report, as the Board considers them to be of strategic importance. Directors The Directors in office during the year and at the date of this report, and their biographical details, are shown on page 34. None of the Directors or any persons connected with them had a material interest in the transactions and arrangements of, or the agreement with, the Portfolio Manager during the year. Performance and outlook A summary of the Company’s performance during the year ended 31 March 2020 and the outlook for the forthcoming year is set out in the Strategic Report on pages 6 to 32. Corporate governance The Company’s Corporate Governance Statement is set out on pages 37 to 41 and forms part of this report. Details regarding independent professional advice, insurance and indemnity are set out in that statement on page 41. Share capital Share issues On 20 June 2018, the Company was granted a block listing of 5.0 million ordinary shares to be listed to the premium segment of the Official List of the FCA and admitted to trading on the premium segment of the LSE’s main market. During the year ended 31 March 2020, no shares were issued under the block listing (period ended 31 March 2019: 800,000 shares were issued). As at the date of this report, a balance of 4.2 million shares remain under this block listing. No other share issues were made during the year or since the year end. Proposals for the renewal of the Directors’ authority to issue shares will be set out in the Notice of AGM. Purchase of own shares At the AGM held on 27 June 2019, the Directors were granted the authority to buy back up to 13,229,755 ordinary shares, being 14.99% of the ordinary shares in issue at the time of the passing of the resolution. No shares were bought back under this authority during the year. Subsequent to the year end of 31 March 2020 and up to 8 June 2020, the date of signing this report, the Company purchased in the stock market 275,000 shares (with a nominal value of £2,750.00) for treasury, at a total cost of £230,000, representing 0.3% of the issued share capital as at 31 March 2020. The share purchases were made with a view to reducing discount volatility and maintaining the middle market price at which the shares traded close to the NAV. Current share capital As at 31 March 2020, there were 88,257,211 ordinary shares in issue, none of which were held in treasury. At general meetings of the Company, shareholders were entitled to one vote on a show of hands and, on a poll, to one vote for every share held. The total voting rights of the Company as at 31 March 2020 were 88,257,211. As at 8 June 2020, 275,000 shares were held in treasury. Accordingly, the total voting rights of the Company as at the date of this report were 87,982,211. There are no restrictions concerning the transfer of securities in the Company or on voting rights; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; and no agreements which the Company is party to that might affect its control following a successful takeover bid. 35 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCDirectors’ Report (continued) Substantial shareholdings The Company has been informed of the following notifiable interests in the voting rights of the Company as at 31 March 2020: Number of shares % of voting rights KPMG LLP has expressed its willingness to continue in office as Auditor of the Company and resolutions for its re- appointment and for the Audit Committee to determine its remuneration will be proposed at the forthcoming AGM. Schroders plc Harwood Capital LLP Brewin Dolphin Limited Ian Armitage Investec Wealth and Investment Limited 14,406,561 13,800,000 8,276,500 6,600,000 4,471,900 16.3 15.6 9.4 7.5 5.1 instruments comprise Financial risk management The Company’s financial its investment portfolio, cash balances, debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement and accrued income. The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 12 to the Financial Statements. The Company has not been informed of any changes to the above interests between 31 March 2020 and the date of this report. Articles of Association The Company’s Articles of Association may only be amended by a special resolution at a general meeting of the shareholders. Requirements of the Listing Rules Listing Rule 9.8.4 requires the Company to include certain information in a single identifiable section of the Annual Report or a cross-reference table indicating where the information is set out. The information required under Listing Rules 9.8.4(5) and 9.8.4(6) in relation to Peter Hewitt waiving his Director’s fee is set out on page 46. The Directors confirm that there are no additional disclosures to be made in relation to Listing Rule 9.8.4. Auditor The Directors who held office at the date of approval of the Directors’ Report confirm that, so far as they are aware, there is no relevant audit information of which the Company’s Auditor is unaware; and each Director has taken all the steps that they ought to have taken as a Director to make themself aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information. Post Balance Sheet Events Details of the post Balance Sheet events are set out in note 14 to the Financial Statements. Greenhouse gas emissions The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emission-producing sources under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. Annual General Meeting The AGM of the Company will be held at 10.30 am on Tuesday, 22 September 2020 at the offices of Odyssean Capital LLP, 6 Stratton Street, Mayfair, London W1J 8LD. The Notice of the AGM will be circulated to shareholders in due course. By order of the Board Link Company Matters Limited Company Secretary 8 June 2020 36 ODYSSEAN INVESTMENT TRUST PLCCorporate Governance Statement This Corporate Governance Statement forms part of the Directors’ Report. Introduction from the Chairman I am pleased to present this year’s corporate governance statement. The Board is accountable to shareholders for the governance of the Company’s affairs and is committed to maintaining the highest standard of corporate governance for the long-term sustainable success of the Company, generating value for shareholders, other stakeholders and contributing to the wider society through investing in its portfolio companies. In this statement, the Company reports on its compliance with the AIC Code of Corporate Governance (the “AIC Code”), sets out how the Board and its committees have operated during the past year and describes how the Board exercises effective stewardship over the Company’s activities in the interests of shareholders and other stakeholders of the Company. In February 2019, the AIC published a revised version of the AIC Code to reflect the changes made to the 2018 UK Corporate Governance Code (the “UK Code”). The 2019 AIC Code applies to accounting periods which begun on or after 1 January 2019. The Company has therefore reviewed its corporate governance framework to ensure compliance with the principles and recommendations of the 2019 AIC Code. As a result, our reporting on corporate governance is further expanded this year. In particular, on pages 23 to 26, we set out a full report on how we meet the duties placed on Directors under Section 172 of the Companies Act 2006. I am confident that we have properly undertaken our duties to shareholders and other stakeholders, and taken a long-term approach to the management of the Company. Statement of compliance with the AIC Code The Board of the Company has considered the principles and recommendations of the AIC Code which addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company as an investment trust. The Board considers that reporting against the principles and recommendations of the AIC Code (which incorporates the UK Code), will provide better information to shareholders. the FCA. A copy of the AIC Code can be obtained via the AIC’s website at www.theaic.co.uk. A copy of the UK Code can be obtained at www.frc.org.uk. The Board recognises the importance of a strong corporate governance culture and has established a framework for corporate governance which it considers to be appropriate to the business of the Company. The Board considers that it has managed its affairs in compliance with the AIC Code and the relevant provisions of the UK Code throughout the year ended 31 March 2020, except where it has concluded that adherence or compliance with any particular principle or recommendation of either of the Codes would not have been appropriate to the Company’s circumstances. Similar to the UK Code, the AIC Code specifies a “comply or explain” basis and the Board’s report under this section explains any deviation from its recommendations. The UK Code includes provisions relating to: – – the role of the chief executive; and executive directors’ remuneration. The Board considers these provisions are not relevant to the position of the Company, being an externally-managed investment company. The Company has therefore not reported further in respect of these provisions. The Board of Directors The Board of Directors is collectively responsible for the long-term success of the Company. It provides overall leadership, sets the strategic aims of the Company and ensures that the necessary resources are in place for the Company to meet its objectives and fulfil its obligations to shareholders within a framework of high standards of corporate governance and effective internal controls. The Directors are responsible for the determination of the Company’s investment policy and investment strategy and have overall responsibility for the Company’s activities, including the review of investment activity and performance and the control and supervision of the Portfolio Manager. The Financial Reporting Council (the “FRC”) has endorsed the AIC Code. The terms of the FRC’s endorsement mean that AIC members who report against the AIC Code meet fully their obligations under the UK Code and the related disclosure requirements contained in the Listing Rules of The Board consists of four non-executive Directors. The Board conducted an internal evaluation of its size, skills and experience in January 2020. It concluded that it has substantial recent and relevant experience of investment trusts and financial and public company management. 37 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCCorporate Governance Statement (continued) Other than their letters of appointment as Directors, none of the Directors has a contract of service with the Company nor has there been any other contract or arrangement between the Company and any Director at any time during the year. Directors are not entitled to any compensation for loss of office. Copies of the letters of appointment are available on request from the Company Secretary and will be available at the AGM. Chairman and Senior Independent Director The Chairman, Jane Tufnell, is deemed by her fellow independent Board members to be independent in character and judgement, and free of any conflicts of interest. She leads the Board and is responsible for its overall effectiveness in directing the Company. In liaison with the Company Secretary, she ensures that the Directors receive accurate, timely and clear information. Mrs Tufnell considers herself to have sufficient time to spend on the affairs of the Company. She has no significant commitments other than those disclosed in her biography on page 34. The role and responsibilities of the Chairman are clearly defined and set out in writing, a copy of which is available on the Company’s website. Arabella Cecil is the Senior Independent Director of the Company. She provides a sounding board for the Chairman and serves as an intermediary for the other Directors and shareholders. Miss Cecil also provides a channel for any shareholder concerns regarding the Chairman and will take the lead in the annual evaluation of the Chairman by the other independent Directors. The role and responsibilities of the Senior Independent Director are clearly defined and set out in writing, a copy of which is available on the Company’s website. Culture The Chairman demonstrates objective judgement, promotes a culture of openness and debate, and facilitates effective contributions by all Directors. The Directors are required to act with integrity, lead by example and promote this culture within the Company. The Board seeks to ensure the alignment of the Company’s purpose, values and strategy with the culture of openness, debate and integrity through ongoing dialogue, and engagement with the Portfolio Manager and the Company’s other service providers. The culture of the Board is considered as part of the annual performance evaluation process which is undertaken by each Director. The culture of the Company’s service providers is also considered by the Board during the annual review of their performance and while considering their continuing appointment. 38 Board operation The Directors have adopted a formal schedule of matters specifically reserved for their approval. A copy of this schedule is available on the Company’s website. These matters include, but are not limited to, the following: – – – – approval of the Company’s investment policy, long- term objectives and business strategy; approval of the policies regarding insurance, hedging, borrowing limits and corporate security; approval of the Company’s Annual and Interim Reports, financial accounting statements policies, prospectuses, circulars and other shareholder communications; and approval for raising new capital and major financing facilities; – Board appointments and removals; – – appointment and removal of the Portfolio Manager, Auditor and the Company’s other service providers; and approval of the Company’s annual operating budgets. Board meetings The Company has four scheduled Board meetings a year with additional meetings in respect of share issuances and regulatory matters arranged as necessary. At each scheduled Board meeting, the Directors follow a formal agenda which is circulated in advance by the the Company Secretary. The Company Secretary, Administrator and the Portfolio Manager regularly provide the Board with financial information, including an annual expenses budget, together with briefing notes and papers in relation to changes in the Company’s economic and financial environment, statutory and regulatory changes and corporate governance best practice. A description of the Company’s risk management and internal control systems is set out in the Strategic Report on pages 29 to 31. Board Committees Given the number of Directors, the Board does not consider it necessary for the Company to establish separate nomination and remuneration committees and all of the matters that can be delegated to such committees are considered by the Board as a whole. The Board considers that the combined knowledge and experience of its members enable it to successfully fulfil the role of these committees. ODYSSEAN INVESTMENT TRUST PLCCorporate Governance Statement (continued) The Board has established three committees to assist with its operations: the Audit Committee; the Management Engagement Committee and the Disclosure Committee. Each committee’s delegated responsibilities are clearly defined in formal terms of reference, which are available on the Company’s website. Audit Committee The Audit Committee is chaired by Richard King and comprises all Directors. It meets formally at least twice a year. The Board believes it is appropriate for the Chairman of the Company to be a member of the Audit Committee as she provides a valuable contribution to the Committee and her membership enhances the operation of the Committee and its interaction with the Board. The Board considers that the members of the Audit Committee have the requisite skills and experience to fulfil the responsibilities of the Committee and that the Committee, as a whole, has the competence relevant to the investment trust sector. The Chairman of the Audit Committee has significant recent and relevant financial experience. The Audit Committee has direct access to the Company’s Auditor, and provides a forum through which the Auditor reports to the Board. Representatives of the Auditor attend meetings of the Audit Committee at least twice a year. Further details about the Audit Committee and its activities during the period under review are set out on pages 42 to 44. Management Engagement Committee Peter Hewitt is the Chairman of the Management Engagement Committee, which comprises all Directors. The Committee meets at least once a year to review the ongoing performance and the continuing appointment of all service providers of the Company, including the Portfolio Manager. The Committee also considers any variation to the terms of all service providers’ agreements and reports its findings to the Board. Post year end, the Management Engagement Committee carried out a review of the current arrangements for the provision of administration and company secretarial services to the Company. Following this review, the Board approved that Frostrow Capital LLP be appointed to provide these services, in addition to acting as the Company's marketing facilitator. This appointment is expected to take effect from mid-July 2020. The performance of the Company’s service providers is closely monitored by the Committee and in arriving at its decisions regarding the continuing appointment of the service providers, it is aided by the feedback received from the Portfolio Manager on the performance of those service providers. Disclosure Committee The Disclosure Committee is chaired by Jane Tufnell, the Chairman of the Board, and includes Arabella Cecil as its member. The Committee has been established to ensure the identification and disclosure of inside information and the Company’s ongoing compliance with the Market Abuse Regulation. No meetings of the Committee were held during the year. Meeting attendance The number of scheduled Board and Audit Committee meetings held during the year ended 31 March 2020 and the attendance of the individual Directors is shown below: Board Meetings Audit Committee Management Engagement Committee Number entitled to attend Number attended Number entitled to attend Number attended Number entitled to attend Number attended Jane Tufnell Arabella Cecil Peter Hewitt Richard King 4 4 4 4 4 4 4 4 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 39 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCCorporate Governance Statement (continued) Performance evaluation The Directors are aware that they need to continually monitor and improve Board performance and recognise that this can be achieved through regular evaluation of the Board, its committees and the individual Directors; this will provide a valuable feedback mechanism for improving Board’s effectiveness. A process of performance evaluation was undertaken in January 2020 and its report considered by the Board at its meeting held in February 2020. The evaluation of the Board and its Committees, in particular, the Audit Committee, has been carried out by way of formal questionnaires, and the evaluation of the Chairman and the individual Directors has been conducted verbally by the Senior Independent Director and the Chairman, respectively. The independence of the Directors and their ability to commit sufficient time to the Company's activities was considered as part of the evaluation process. As a result of the evaluation, the Board considers that the composition and the structure of the Board and its committees, remained appropriate; there was an adequate balance of skills, knowledge, experience and diversity on the Board; and the Board members worked efficiently together to achieve the Company’s objectives. Individual evaluation demonstrated that each Director continued to contribute effectively in their role. This process is carried out on an annual basis. Although the Company is not a constituent of the FTSE 350, the Board has determined that in line with the recommendation of the AIC Code, an externally facilitated Board evaluation would be carried out in 2021, being the third year since the Company's launch. Independence of Directors The independence of the Directors was reviewed as part of the annual evaluation process and it was found that each Director is considered to be independent in character and judgement and entirely independent of the Portfolio Manager. None of the Directors sits on the boards of any other companies managed by the Portfolio Manager. Tenure The Company has no set policy on the length of the tenure of the Directors. It is intended that all Directors, including the Chairman, would remain on the Board no longer than nine years. However, the Board has agreed that to facilitate a phased and efficient refreshment of the Board, if necessary, the Chairman could stay on for more than nine years as a Director. Re-election of Directors Under the Company’s Articles of Association, Directors are required to retire at the first AGM following their appointment. Thereafter, at each AGM, any Director who has not stood for re-election at either of the two preceding AGMs shall retire. In addition, one-third of the Directors eligible to retire by rotation shall retire from office at each AGM. In addition, in accordance with the AIC Code, all Directors will be subject to annual re-election. Accordingly, all Directors will be standing for re-election at the Company’s forthcoming AGM. As detailed on page 40, following formal performance evaluation, it is considered that each current Director has the necessary skills and experience, and continues to contribute effectively to the management of the Company. In addition, it is believed that the Board has the relevant expertise and sufficient time to provide the appropriate leadership and direction for the Company. Therefore, the Board strongly recommends the re election of each of the Directors on the basis of their experience and expertise in investment matters, their independence and continuing effectiveness and commitment to the Company. Diversity The Board has adopted a diversity policy which reflects its belief in the benefits of cognitive diversity, and remains committed to ensuring that the Company’s Directors bring a wide range of skills, knowledge, experience, backgrounds and perspectives to the Board and its Committees. The Board does not feel that it would be appropriate to set targets as all appointments are made on merit. The Company does not have any other administrative and management bodies as all its functions have been outsourced to third party service providers. Conflicts of interest It is the responsibility of each individual Director to avoid an unauthorised conflict of interest situation arising. The Director must request authorisation from the Board as soon as they become aware of the possibility of an interest that conflicts, or might possibly conflict, with the interests 40 ODYSSEAN INVESTMENT TRUST PLCCorporate Governance Statement (continued) appointment. The Company has also entered into a deed of indemnity with each Director pursuant to which it has agreed to insure, indemnify and/or loan funds to the Director in relation to certain specific liabilities incurred by them in the performance of their duties as a Director of the Company. Relations with shareholders Details regarding the Company’s engagement with its shareholders are set out within the Strategic Report on pages 24 and 25. Internal control review and assessment process Details of the Company’s internal control review and the assessment process are outlined in the Strategic Report on page 29. Company Secretary The Board has direct access to the advice and services of the Company Secretary, Link Company Matters Limited, which is responsible for ensuring that Board and Committee procedures are followed and that applicable regulations are complied with. The Company Secretary is also responsible to the Board for ensuring timely delivery of the information and reports which the Directors require and that the statutory obligations of the Company are met. It is expected that with effect from mid-July 2020, Frostrow Capital LLP will act as OIT's Company Secretary. of the Company (“situational conflicts”). The Company’s Articles of Association authorise the Board to approve such situations, where deemed appropriate. A register of conflicts is maintained by the Company Secretary and is reviewed at Board meetings, to ensure that any authorised conflicts remain appropriate. The Directors are required to confirm at these meetings whether there has been any change to their position. The Board is responsible for considering Directors’ requests for authorisation of situational conflicts and for deciding whether or not the situational conflict should be authorised. The factors to be considered will include: whether the situational conflict could prevent the Director from properly performing their duties; whether it has, or could have, any impact on the Company; and whether it could be regarded as likely to affect the judgement and/ or actions of the Director in question. When the Board is deciding whether to authorise a conflict or potential conflict, only Directors who have no interest in the matter being considered are able to take the relevant decision, and in taking the decision, the Directors must act in a way they consider, in good faith, will be most likely to promote the Company’s success. The Directors are able to impose limits or conditions when giving authorisation if they think this is appropriate in the circumstances. Induction of new Directors The Company has an established process in place for the induction of new Directors. An induction pack will be provided to new Directors by the Company Secretary, containing relevant information about the Company, its constitutional documents and its processes and procedures. New appointees will also have the opportunity of meeting with the Chairman and relevant persons at the Portfolio Manager. Insurance and indemnity provisions The Board has agreed arrangements whereby Directors may take independent professional advice in the furtherance of their duties. The Company has Directors’ and Officers’ liability insurance to cover legal defence costs and public offering of securities insurance in place in respect of the IPO. Under the Company’s Articles of Association, the Directors are provided, subject to the provisions of UK legislation, with an indemnity in respect of liabilities which they may sustain or incur in connection with their 41 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCAudit Committee Report I am pleased to present the Audit Committee Report for the year ended 31 March 2020. – to ensure the effective operation of the Company’s data protection policy. Role of the Audit Committee The primary responsibilities of the Audit Committee are: to monitor the integrity and contents of the Company’s half-yearly reports, annual reports and financial statements and accounting policies, and to review compliance with regulatory and financial reporting requirements; to advise the Board, where requested, on whether the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy; to review the principal and emerging risks facing the Company that would threaten its business model, future performance, solvency or liquidity; to review the Company’s internal financial controls and review the adequacy and effectiveness of the Company’s risk management systems; to assess the prospects of the Company for the next 12 months and to consider its longer-term viability; Matters considered during the period During the year ended 31 March 2020, the Committee met twice and each Director’s attendance at these meetings is set out in the table on page 39. The Committee also met once following the year end. The Committee has: – – – – reviewed the internal controls and risk management systems of the Company and its third party service providers; agreed the audit plan with the Auditor, including the principal areas of focus, and the fees in respect of the audit; received and discussed with the Auditor their report on the results of the audit; and reviewed the Company’s Half-Yearly Report and Annual Report and Financial Statements, discussed the appropriateness of the accounting policies adopted and advised the Board accordingly. The Committee has direct access to the Auditor, KPMG LLP, who attends Committee meetings on a regular basis. The Committee has the opportunity to meet with the Auditor without the Portfolio Manager being present. to consider annually whether there is a need for the Company to have its own internal audit function; The issues considered by the Committee in relation to the Annual Report and Financial Statements were: to oversee the selection process of possible new appointees as external auditor; Significant issue (a) Valuation of investments to make recommendations to the Board in relation to the appointment, re-appointment and removal of the Auditor; to approve the Auditor’s remuneration and its terms of engagement; to review the adequacy and scope of the external audit; to consider the independence, objectivity and effectiveness of the Auditor and the effectiveness of the audit; to approve any non-audit services to be provided by the Auditor and the fees paid for such services; and The Board relies on the Administrator and the Portfolio Manager to use correct listed prices and seeks comfort in the testing of this process through their internal controls reports. The Committee reviewed with the Portfolio Manager and the Administrator the valuation process of the Company’s investments and the systems in place to ensure the accuracy of these valuations. The Committee, in consultation with the Portfolio Manager, has decided not to change any valuations in light of COVID-19 given investments were all quoted on recognised stock exchanges. The Company uses the services of an independent custodian, RBC Investor Services Trust (UK Branch), to hold the assets of the Company. The custodian’s and the Portfolio Manager’s records are reconciled daily. – – – – – – – – – – – – 42 ODYSSEAN INVESTMENT TRUST PLCAudit Committee Report (continued) Other issues (a) Internal controls During the year, the Committee reviewed and, where appropriate, updated the Company’s risk register. This is done on an ongoing basis. The Audit Committee receives a report on internal control and compliance from the Portfolio Manager and discusses this with the Portfolio Manager. Reports from the Company’s other service providers are also reviewed. No significant matters of concern arose from these discussions. The Company does not have an internal audit function as most of its day-to-day operations are delegated to third parties, all of whom have their own internal control procedures. The Committee discussed whether it would be appropriate to establish an internal audit function, and agreed that the existing system of monitoring and reporting by third parties remains appropriate and sufficient. (b) Going concern and long-term viability In line with the AIC Code, the Committee considered the Company’s financial requirements and viability for the forthcoming year and over a longer period of three years. Their considerations have included the recent impact of COVID-19 on the markets and the Company. As a result of this assessment, the Committee concluded that the Company had adequate resources to continue in operation and meet its liabilities as they fall due both for the forthcoming year and over the next two years. Related disclosures are set out on page 32. (c) Maintenance of investment trust status The Portfolio Manager and the Administrator have reported to the Audit Committee to confirm continuing compliance with the requirements for maintaining investment trust status. The position is also discussed with the Auditor as part of the audit process. Following the consideration of the above issues and its detailed review, the Committee was of the opinion that the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy and advised the Board accordingly. Audit fees and non-audit services An audit fee of £30,000 has been agreed in respect of the audit for the year ended 31 March 2020 (period ended 31 March 2019: £29,000). In accordance with the Company’s non-audit services policy, the Audit Committee reviews the scope and nature of all proposed non-audit services before engagement, to ensure that auditor independence and objectivity are safeguarded. The policy includes a list of non-audit services which may be provided by the Auditor provided there is no apparent threat to independence, as well as a list of services which are prohibited. In respect of any permissible non-audit service up to a fee of £10,000 or where any urgent matters arise, the Audit Committee has delegated authority to the Portfolio Manager to approve these between meetings. Non-audit services are capped at 70% of the average of the statutory audit fees for the preceding three years. No non-audit services were provided by the Auditor during the year ended 31 March 2020 (period ended 31 March 2019: reporting accountant services in respect of the IPO prospectus for a fee of £30,000 and review of the 2018 half-yearly report for a fee of £9,000). Further information on the fees paid to the Auditor is set out in note 4 to the Financial Statements on page 66. Effectiveness of the external audit The Audit Committee monitors and reviews the effectiveness of the external audit carried out by the Auditor, including a detailed review of the audit plan and the audit results report, and makes recommendations to the Board on the re-appointment, remuneration and terms of engagement of the Auditor. This review takes into account the experience and tenure of the audit partner and team, the nature and level of services provided, and confirmation that the Auditor has complied with independence standards. Any concerns with the effectiveness of the external audit process would be reported to the Board. No concerns were raised in respect of the year ended 31 March 2020. Independence and objectivity of the Auditor The Committee receives an annual assurance from the Auditor that its independence is not compromised. No non-audit services were provided by the Auditor to the Company during the year. Following a review of the performance of the Auditor, the Committee is satisfied that the Auditor remains independent and objective, and has fulfilled its obligations to the Company and its 43 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCAudit Committee Report (continued) shareholders. There are no contractual obligations that would restrict the Committee in selecting an alternative external auditor. KPMG LLP has been the Auditor to the Company since launch in 2018. The current audit partner is Jatin Patel. No tender for the audit of the Company has been undertaken. The Committee will review the continuing appointment of the Auditor on an annual basis and give regular consideration to the Auditor’s fees and independence, along with matters raised during each audit. Re-appointment of the Auditor Following consideration of the performance of the Auditor, the services provided during the year and a review of its independence and objectivity, the Committee has recommended to the Board the re-appointment of KPMG LLP as Auditor to the Company. In accordance with the requirements relating to the appointment of auditors, the Company would need to conduct an audit tender no later than for the accounting period beginning 1 April 2028. Richard King Chairman of the Audit Committee 8 June 2020 44 ODYSSEAN INVESTMENT TRUST PLCDirectors’ Remuneration Report Statement from the Chairman I am pleased to present the Directors’ Remuneration Report for the year ended 31 March 2020. As the Company has no employees and the Board is comprised wholly of non-executive Directors, the Board has not established a separate Remuneration Committee. Directors’ remuneration is determined by the Board as a whole, at its discretion within an aggregate ceiling of £300,000 per annum, as prescribed in the Company’s Articles of Association. Each Director abstains from voting on their own individual remuneration. During the period, the Board reviewed the levels of Directors’ remuneration while having regard to the Company’s financial position and performance, remuneration in other companies of comparable scale and complexity and market statistics generally. During the year ended 31 March 2020, the annual fees were set out at the rate of £34,000 for the Chairman, £27,500 for the Chairman of the Audit committee and £24,000 for a Director. No changes to these fee levels are proposed for the year ending 31 March 2021. Each of the Directors has agreed to use their applicable Directors’ fees (net of applicable taxes) to acquire the Company’s ordinary shares in the secondary market, subject to regulatory requirements. In relation to any dealings, the Directors will comply with the share dealing code adopted by the Company in accordance with the Market Abuse Regulation. An ordinary resolution will be put to shareholders at the forthcoming AGM to be held in September 2020 to receive and approve the Directors’ Remuneration Report. The Directors’ Remuneration Policy was approved by shareholders at the AGM held on 27 June 2019. The provisions of the Remuneration Policy, as detailed on page  48, will apply until they are next put to shareholders for renewal of that approval, which must be at intervals of not more than three years, or earlier, if proposals are made to vary the policy. The Remuneration Policy is binding and sets the parameters within which Directors’ remuneration may be set. There will be no significant change in the way the Remuneration Policy will be implemented in the course of the next financial year. Company performance The graph below compares the total return to holders of ordinary shares since they were first admitted to trading on the LSE, compared to the total return of the NSCI ex IC plus AIM Total Return Index. Further information about the Company's performance during the year is detailed in the Chairman's Statement and the Portfolio Manager's Report on pages 6 to 20. OIT Share Price NSCI ex IT plus AIM Total Return Index 120 110 100 90 80 70 60 M ay 2018 Jul 2018 Sep 2018 N ov 2018 Jan 2019 M ar 2019 M ay 2019 Jul 2019 Sep 2019 N ov 2019 Jan 2020 M ar 2020 As at 31 March 2020. Performance measured from close of business on 1 May 2018. Share performance since inception assumes IPO price of 100.0p. Source: Bloomberg, Factset. Rebased to 100. 45 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCDirectors’ Remuneration Report (continued) Directors’ remuneration for the year ended 31 March 2020 (audited) The single total figure table below details the remuneration received by the Directors who served during the year: Director Fees Taxable benefits Total Fees Taxable benefits Total Year ended 31 March 2020 Period ended 31 March 2019 Jane Tufnell¹ Arabella Cecil2,3 Peter Hewitt2 Richard King1 £34,000 £24,000 –4 £27,500 £85,500 – – £595 – £595 £34,000 £24,000 £595 £27,500 £86,095 £31,1671 £17,608²,³ – 2,4 £25,2081 £73,983 – – £723 – £723 £31,167 £17,608 £723 £25,208 £74,706 ¹ Appointed on 21 December 2017. ² Appointed on 31 January 2018. ³ Until 4 February 2019, Arabella Cecil invoiced her Director’s fee through Gravity Partners Limited. ⁴ Peter Hewitt is not receiving a fee in respect of his services as a Director to the Company; this is owing to his employment as a director of Global Equities in BMO Global Asset Management Limited. There are no variable elements in the remuneration payable to the Directors. Taxable benefits included in the above table are in respect of the amounts reimbursed to Directors as travel and other expenses properly incurred by them in the performance of their duties. Relative importance of spend on pay The table below shows the proportion of the Company’s income spent on pay. Year ended 31 March 2020 Period ended 31 March 2019 Spend on Directors’ fees* Management fee and other expenses £86,000 £1,313,000 £74,000 £1,165,000 * As the Company has no employees, the total spend on pay on remuneration comprises only the Directors’ fees. In the absence of any employees, dividend payments made during the year and amount spent on shares buybacks, the management fee and other expenses have been included because the Directors believe it will help shareholders’ understanding of the relative importance of the spend on pay. The figures for this measure are the same as those shown in notes 3 and 4 to the Financial Statements. 46 ODYSSEAN INVESTMENT TRUST PLCDirectors’ Remuneration Report (continued) Directors’ interests (audited) The Company’s Articles of Association do not require a Director to own shares in the Company. The interests of the Directors and any connected persons in the ordinary shares of the Company at 31 March 2020 and 8 June 2020, the date of this report, are shown in the table below: Jane Tufnell Arabella Cecil Peter Hewitt Richard King 8 June 2020 Number of shares 31 March 2020 Number of shares 31 March 2019 Number of shares 559,086 139,021 35,000 55,935 559,086 133,636 35,000 55,935 519,554 114,717 35,000 38,885 None of the Directors or any person connected with them had a material interest in the Company’s transactions, arrangements or agreements during the year. Voting at AGM The Directors’ Remuneration Report for the period ended 31 March 2019 and the Directors’ Remuneration Policy were approved at the AGM held on 27 June 2019. The votes cast by proxy on these resolutions were: Directors’ Remuneration Report Directors’ Remuneration Policy Number of votes % of votes cast Number of votes % of votes cast For Against At Chairman’s discretion Total votes cast Votes withheld 26,192,463 0 0 26,192,463 0 100.0 0.0 0.0 100.0 0.0 26,192,463 0 0 26,192,463 0 100.0 0.0 0.0 100.0 0.0 47 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCDirectors’ Remuneration Report (continued) Remuneration policy The Company follows the recommendation of the AIC Code that non executive Directors’ remuneration should reflect the time commitment and responsibilities of the role. The Board’s policy is that the remuneration of non-executive Directors should reflect the experience of the Board as a whole, and be determined with reference to comparable organisations and appointments. All Directors are non-executive, appointed under the terms of letters of appointment. There are no service contracts in place. The Company has no employees. The fees for the non-executive Directors are determined within the limits (not to exceed £300,000 per annum) set out in the Company’s Articles of Association, or any greater sum that may be determined by special resolution of the Company. Directors are not eligible for bonuses, share options, long-term incentive schemes or other performance-related benefits as the Board does not believe that this is appropriate for non-executive Directors. There are no pension arrangements or retirement benefits in place for the Directors of the Company. Under the Company’s Articles of Association, if any Director is called upon to perform or render any special duties or services outside their ordinary duties as a Director, they may be paid such reasonable additional remuneration as the Board, or any committee authorised by the Board, may from time to time determine. The Directors are entitled to be repaid all reasonable travelling, hotel and other expenses properly incurred by them in or about the performance of their duties as Director, including any expenses incurred in attending meetings of the Board or any committee of the Board or general meetings of the Company. insurance cover Directors’ and Officers’ maintained by the Company on behalf of the Directors. liability is 48 Directors’ fee levels Component Role Rate at 1 April 2020 Purpose of Remuneration Annual fee Chairman £34,000 Annual fee Additional fee Additional fee £24,000 £3,500 Non-executive Director Chairman of the Audit Committee All Directors N/A Expenses All Directors N/A Commitment as Chairman1 Commitment as non-executive Director2 For additional responsibilities and time commitments3 For extra or special services performed in their role as a Director4 Reimbursement of expenses incurred in the performance of duties as a Director 1 The Chairman of the Board is paid a higher fee than the other Directors to reflect the more onerous role. 2 The Company’s Articles of Association limit the aggregate fees payable to the Board of Directors to £300,000 per annum. 3 The Chairman of the Audit Committee is paid a higher fee than the other Directors to reflect the more onerous role. 4 Additional fees would only be paid in exceptional circumstances in relation to the performance of extra or special services. Each of the Directors has agreed to use their applicable Directors’ fees (net of applicable taxes) to acquire the Company’s ordinary shares in the secondary market, subject to regulatory requirements. Fees are reviewed annually in accordance with the above policy. The fee for any new Director appointed to the Board will be determined on the same basis. The Company is committed to ongoing shareholder dialogue and any views expressed by shareholders on the fees being paid to Directors would be taken into consideration by the Board when reviewing the Directors’ remuneration policy and in the annual review of Directors’ fees. Compensation will not be made upon early termination of appointment. Approval The Directors’ Remuneration Report was approved by the Board and signed on its behalf by: Jane Tufnell Chairman 8 June 2020 ODYSSEAN INVESTMENT TRUST PLCStatement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulation. Company law requires the Directors to prepare financial statements for each financial period. Accordingly, the Directors have prepared the Financial Statements in accordance with IFRS as adopted by the EU. Under company law, the 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 Company and of the profit or loss of the Company for that period. In preparing the Financial Statements, the Directors are required to: – – – – select suitable accounting policies in accordance with IAS 8: “Accounting Policies, Changes in Accounting them Estimates and Errors” and consistently; then apply present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; state whether applicable IFRS 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 Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the FCA. The Financial Statements are published on the Company’s website, www.oitplc.com, which is maintained on behalf of the Company by the Portfolio Manager. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the Financial Statements since they were initially presented on the website. Under the Portfolio Management Agreement, the Portfolio Manager is responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction. We confirm that to the best of our knowledge: – – the Financial Statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Company; and the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. The Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. On behalf of the Board Jane Tufnell Chairman 8 June 2020 49 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCFinancial Statements FINANCIAL STATEMENTS Independent Auditor’s Report 51 Statement of Comprehensive Income 56 Statement of Changes in Equity 57 58 Balance Sheet 59 Cash Flow Statement 60 Notes to the Financial Statements Independent auditor’s report to the members of Odyssean Investment Trust PLC We were first appointed as auditor by the shareholders on 29 November 2018. The period of total uninterrupted engagement is for the financial period ended 31 March 2019 and year ended 31 March 2020. We have fulfilled our ethical responsibilities under, and we remain independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided. Overview Materiality Company financial statements as a whole £0.82m (2019: £0.85m) 1% of Total Assets (2019: 1%) Key audit matters 2020 Recurring risk Carrying amount of quoted investments 1. Our opinion is unmodified We have audited the financial statements of Odyssean Investment Trust PLC (“the Company”) for the year ended 31 March 2020 which comprise the statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement, and the related notes, including the accounting policies in note 1. In our opinion, the Financial Statements: – – – the financial statements give a true and fair view of the state of the Company’s affairs as at 31 March 2020 and its return for the year then ended; have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee. ODYSSEAN INVESTMENT TRUST PLC 51 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverview2. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, 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. We summarise below the key audit matter (unchanged from 2019), in arriving at our audit opinion above, together with our key audit procedures to address this matter and, as required for public interest entities, our results from those procedures. This matter was addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter. Carrying amount of quoted investments (£72m; (2019: £67m)) Refer to page 42 (Audit Committee Report), pages 61 and 62 (accounting policy) and pages 69 and 70 (financial disclosures). The risk Our response Low risk, high value: Our procedures included: The Company’s portfolio of quoted investments makes up 88% (2019: 78%) of the Company’s total assets by value and is considered to be one of the key drivers of results. We do not consider these investments to be at a high risk of significant misstatement, or to be subject to a significant level of judgement because they comprise liquid, quoted investments. However, due to their materiality in the context of the financial statements as a whole, they are considered to be one of the areas which had the greatest effect on our overall audit strategy and allocation of resources in planning and completing our audit. Tests of Detail: Agreeing the valuation of 100% of quoted investments in the portfolio to externally quoted prices; and Enquiry of custodians: Agreeing 100% of investment holdings in the portfolio to independently received third party confirmations from investment custodians. Assessing transparency: We considered the adequacy of disclosure of the Company’s investments against the requirements set out in accounting standards. Our findings: We found the carrying amount of quoted investments to be acceptable (2019: acceptable). 3. Our application of Company materiality and an overview of the scope of our audit Materiality for the financial statements as a whole was set at £0.82m (2019: £0.85m), determined with reference to a benchmark of total assets, of which it represents 1% (2019: 1%). We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £42k (2019: £42k), in addition to other identified misstatements that warranted reporting on qualitative grounds. Our audit of the Company was undertaken to the materiality level specified above and was performed at the at our offices. Total Assets Materiality £82.2m (2019: £85.3m) £0.82m (2019: £0.85m) £820K Whole financial statements materiality Materiality Total Assets £42k Misstatements reported to the audit committee 52 ODYSSEAN INVESTMENT TRUST PLC4. We have nothing to report on going concern The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease their operations, and as they have concluded that the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”). Our responsibility is to conclude on the appropriateness of the Directors’ conclusions and, had there been a material uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Company will continue in operation. In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Company’s business model, including the impact of Brexit, and analysed how those risks might affect the Company’s financial resources or ability to continue operations over the going concern period. We evaluated those risks and concluded that they were not significant enough to require us to perform additional audit procedures. Based on this work, we are required to report to you if: – we have anything material to add or draw attention to in relation to the Directors’ statement in note 1 to the financial statements on the use of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Company’s use of that basis for a period of at least 12 months from the date of approval of the financial statements; or – the related statement under the Listing Rules set out on page 32 is materially inconsistent with our audit knowledge. We have nothing to report in these respects, and we did not identify going concern as a key audit matter. 5. We have nothing to report on the other information in the Annual Report The Directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information. Strategic Report and Directors’ Report Based solely on our work on the other information: – we have not identified material misstatements in the – – Strategic Report and the Directors’ Report; in our opinion the information given in those reports for the financial year is consistent with the financial statements; and in our opinion those reports have been prepared in accordance with the Companies Act 2006. Directors’ Remuneration Report In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in relation to: – – – the Directors’ confirmation within the Viability Statement on page 32 that they have carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity; the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated; and the Directors’ explanation in the Viability Statement of how they have assessed the prospects of the Company, over what period they have done so and why they considered that period to be appropriate, and their 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 their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Under the Listing Rules we are required to review the longer- term viability statement. We have nothing to report in this respect. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Company’s longer-term viability. 53 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCAuditor’s responsibilities 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 other irregularities (see below), or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities. Irregularities – ability to detect We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience and through discussion with the Directors, the Manager and the Administrator (as required by auditing standards) the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably. Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), and its qualification as an Investment Trust under UK tax legislation, any breach of which could lead to the Company losing various deductions and exemptions from UK corporation tax, and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: the Listing Rules and certain aspects of company legislation recognising the financial and regulated nature of the Company’s activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors, the Manager and the Administrator and inspection of regulatory and legal correspondence, if any. These limited procedures did not identify any actual or suspected non- compliance. Corporate governance disclosures We are required to report to you if: – we have identified material inconsistencies between the knowledge we acquired during our financial statements audit and the Directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy; or – the section of the annual report describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee. We are required to report to you if the Corporate Governance Statement does not properly disclose a departure from the provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 6. We have nothing to report on the other matters on which we are required to report by exception Under the Companies Act 2006, we are required to report to you if, in our opinion: – – – 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 the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or – we have not received all the information and explanations we require for our audit. We have nothing to report in these respects. 7. Respective responsibilities Directors’ responsibilities As explained more fully in their statement set out on page 49, the Directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; 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; assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. 54 ODYSSEAN INVESTMENT TRUST PLCOwing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. 8. The purpose of our audit work and to whom we owe our responsibilities This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. Jatin Patel (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square London E14 5GH 8 June 2020 55 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCStatement of Comprehensive Income for the year ended 31 March 2020 Income Net (losses) on investments at fair value Currency exchange losses Total income Expenses Portfolio management fee Other expenses Total expenses Return before taxation Taxation Return for the period Basic and diluted earnings per ordinary share (pence) Year ended 31 March 2020 Period ended 31 March 2019 Notes Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 2 7 3 4 5 6 1,949 – – 133 (5,588) – 2,082 (5,588) – 715 – – – (1,266) (5) 715 (1,266) (5) 1,949 (5,455) (3,506) 715 (1,271) (556) (904) (495) (1,399) – – – (904) (495) (784) (455) (1,399) (1,239) – – – (784) (455) (1,239) 550 (7) (5,455) – (4,905) (7) (524) (5) (1,271) – (1,795) (5) 543 (5,455) (4,912) (529) (1,271) (1,800) 0.6 (6.2) (5.6) (0.6) (1.4) (2.0) The total column of this statement is the Income Statement of the Company prepared in accordance with IFRS, as adopted by the EU. The supplementary revenue and capital columns are presented in accordance with the Statement of Recommended Practice issued by the AIC ("AIC SORP"). All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. There is no other comprehensive income, and therefore the profit for the period after tax is also the total comprehensive income. The accompanying notes are an integral part of these financial statements. 56 ODYSSEAN INVESTMENT TRUST PLCStatement of Changes in Equity for the year ended 31 March 2020 Share capital £’000 Share premium account £’000 Special distributable reserve* £’000 Notes Capital reserve £’000 Revenue reserve* £’000 Total £’000 Year ended 31 March 2020 Opening balance as at 1 April 2019 Total comprehensive income for the year As at 31 March 2020 Notes 10 10 10 10 Period ended 31 March 2019 Opening balance as at 21 December 2017 Gross proceeds of share issue Share issue costs Transfer to special distributable reserve Share premium cancellation costs Total comprehensive income for the period As at 31 March 2019 883 – 883 449 85,475 (1,271) (529) 85,007 – – (5,455) 543 (4,912) 449 85,475 (6,726) 14 80,095 Share capital £’000 Share premium account £’000 Special distributable reserve* £’000 Capital reserve £’000 Revenue reserve* £’000 Total £’000 – 883 – – – – 883 – 87,403 (1,459) (85,495) – – – – 85,495 (20) – – – – – – – – – – – 88,286 (1,459) – (20) – – (1,271) (529) (1,800) 449 85,475 (1,271) (529) 85,007 * The special distributable and revenue reserves can be distributed in the form of dividends. The distributable reserves are £78,763,000 (2019: £83,675,000) The accompanying notes are an integral part of these financial statements. 57 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCBalance Sheet as at 31 March 2020 Non current assets Investments at fair value through profit or loss Current assets Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables Total liabilities Total assets less current liabilities Net assets Represented by: Share capital Share premium account Special distributable reserve Capital reserve Revenue reserve 31 March 2020 £’000 31 March 2019 £’000 Notes 7 8 72,266 66,807 187 9,800 298 18,219 9,987 18,517 82,253 85,324 9 (2,158) (317) (2,158) (317) 80,095 85,007 80,095 85,007 10 883 449 85,475 (6,726) 14 883 449 85,475 (1,271) (529) Total equity attributable to equity holders of the Company 80,095 85,007 Basic and diluted NAV per ordinary share (pence) 11 90.8 96.3 These statements were approved and authorised for issue by the Board on 8 June 2020 and signed on its behalf by: Jane Tufnell Chairman Company Registered Number: 11121934 The accompanying notes are an integral part of these financial statements. 58 ODYSSEAN INVESTMENT TRUST PLCCash Flow Statement for the year ended 31 March 2020 Reconciliation of total return before taxation to net cash outflows from operating activities Profit before tax Losses on investments held at fair value through profit and loss Decrease/(increase) in receivables (Decrease)/increase in creditors Taxation paid Net cash inflow from operating activities Investing activities Purchases Sales Net cash outflow from investing activities Financing activities Gross proceeds of shares issued Share issue costs Share premium cancellation costs Net cash inflow from investing activities Year ended 31 March 2020 £’000 Period ended 31 March 2019 £’000 Notes (4,905) 5,588 105 32 (10) 810 (1,795) 1,270 (288) 319 (5) (499) (26,405) 17,167 (9,238) (69,217) 1,138 (68,079) – 10 – 10 88,285 (1,469) (20) 86,796 (Decrease)/Increase in cash and cash equivalents (8,418) 18,218 Reconciliation of net cash flow movements in funds Cash and cash equivalents at the beginning of the year Exchange rate movements Increase in cash and cash equivalents Increase in net cash Cash and cash equivalents at end of year The accompanying notes are an integral part of these financial statements. 18,219 – (1) (8,418) (8,419) 1 18,218 18,219 9,800 18,219 59 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements for the year ended 31 March 2020 1. Accounting Policies Odyssean Investment Trust PLC is a listed public company incorporated and registered in England and Wales. The registered office of the Company is Beaufort House, 51 New North Road, Exeter EX4 4EP. The principal activity of the Company is that of an investment trust company within the meaning of sections 1158/1159 of the Corporation Tax Act 2010 and its investment approach is detailed in the Strategic Report. a) Basis of preparation The financial statements of the Company have been prepared in accordance with IFRS as adopted by the EU which comprise standards and interpretations approved by the International Accounting Standards Board (‘IASB’), and as applied in accordance with the provisions of the Companies Act 2006. The annual financial statements have also been prepared in accordance with the AIC SORP for the financial statements of investment trust companies and venture capital trusts, except to any extent where it is not consistent with the requirements of IFRS. The comparatives for the period to 31 March 2019 are for the 15-month period from incorporation on 21 December 2017 to 31 March 2019. In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been prepared alongside the Income Statement. The functional currency of the Company is Sterling because this is the currency of the primary economic environment in which the Company operates. The financial statements are also presented in Sterling rounded to the nearest thousand, except where otherwise indicated. b) Going concern The financial statements have been prepared on a going concern basis that approval as an investment trust company will continue to be met. The Directors have made an assessment of the Company’s ability to continue as a going concern and are satisfied that the Company has the resources to continue in business for the foreseeable future, being a period of at least 12 months from the date these financial statements were approved. In making the assessment, the Directors have considered the likely impacts of the current COVID-19 pandemic on the Company, operations and the investment portfolio. The Directors noted the cash balance exceeds any short-term liabilities, the Company has no debt and the Company holds a portfolio of investments listed on the LSE. The Company is a closed end fund, where assets are not required to be liquidated to meet redemptions. Whilst the economic future is uncertain, and the Directors believe it is possible the Company could experience further reductions in income and/or market value that this should not be to a level which would threaten the Company’s ability to continue as a going concern. The Directors, the Portfolio Manager and other service providers have put in place contingency plans to minimise disruption. Furthermore, the Directors are not aware of any material uncertainties that may cast doubt upon the Company’s ability to continue as a going concern, having taken into account the liquidity of the Company’s investment portfolio and the Company’s financial position in respect of its cash flows, debt and investment commitments. Therefore, the financial statements have been prepared on a going concern basis. c) Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of the business, being investment business. The Company invests in small companies principally based in countries bordering the North Atlantic Ocean. 60 ODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 1. Accounting Policies (continued) d) Accounting developments In the current year, the Company has applied a number of amendments to IFRS, issued by the IASB. These include annual improvements to IFRS, changes in standards, legislative and regulatory amendments, changes in disclosure and presentation requirements. The Company has also applied, with associated amendments, for the first time the following standards: IFRS 16 Leases sets out the principles for the recognition, measurement, presentation and disclosure of leases by lessors and lessees. The adoption of the changes to accounting standards has had no material impact on the current or prior years' financial statements. e) Critical accounting judgements and key sources of estimation uncertainty The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts in the Balance Sheet, the Income Statement and the disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The areas requiring the most significant judgement and estimation in the preparation of the financial statements are: recognising and classifying unusual or special dividends received as either revenue or capital in nature; when determining any deferred performance fee, this may be affected by future changes in the Company's portfolio and other assets and liabilities; and setting the levels of dividends paid and proposed in satisfaction of both the Company’s long-term objective and its obligations to adhere to investment trust status rules under Section 1158 of the Corporation Tax Act 2010. The estimates and underlying assumptions are reviewed on an ongoing basis. Any revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period if the revision affects both current and future periods. There are no significant judgements or estimates in these financial statements. f ) Investments The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis in accordance with the documented investment strategy and information is provided internally on that basis to the Company’s Board of Directors and other key management personnel. The investments held by the Company are designated by the Company as ‘at fair value through profit or loss’. All gains and losses are allocated to the capital return within the Statement of Comprehensive Income as ‘Gains or losses on investments held at fair value through profit or loss’. Also included within this heading are transaction costs in relation to the purchase or sale of investments. When a sale or purchase is made under a contract, the terms of which require delivery within the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date. 61 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 1. Accounting Policies (continued) f ) Investments (continued) All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, which is either the bid price or the closing price for Stock Exchange Electronic Trading Service (‘SETS’). The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of consideration received and receivable and the cumulative gain or loss that had been accumulated is recognised in profit or loss. Fair values for unquoted investments, or investments for which the market is inactive, are established by using various valuation techniques in accordance with the International Private Equity and Venture Capital Valuation (the “IPEV”) guidelines. These may include recent arm’s length market transactions, earnings multiples and the net asset basis. All investments for which a fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy levels set out in note 7. g) Foreign currency translation Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the date of the transaction. Items that are denominated in foreign currencies are retranslated at the rates prevailing on the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is capital or revenue in nature. h) Cash and Cash Equivalents Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts when applicable. i) Other receivables and payables Trade receivables and trade payables are measured at amortised cost and balances revalued for exchange rate movement. j) Income Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company’s right to receive payment is established. Dividends from overseas companies are shown gross of any withholding taxes which are disclosed separately in the Statement of Comprehensive Income. Special dividends are taken to the revenue or capital account depending on their nature. In deciding whether a dividend should be regarded as capital or revenue receipt, the Board reviews all relevant information as to the sources of the dividend on a case-by-case basis. 62 ODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 j) 1. Accounting Policies (continued) Income (continued) When the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income. Any excess in the value of the cash dividend is recognised in the capital column. All other income is accounted on a time-apportioned accruals basis and is recognised in the Statement of Comprehensive Income. k) Expenses All expenses are accounted on an accruals basis and are allocated wholly to revenue with the exception of the Performance Fees and transaction costs which are allocated wholly to capital, as the fee payable by reference to the capital performance of the Company. l) Taxation The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or accelerated because of temporary differences between the treatment of certain items for accounting and taxation purposes. Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets are only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be deducted. In line with recommendations of the SORP, the allocation method used to calculate the tax relief expenses charged to capital is the ‘marginal’ basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred to the capital account. m) Dividends payable to shareholders Dividends to shareholders are recognised as a liability in the period in which they are paid or approved in general meetings and are taken to the Statement of Changes in Equity. Dividends declared and approved by the Company after the Balance Sheet date have not been recognised as a liability of the Company at the Balance Sheet date. n) Share capital and reserves The share capital represents the nominal value of equity shares. The share premium account represents the accumulated premium paid for shares issued above their nominal value less issue expenses. The special distributable reserve was created on 7 August 2018. This reserve may be used for the costs of share buybacks and the cancellation of shares. The capital reserve represents realised and unrealised capital and exchange gains and losses on the disposal and revaluation of investments and of foreign currency items. In addition, performance fee costs are allocated to the capital reserve. The revenue reserve represents the surplus of accumulated revenue profits being the excess of income derived from holding investments less the costs associated with running the Company. This reserve may be distributed by way of dividends. 63 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 2. Income Year ended 31 March 2020 Income £’000 Year ended 31 March 2020 Capital £’000 Year ended 31 March 2020 Total £’000 Period ended 31 March 2019 Total £’000 Income from investments UK dividends Unfranked investment income Other income Bank interest received Other income Total income 3. Portfolio management fee 1,922 – 24 3 133 – – – 2,055 – 24 3 1,949 133 2,082 Year ended 31 March 2020 Period ended 31 March 2019 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Management fee Performance fee provision 904 – 904 – – – 904 – 904 784 – 784 – – – 632 34 49 – 715 Total £’000 784 – 784 The Company is liable to pay a performance fee depending on the performance of the Company over a three-year period and thereafter a rolling three-year period as set out in the Company's prospectus dated 26 March 2018. Based on the performance of the Company to 31 March 2020, no performance fee has been accrued. As at 8 June 2020, being the latest date prior to release, due to the impact of market movements since the period end, the Company has no performance fee provision included in the NAV. Pursuant to the terms of the Portfolio Management Agreement, the Portfolio Manager is entitled, with effect from IPO on 1 May 2018, to receive an annual management fee equal to the lower of: (i) 1% of the NAV (calculated before deduction of any accrued but unpaid Management fee and any performance fee) per annum; or (ii) 1% per annum of the Company’s market capitalisation. The annual management fee is calculated and accrues daily and is payable quarterly in arrears. In addition, the Portfolio Manager will be entitled to a performance fee (the “Performance Fee”) in certain circumstances. 64 ODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 3. Portfolio management fee (continued) The Company’s performance is measured over rolling three-year periods ending on 31 March each year (each a “Performance Period”), by comparing the NAV total return per ordinary share over a Performance Period against the total return performance of the NSCI ex IC plus AIM Total Return Index (the “Comparator Index”). The first Performance Period will run from IPO to 31 March 2021. A Performance Fee is payable if the NAV per ordinary share at the end of the relevant Performance Period (as adjusted to: (i) add back the aggregate value of any dividends per ordinary share paid (or accounted as paid for the purposes of calculating the NAV) to shareholders during the relevant Performance Period; and (ii) exclude any accrual for unpaid Performance Fee accrued in relation to the relevant Performance Period) (the “NAV Total Return per Share”) exceeds both: (i) (a) the NAV per ordinary share at IPO, in relation to the first Performance Period; and (b) thereafter the NAV per ordinary share on the first business day of a Performance Period; in each case as adjusted by the aggregate amount of (i) the total return on the Comparator Index (expressed as a percentage); and (ii) 1% per annum over the relevant Performance Period (the “Target NAV per Share”); (ii) the highest previously recorded NAV per ordinary share as at the end of the relevant Performance Period in respect of which a Performance Fee was last paid (or the NAV per ordinary share as at IPO, if no Performance Fee has been paid) (the “High Watermark”); and (iii) with any resulting excess amount being known as the “Excess Amount”. The Portfolio Manager will be entitled to 10% of the Excess Amount multiplied by the time weighted average number of ordinary shares in issue during the relevant Performance Period to which the calculation date relates. The Performance Fee will accrue daily. Payment of a Performance Fee that has been earned will be deferred to the extent that the amount payable exceeds 1.75% per annum of the NAV at the end of the relevant Performance Period (amounts deferred will be payable when, and to the extent that, following any later Performance Period(s) with respect to which a Performance Fee is payable, it is possible to pay the deferred amounts without causing that cap to be exceeded or the relevant NAV total return per share to fall below both the relevant target NAV per share and the relevant High Watermark for such Performance Period, with any amount not paid being retained and carried forward). Subject at all times to compliance with relevant regulatory and tax requirements, any Performance Fee paid or payable shall: – where as at the relevant calculation date, the ordinary shares are trading at, or at a premium to, the latest published NAV per ordinary share, be satisfied as to 50% of its value by the issuance of new ordinary shares by the Company to the Portfolio Manager (rounded down to the nearest whole number of ordinary shares) (including the reissue of treasury shares) issued at the latest published NAV per ordinary share applicable at the date of issuance; – where as at the relevant calculation date, the ordinary shares are trading at a discount to the latest published NAV per ordinary share, be satisfied as to 100% of its value in cash and the Portfolio Manager shall, as soon as reasonably practicable following receipt of such payment, use 50% of such Performance Fee payment to make market purchases of ordinary shares (rounded down to the nearest whole number of ordinary shares) within four months of the date of receipt of such Performance Fee payment, (in each case “Restricted Shares”). 65 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 3. Portfolio management fee (continued) Each such tranche of Restricted Shares issued to, or acquired by, the Portfolio Manager will be subject to a lock-up undertaking for a period of three years post issuance or acquisition (subject to customary exceptions). At no time shall the Portfolio Manager (and/or any persons deemed to be acting in concert with it for the purposes of the Takeover Code) be obliged, in the absence of a relevant whitewash resolution having been passed in accordance with the Takeover Code, to receive, or acquire, further ordinary shares where to do so would trigger a requirement to make a mandatory offer pursuant to Rule 9 of the Takeover Code. Where any restriction exists on the issuance of further ordinary shares to the Portfolio Manager, the relevant amount of the Performance Fee may be paid in cash. In addition, the Portfolio Manager is entitled to reimbursement for all costs and expenses properly incurred by it in the performance of its duties under the Portfolio Management Agreement. The initial term of the Portfolio Management Agreement is three years commencing on the date of IPO (the “Initial Term”). The Company may terminate the Portfolio Management Agreement by giving the Portfolio Manager not less than six months’ prior written notice, such notice not to be served prior to the end of the Initial Term. The Portfolio Manager may terminate the Portfolio Management Agreement by giving the Company not less than six months’ prior written notice, such notice not to be served prior to the end of the Initial Term. 4. Other expenses Directors' fees* Company Secretarial fee Administration fee Auditors remuneration – audit** Auditors remuneration – interim review Other expenses Year ended 31 March 2020 £’000 Period ended 31 March 2019 £’000 86 64 85 30 – 230 495 74 57 81 29 9 205 455 * Peter Hewitt is not receiving a Director fee in respect of his services to the Company. Each of the Directors has agreed to use their applicable Directors' fees (net of applicable taxes) to acquire ordinary shares in the secondary market, subject to regulatory requirements. In relation to any dealings, the Directors will comply with the share dealing code adopted by the Company in accordance with the Market Abuse Regulation. The Board will be responsible for taking all proper and reasonable steps to ensure compliance with the share dealing code by the Directors. ** As detailed in the Audit Committee report on page 43. No other fees were paid to the Auditor during the year (2019: a further £30,000 was paid to the Auditor relating to accounting services for the prospectus at launch, recognised in the share premium account). 66 ODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 5. Taxation Analysis of charge in year Current tax: Overseas tax suffered Year ended 31 March 2020 Period ended 31 March 2019 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 7 7 – – 7 7 5 5 – – 5 5 The tax assessed for the year is the standard rate of Corporation Tax in the UK of 19% (2019: 19%). The differences are explained below: Year ended 31 March 2020 Period ended 31 March 2019 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 Net return before taxation 543 (5,455) (4,912) (524) (1,271) (1,795) Theoretical tax at UK corporation tax rate of 19% (2019: 19%) Effects of: UK dividends that are not taxable Foreign dividends that are not taxable Non-taxable investment losses/(gains) Irrecoverable overseas tax Unrelieved excess expenses 103 (1,037) (934) (99) (241) (340) (346) (17) (1) 7 261 - - 1,037 - - (346) (17) 1,036 7 261 (120) (7) - 5 226 - - 241 - - (120) (7) 241 5 226 7 - 7 5 - 5 Factors that may affect future tax charges At 31 March 2020, the Company had no unprovided deferred tax liabilities (2019: £nil). At that date, based on current estimates and including the accumulation of net allowable losses, the Company had unrelieved losses of £2,564,000 (2019: £1,189,000) that are available to offset future taxable revenue. A deferred tax asset of £435,000 has not been recognised because the Company is not expected to generate sufficient taxable income in future periods in excess of the available deductible expenses and accordingly, the Company is unlikely to be able to reduce future tax liabilities through the use of existing surplus losses Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Trust meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an Investment Trust company. 67 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 6. Earnings per ordinary share Year ended 31 March 2020 Period ended 31 March 2019 Weighted average ordinary shares* Basic and diluted earnings per share pence Weighted average ordinary shares* Net return £’000 Net return £’000 Revenue Capital Total 543 88,257,211 (5,455) 88,257,211 0.6 (6.2) (529) (1,271) 88,040,346 88,040,346 (4,912) 88,257,211 (5.6) (1,800) 88,040,346 Basic and diluted earnings per share pence (0.6) (1.4) (2.0) * The Company’s weighted average number of ordinary shares for the period has been calculated from 1 May 2018, being the date the initial shares were listed for trading. There are no dilutive instruments issued by the Company. 68 ODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 7. Investments held at fair value through profit or loss Opening book cost Opening investment holding gains Opening fair value Analysis of transactions made during the year Purchases at cost Sales proceeds received Gains/(losses) on investments Decrease in investment holding gains Closing fair value Closing book cost Closing investment holding gains/(losses) Closing fair value Analysis of capital losses Gains on sales of investments based on historical cost Movement in in investment holding gains for the year Net losses on investments held at fair value Transaction costs As at 31 March 2020 £’000 68,330 (1,523) 66,807 28,214 (17,167) 4,342 (9,930) As at 31 March 2019 £’000 – – – 69,211 (1,138) 257 (1,523) 72,266 66,807 83,719 (11,453) 68,330 (1,523) 72,266 66,807 4,342 (9,930) 257 (1,523) (5,588) (1,266) 140 384 The Company is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following three levels: – Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market is a market in which transactions for the asset or liability occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place between market participants at the measurement date. Quoted prices provided by external pricing services, brokers and vendors are included in Level 1, if they reflect actual and regularly occurring market transactions on an arms length basis. 69 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 7. Investments held at fair value through profit or loss (continued) – Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). – Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. As at 31 March 2020 As at 31 March 2019 Total £’000 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000 Level 1 £’000 Level 2 £’000 Level 3 £’000 Quoted at fair value 72,266 72,266 Total 72,266 72,266 – – – – 66,807 66,807 66,807 66,807 – – – – There were no transfers between levels during the period. 8. Trade and other receivables Other receivables 9. Trade and other payables Due to brokers Portfolio managers fees Directors' fees Other payables 70 As at 31 March 2020 £'000 As at 31 March 2019 £'000 187 187 298 298 As at 31 March 2020 £'000 As at 31 March 2019 £'000 1,808 231 – 119 2,158 – 208 6 103 317 ODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 10. Share capital Year ended 31 March 2020 Period ended 31 March 2019 Number of Shares £’000 Number of Shares £’000 Issued and fully paid: Ordinary shares of 1p: Balance at beginning of the period Initial share issue Subsequent share issues – block listing 88,257,211 – – 883 – – – 87,457,211 800,000 Balance at end of the period 88,257,211 883 88,257,211 – 875 8 883 The Company was incorporated with 1 ordinary share and 50,000 management shares. The management shares were cancelled on 1 May 2018. As at 31 March 2020, the Company held no management shares. The initial placing of 87,457,210 ordinary shares took place on 1 May 2018, raising gross proceeds of £87,457,000. A further issue of shares of 800,000 took place during the year and raised gross proceeds of £828,000 less issue costs of £12,000. The Company commenced business on 1 May 2018 when the initial ordinary shares were listed on the premium segment of the Official List of the FCA and admitted to trading on the premium segment of the LSE's main market for listed securities. Following approval of the Court on 8 August 2018, the share premium account cancellation was effective. The share premium account of £85,495,000 at 7 August 2018 was transferred to a special distributable reserve. The issue costs of £1,447,000 relating to the initial and subsequent listings prior to cancellation were offset against the share premium account. 11. Net asset value per ordinary share The net asset value attributable to the ordinary shareholders and the net asset value per ordinary share at the year end were as follows: Net asset value/shareholders funds Number of ordinary shares in issue at the year end Net asset value per share – Basic and diluted As at 31 March 2020 As at 31 March 2019 £80,095,000 £85,007,000 88,257,211 88,257,211 90.8p 96.3p 71 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 12. Financial Instruments Investment objective and policy The Company primarily invests in smaller company equities quoted on markets operated by the LSE, which the Portfolio Manager believes are trading below intrinsic value and where this value can be increased through strategic, operational, management and financial initiatives. The Company’s investment objective and policy are detailed on pages 2 and 3. The Company’s financial instruments include its investment portfolios, cash balances, trade receivables and trade payables that arise directly from its operations. Adherence to the Company’s investment policy is key to mitigating risk. Risks The Portfolio Manager monitors the financial risks affecting the Company on an ongoing basis and the Board regularly receive financial information, which is used to identify and monitor risk. All risks are actively reviewed and managed by the Board. The risks identified arising from the Company’s financial instruments are: (i) market risk, including market price risk, interest rate risk and currency risk; (ii) liquidity risk; (iii) credit and counterparty risk (i) Market risk Market risk is the risk of loss arising from movements in observable market variables. The fair value of future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. The Portfolio Manager assesses the exposure to market risk when making each investment decision and these risks are monitored by the Portfolio Manager on a regular basis and the Board at meetings with the Portfolio Manager. Market price risk The Company is exposed to market price risk (i.e. changes in market prices other than those arising from currency or interest rate risk) which may affect the value of investments whose future prices are uncertain. The Company’s exposure to market price risk comprises movements in the value of the Company’s investments. If the fair value of the Company’s investments at the year-end increased or decreased by 10%, then it would have had an impact on the Company’s capital return and equity of £7,227,000 (2019: £6,681,000). The Portfolio Manager manages this risk by following the investment objective as set out in the prospectus. The Portfolio Manager assesses the exposure to market price risk when making each investment decision and monitors the overall level of market price risk on the whole investment portfolio on an ongoing basis. The Portfolio Manager maintains a net cash position and intends to maintain this for the foreseeable future. 72 ODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 12. Financial instruments (continued) Currency risk Currency risk is the risk that fair values of future cash flows of a financial instrument fluctuate because of changes in foreign exchange rates. The Company has limited exposure to foreign currency fluctuations, it has only one (2019: one) investment in EUR fair valued at £1,157,000 (2019: £1,873,000) impacted by foreign exchange rates which has an immaterial effect on the investment portfolio. A 5% rise or decline in Sterling against the foreign currency denominated investment held at year end would have increased/decreased the net asset value by £58,000 (2019: £94,000). Whilst the Company’s other investments are denominated in Sterling, the Company may have currency exposure through the trading activities of its investee companies. The Portfolio Manager does not hedge underlying portfolio companies. Interest rate risk Interest rate risk is the risk that fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate movements may potentially affect future cash flows from the level of income receivable on cash deposits. The Company's bank balances are subject to a variable rate of interest, it does not generate significant income from interest and the Portfolio Manager does not hedge against this. The Company has no gearing and therefore there is limited downside risk from increasing interest costs on borrowings. If the Company maintained the following level of cash for a year £9,800,000 (2019: £18,219,000), a 1% increase in interest rates would increase the revenue return and net assets by £98,000 (£182,000). If there was a fall of 1% in interest rates, it would potentially impact the Company by turning positive interest to negative interest. The total effect would be a revenue reduction/cost increase of £98,000 (2019: £182,000). The portfolio Manger actively manages the cash positions of the Company. (ii) Liquidity risk The Company’s assets mainly comprise readily realisable securities which can be easily sold to meet funding commitments and obligations. Liquidity risk is mitigated by the fact that the Company has £9,800,000 (2019: £18,219,000) cash at bank and the assets are readily realisable. The Company is a closed-end fund, assets do not need to be liquidated to meet redemptions. The Portfolio Manager maintains a net cash position and intends to maintain this for the foreseeable future. The Portfolio Manager will manage the portfolio to maintain sufficient cash balances to meet its obligations or liabilities as they fall due. (iii) Credit risk This is the risk a counterparty of the Company will not meet their obligations to the Company. The Company does not have any significant exposure to credit risk arising from one individual party. Credit risk is spread across a number of counterparties, each having an immaterial effect on the Company's cash flows, should a default happen. The credit standing of all counterparties is reviewed periodically and assesses the debtors to ensure they are neither past due or impaired. All the investments of the Company which are traded on a recognised exchange are held by the Company's custodian, RBC Investor Services Trust ("RBC"). All the Company's cash is also held by RBC. The Portfolio Manager and the Board actively monitor the relationship with RBC and review RBC’s internal control report. 73 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCNotes to the Financial Statements (continued) for the year ended 31 March 2020 13. Related party transactions The amounts incurred in respect of Portfolio Management fees during the period to 31 March 2020 was £904,000 (2019: 784,000), of which £231,000 (2019: £208,000) was outstanding at 31 March 2020. The amount accrued in relation to the Performance Fee provision as at 31 March 2020 was £nil (2019: £nil). Fees paid to the Company’s Directors and Directors shareholdings, are disclosed in the Directors’ Remuneration Report. At the year end, there were no outstanding fees payable to Directors (2019: £6,000). 14. Subsequent events Since the period end, the Company has bought back 275,000 Ordinary Shares with a nominal value of £2,750 at a total cost of £230,000, which have been placed in treasury. Since 31 March 2020, markets and operations have continued to be disrupted by the effects of the COVID-19 pandemic. However, since the year end, the NAV per share has increased by 14.7% to 5 June 2020. 74 ODYSSEAN INVESTMENT TRUST PLCAdditional Information ADDITIONAL INFORMATION Shareholder Information 76 77 Glossary 80 Corporate Information Shareholder Information Investing in the Company The Company’s shares are traded on the LSE and can be bought or sold through a stock broker or other financial intermediary. Shares in the Company are available through savings plans, including Investment Dealing Accounts, ISAs, Junior ISAs and SIPPs, which facilitate both regular monthly investments and lump sum investments in the Company’s shares. The Company’s shares are also available on various investment platforms. Share capital and NAV information Ordinary 1p shares SEDOL number ISIN Ticker LEI 88,257,211 BFFK7H5 GB00BFFK7H57 OIT 213800RWVAQJKXYHSZ74 The Company’s NAV is released daily to the LSE and published on the Company’s website. Share register enquiries The register for the ordinary shares is maintained by Equiniti Limited. In the event of queries regarding your holding, please contact the Registrar on 0371 384 2030. Changes of name and/or address must be notified in writing to the Registrar, at the address shown on page  80. You can check your shareholding and find practical help on transferring shares or updating your details at www.shareview.co.uk. Key dates Company’s year end Annual results announced AGM Company’s half-year end Half-yearly results announced December 31 March June September 30 September Sources of further information Copies of the Company’s Annual and Interim Reports, Stock Exchange announcements and further information on the Company can be obtained from its website: www.oitplc.com, or from the Company Secretary at 01392 477 500. Association of Investment Companies The Company is a member of the AIC, which publishes monthly statistical information in respect of member companies. The AIC can be contacted on 020 7282 5555, enquiries@theaic.co.uk or visit the website: www.theaic.co.uk. 76 ODYSSEAN INVESTMENT TRUST PLCGlossary AGM Annual General Meeting ESG Environmental, social and governance AIC Association of Investment Companies EU European Union Alternative Performance Measure (‘APM’) An APM is a numerical measure of the Company’s current, historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial framework. Comparator Benchmark The Company’s Comparator Benchmark is the NSCI (Numis Smaller Companies Index) ex IC plus AIM Total Return Index. The benchmark is used only as a yard stick to compare investment performance. Cost The book cost of each investment is the total acquisition value, including transaction costs, less the value of any disposals or capitalised distributions allocated on a weighted average cost basis. Discount/premium If the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium. Premium/(Discount) Calculation Closing NAV per share (p) Closing share price (p) (Discount)/Premium (c=((b-a)/a) x 100) (%) 31 March 2020 31 March 2019 90.8p 90.0p 96.3p 99.3p a b (0.9)% 3.1% c The discount and performance are calculated in accordance with guidelines issued by the AIC. The discount is calculated using the net asset values per share inclusive of accrued income with debt at market value. FCA Financial Conduct Authority Gearing Gearing refers to the ratio of the Company’s debt to its equity capital. The Company may borrow money to invest in additional investments for its portfolio. If the Company’s assets grow, the shareholders’ assets grow proportionately more because the debt remains the same. If the Company’s assets fall, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. The Company has no borrowings during the year (2019:nil). IFRS International Financial Reporting Standards IPO Initial public offering Key Performance Indicators ('KPIs') KPIs are a shortlist of corporate attributes that are used to assess the general progress of the Company. These are outlined on page 27. LSE London Stock Exchange Link Link Company Matters Limited and Link Alternative Fund Administrators Limited, the Company's current Company Secretary and Administrator, respectively. M&A Mergers and acquisitions 77 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCGlossary (continued) Net Asset Value (‘NAV’) The NAV is shareholders’ funds expressed as an amount per individual share. Shareholders’ funds are the total value of all of the Company’s assets, at their current market value, having deducted all liabilities and prior charges at their par value, or at their asset value as appropriate. The total NAV per share is calculated by dividing shareholders’ funds of £80,095,000 (2019: £85,007,000) by the number of Ordinary Shares in issue 88,257,211 (2019: 88,257,211) at the year end. 31 March 2020 31 March 2019 Net asset value/shareholders funds £80,095,000 £85,007,000 Number of ordinary shares in issue at the year end Net asset value per share – Basic and diluted 88,257,211 88,257,211 90.8p 96.3p NAV total return NAV total return is the closing NAV per share including any cumulative dividends paid as a percentage over the opening NAV. Ongoing Charges Ratio As recommended by the AIC in its guidance, ongoing charges are the Company’s annualised expenses (excluding finance costs and certain non-recurring items) expressed as a percentage of the average monthly net assets of the Company during the year as disclosed to the LSE. Total expenses Less one time expenses and finance charges 31 March 2020 31 March 2019 1,399,000 1,239,000 – 21,000 R&D Research and development TMT Technology, media and telecom Total assets Total assets are the sum of both fixed and current assets with no deductions. Total Return – NAV and Share Price Returns Total return statistics enable the investor to make performance comparisons between investment trusts with different dividend policies. The combined effect of any dividends paid, together with the rise or fall in the share price or NAV. This is calculated by the movement in the NAV or share price plus dividend income reinvested by the Company at the prevailing NAV or share price. NAV Total Return Closing NAV per share (p) Opening NAV Per share (p) Dividend reinvested (p) NAV total return 31 March 2020 31 March 2019 90.8p 96.3p – 96.3p 99.3p a b – (c= ((a-b)/b x 100) (%) (5.7%) (2.1%)# c Share Price Total Return Closing share price (p) Opening share price (p) Dividend reinvested (p) Share price total return 31 March 2020 31 March 2019 90.0p 99.3p – 99.3p 100.0p a b – Annualised Ongoing charges (a) 1,399,000 1,328,000* (c= ((a-b)/b x 100) (%) (9.4%) (0.7%)# c Average net asset value (b) 84,064,000 85,391,000* # For the period from commencing trading and listed on the LSE on 1 May 2018. Ongoing charges (a/b) expressed as a % 1.7% 1.6% * For the period from commencing trading and listed on the LSE on 1 May 2018. Total return per ordinary share Total return per ordinary share is the total return for the period expressed as an amount per weighted average ordinary share. P/E Price earnings ratio 78 ODYSSEAN INVESTMENT TRUST PLCGlossary (continued) UCITS Undertakings for the Collective Investment in Transferable Securities Volatility The term volatility describes how much and how quickly the share price or net asset value has tended to change in the past. Those investments with the greatest movement in their share prices are known as having high volatility, whereas those with a narrow range of change are known as having low volatility. 79 Strategic ReportGovernanceFinancial StatementsAdditional InformationOverviewODYSSEAN INVESTMENT TRUST PLCCorporate Information Directors Jane Tufnell (Chairman) Arabella Cecil Peter Hewitt Richard King Company Secretary and Registered Office Link Company Matters Limited* Beaufort House 51 New North Road Exeter EX4 4EP Tel: 01392 477500 Email: odyssean_cosec@linkgroup.co.uk Auditor KPMG LLP 15 Canada Square Canary Wharf London E14 5GL Registrar Equiniti Limited Aspect House Spencer Road Lancing BN99 6DA Tel: 0371 384 2030; +44 (0) 121 415 7047 www.shareview.co.uk * Expected to come into effect from mid-July 2020: Frostrow Capital LLP 25 Southampton Buildings London WC2A 1AL Tel: 0203 008 4910 Email: info@frostrow.com Portfolio Manager Odyssean Capital LLP 6 Stratton Street Mayfair London W1J 8LD Tel: 020 7640 3280 Email: info@odysseancapital.com Broker Winterflood Securities Limited Cannon Bridge House 25 Dowgate Hill London EC4R 2GA Solicitor Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU Custodian RBC Investor Services Trust (UK Branch) Riverbank House 2 Swan Lane London EC4R 3AF Corporate website www.oitplc.com Shareholder warning Many companies are aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These calls typically come from fraudsters operating in ‘boiler rooms’ offering investors shares that often turn out to be worthless or non- existent, or an inflated price for shares they own. While high profits are promised, those who buy or sell shares in this way usually lose their money. These fraudsters can be very persistent and extremely persuasive. Shareholders are therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. It is very unlikely that either the Company or the Company’s Registrar would make unsolicited telephone calls to shareholders and that any such calls would relate only to official documentation already circulated to shareholders and never in respect of investment ‘advice’. If you have been contacted by an unauthorised firm regarding your shares, you can report this using the FCA helpline on 0800 111 6768 or by using the share fraud reporting form at www.fca.org.uk/consumers/scams. 80 ODYSSEAN INVESTMENT TRUST PLCINVESTMENT TRUST PLCCompany Registered Number: 11121934www.oitplc.com

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