Trian Investors 1 Annual Report 2018

FY2018 Annual Report · Trian Investors 1
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Trian Investors 1 Limited

Annual Report and Audited Financial Statements
For the period from 24 August 2018 to 31 December 2018

Registered number: 65419

Contents

Annual Report and Audited Financial Statements

Overview of the Company

Chairman’s Statement

Report of the Directors

Corporate Governance Statement

Directors’ Responsibility Statement

Report of the Audit Committee

Independent Auditor’s Report

Financial Statements

Statement of Financial Position

Statement of Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

General Information

2

3

4

9

16

18

21

27

28

29

30

31

39

1

Trian Investors 1 Limited

Overview of the Company

Trian Investors 1 Limited (the “Company”) is a Guernsey domiciled limited company incorporated on 24 August
2018. The ordinary shares of the Company were admitted for trading on the Specialist Fund Segment of the
London Stock Exchange (“SFS”) on 27 September 2018 (“Admission”).

The investment objective of the Company, through its investment in Trian Investors 1, L.P. (Incorporated) (the
“Investment Partnership”), is to generate signiﬁcant capital appreciation through the investment activity of
Trian Investors Management, LLC (the “Investment Manager”) and its parent, Trian Fund Management, L.P.
(collectively, “Trian”). Trian’s investment strategy is to act as a highly engaged shareowner at the companies
in which it invests, combining concentrated public equity ownership with operational expertise.

In accordance with its investment policy, the Company expects to make a substantial minority investment,
through its investment in the Investment Partnership, in a high quality, but undervalued and underperforming,
company publicly listed in the United Kingdom (“UK”) or the United States (“US”), where the Investment
Manager believes it has developed a compelling set of operational and strategic initiatives that will help
generate signiﬁcant shareholder value.

2

Annual Report and Audited Financial Statements

Chairman’s Statement
For the period from 24 August 2018 to 31 December 2018

Dear Shareholder,

On behalf of the Board of Directors, I am pleased to present to you the ﬁrst audited ﬁnancial statements of
the Company covering the period from 24 August 2018 to 31 December 2018 (the “Financial Statements”).

This is our ﬁrst opportunity to write to you as a shareholder since our initial public offering was successfully
completed on 24 September 2018. The offering raised gross proceeds of £270.6 million, and the shares of the
Company were admitted to trading on the SFS on 27 September 2018. The net proceeds of the initial public
offering have been placed in short-term bank deposits and money market funds, pending investment in a
target company through the Company’s investment in the Investment Partnership. As at 31 December 2018,
the Net Asset Value of the Company was £266.1 million, or 98.35 pence per share.

As set out in the Company’s Prospectus dated 21 September 2018 (the “Prospectus”), the Company expects
to make a substantial minority investment, through its investment in the Investment Partnership, in a high
quality, but undervalued and underperforming, company publicly listed in the UK or US (the ‘‘Target Company’’),
where the Investment Manager believes it has developed a compelling set of operational and strategic
initiatives that will help generate signiﬁcant shareholder value. The Company currently expects the Target
Company to be a mid-cap or large-cap entity operating in the consumer, industrial or ‘non-balance sheet’
ﬁnancial services sectors, where the Investment Manager, and its parent, have signiﬁcant historical operating
knowledge and expertise.

The Investment Manager continues to actively search for and evaluate potential Target Companies, regularly
updating the Board of Directors on its ongoing due diligence. The Investment Manager has made clear to the
Board that it intends to remain selective when searching for a Target Company, with a focus on identifying a
Target Company that it believes will generate attractive returns and a favorable “risk-reward” dynamic, after
taking account of various macroeconomic and political factors, including the potential impact of Brexit. We
concur with the Investment Manager’s approach, and both the Investment Manager and the Board are aligned
regarding the importance of the Company remaining disciplined.

We are grateful for your continued support and will keep you informed of the status of any investment in a
Target Company as appropriate.

Yours sincerely,

Chris Sherwell
Chairman

11 April 2019

3

Trian Investors 1 Limited

Report of the Directors

The Directors present their annual report on the affairs of the Company, together with the Financial
Statements, covering the period from inception on 24 August 2018 to 31 December 2018 (the “Period”).

Incorporation
The Company was incorporated in Guernsey under the Companies (Guernsey) Law, 2008 as amended (the
“Companies Law”) on 24 August 2018.

Principal activities and investment policy
The Company is a Guernsey domiciled limited company. The ordinary shares of the Company were admitted
to trading on the SFS on 27 September 2018.

The Company, via its wholly-owned subsidiary Trian Investors 1 Midco Limited (“Midco”), holds an approximate
99.9 per cent interest in the Investment Partnership.

As further described in the Chairman’s Statement contained on page 3, the Company expects to make a
substantial minority investment, through its investment in the Investment Partnership, in the Target Company.
The investment in the Target Company may be made on-market or off-market.

The Company expects to invest in only one company at a time through the Investment Partnership, subject
to certain exceptions described in the Prospectus. Thus, the Company will not seek to reduce risk through
diversiﬁcation. The choice of Target Company will be subject to a vote in the affirmative of a majority in interest
of the limited partners of the Investment Partnership, in effect giving the Board of Directors of the Company
(the “Board”) a veto on such decision since the Company owns, and is currently expected to continue to own
more than 50 per cent of the interests in the Investment Partnership.

The investment in the Target Company is expected to be in shares, but could also be in warrants, convertibles,
derivatives, contracts for difference and any other equity, debt or other securities.

Depending on the size of the investment, all or part of the Company’s assets will be invested in the Target
Company through the Investment Partnership, less the amounts retained by the Company for working capital
purposes (“Minimum Capital Requirements”). The investment objective and investment policy of the
Investment Partnership are the same as those of the Company.

The Company’s investment, through the Investment Partnership, is expected to be made alongside other
investment funds and vehicles managed by Trian Management with similar investment objectives (the “Trian
Funds”), and the Investment Manager and Trian Management (collectively, “Trian”) intend to acquire a
substantial minority interest in the Target Company through the Investment Partnership and the Trian Funds.
It is currently expected that the investment will, in aggregate, exceed a 5 per cent interest in all the outstanding
shares of the Target Company, but may be less.

The holding period for Company and Investment Partnership investments is not ﬁxed, but the Company and
the Investment Partnership expect that a typical holding period would be greater than one year. As at the
date of the Prospectus, the average holding period of the ten portfolio company investments previously
realised by Trian Management, where it beneﬁcially owned (as such term is used in the Prospectus) greater
than 5 per cent of all outstanding company shares, was approximately 3.9 years; however, this ﬁgure
should not be taken as being indicative of the holding period for any investment by the Company or the
Investment Partnership.

The Investment Partnership may engage in hedging transactions, both for investment purposes and for risk
management purposes. Similarly, the Company and the Investment Partnership are permitted to undertake
borrowings, subject to certain limitations described in the Prospectus.

4

Annual Report and Audited Financial Statements

Report of the Directors
(continued)

Business review
A review of the Company’s business and an indication of its likely future development is provided in the
Chairman’s Statement on page 3.

Dividend policy
As further described in the Prospectus, the Company’s dividend policy, subject to the discretion of the
Directors who reserve the right to retain amounts for the Minimum Capital Requirements, is to pay dividends
to shareholders following receipt of any distributions from the Investment Partnership, subject always to
compliance with the statutory solvency test prescribed by the Companies Law. This will be dependent on the
frequency with which the Target Company pays dividends in the ordinary course of business to its shareholders
(of which the Investment Partnership will be one). There is no guarantee that the Target Company will pay
dividends. As such, there can be no assurance that dividends will be paid to Company shareholders and, if
dividends are paid, as to the timing and amount of any dividend payable by the Company.

In the event that the Company receives an in specie distribution of shares in the Target Company from the
Investment Partnership, the Company may, but is not obligated to, distribute those shares in specie to
shareholders, subject to compliance with the statutory solvency test prescribed by the Companies Law.

No distributions or dividends were declared or paid during the Period.

Share capital
As at 31 December 2018, the Company had issued 270,585,977 ordinary shares of no par value (the “Shares”),
all of which carry equal voting rights. Details of the Company’s share capital are provided in Note 7 to the
Financial Statements for the Period.

Shareholdings of Directors and key persons
Directors who held office during the Period and held interests in the Company at 31 December 2018 were:

Directors
Chris Sherwell
Mark Thompson
Simon Holden

31 December 2018

Ordinary
Shares

Percentage
holding

50,000
20,000
15,000

85,000

0.02%
0.01%
0.01%

0.04%

All Directors were appointed on 24 August 2018. All shares were acquired by the Directors on 27 September
2018.

5

Trian Investors 1 Limited

Report of the Directors
(continued)

Signiﬁcant shareholdings
As at 31 March 2019, the Company has received notiﬁcation of the following material shareholdings greater than
5 per cent of the Shares in issue:

Invesco Ltd.
Trian Investors 1 Subscriber, LLC
Jefferies Financial Group Inc.
Janus Henderson Group plc
Kames Capital
FIL Limited
Pelham Capital Ltd

31 March 2019

Ordinary
Shares

Percentage
holding

50,000,000
38,211,600
34,351,145
26,110,998
19,084,700
18,193,604
15,209,125

18.47%
14.12%
12.69%
9.65%
7.05%
6.72%
5.69%

The Company had issued 270,585,977 Shares as at 31 March 2019.

All of the above information is based on notiﬁcations received by the Company made by shareholders pursuant
to the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority (“DTRs”). Since
the time each notiﬁcation was received by the Company, the number of Shares held by the relevant
shareholder may have increased or decreased without triggering any obligation to provide further notiﬁcation
to the Company.

Trian Investors 1 Subscriber, LLC has agreed not to sell, transfer or otherwise dispose of any Shares for a period
of 12 months from the Company’s Admission, subject to certain exceptions (including transfers to its affiliates).

Principal risks and uncertainties
The Directors are responsible for ultimate oversight and exercising supervisory control over the Company,
with day to day functions, including company secretarial and administration services, being carried out
by Estera International Fund Managers (Guernsey) Limited (referred to herein as the “Company Secretary”
or “Administrator”).

Each Director is aware of the risks inherent in the Company’s business and understands the importance of
identifying, evaluating and monitoring these risks. The Board considers the process for identifying, evaluating
and managing any signiﬁcant risks faced by the Company on an on-going basis and arranges for these risks
to be reported and discussed at Board meetings. It ensures that effective controls are in place to mitigate
these risks and that a satisfactory compliance regime exists to ensure all applicable local and international
laws and regulations are upheld.

The principal risks facing the Company include risks around selecting an appropriate Target Company and
executing the investment in such Target Company once selected. The principal risks also include risks relating
to the Company’s dependence on the Investment Manager, risks connected to the Company’s operations and
risks relating to the valuation of the Company’s Shares.

An explanation of each of these principal risks and how they are managed is set out below.

⚫ Selection of Target Company and execution of investments. The Company is subject to the risk that the
Investment Manager will be unable to locate a suitable investment in the UK or the US or will select a Target
Company that fails to produce attractive returns. Once a Target Company is identiﬁed, the Investment
Manager will seek to build a stake, but its stake building activities could give rise to leaks or inappropriate
disclosures that could affect the Investment Manager’s ability to acquire the entirety of its intended stake
at an attractive price. After the stake is disclosed, the Investment Manager may be expected to engage with
the Target Company to seek representation on its board of directors, but the Company remains exposed
to the risk that the Investment Manager will be unable to secure board representation. While these risks

6

Annual Report and Audited Financial Statements

Report of the Directors
(continued)

remain present, Trian has extensive experience identifying targets that have the potential to produce
attractive investment returns, building equity, or equity-equivalent derivative positions at attractive prices
and obtaining board representation after engaging with companies in which it has equity positions
exceeding 5 per cent of a target company’s stock. The Board intends to continually monitor the Investment
Manager’s investment activities and to provide oversight as appropriate.

⚫ Operations of the Company. The Company is subject to various forms of operational risk, including the
risk of fraud, valuation errors, accounting discrepancies, inadequate cash management and regulatory
issues. These issues are actively reviewed by the Board at quarterly Board meetings and between meetings,
including by monitoring the Company’s recent investment performance and operational activities to ensure
that the Investment Manager and the Company’s other service providers are adhering to established
practices and procedures. In addition, the Board receives reports from the Company Secretary and
Administrator at meetings of the Board in respect of compliance matters and the duties performed by
them on behalf of the Company, as well as reports on market activity from the Company’s corporate
brokers, Numis Securities Limited and Jefferies International Limited (collectively, the “Corporate Brokers”).

⚫ Dependence on Investment Manager. Neither the Company nor the Investment Partnership has any
employees or owns any facilities. As a result, the ability of the Company to achieve its investment objective
depends heavily on the expertise and experience of Trian and its ability to pursue its investment strategies.
Trian also manages funds and investment vehicles in addition to the Investment Partnership, which could
give rise to certain conﬂicts of interest. The Board intends to actively monitor the performance of the
Investment Manager, with assistance from the Company’s other service providers, and retains the ability
to appoint a replacement in certain limited circumstances. The Board regularly engages with the
Investment Manager during and between Board meetings, and when appropriate, seeks further clariﬁcation
of matters from the Investment Manager in order to make informed decisions. The Board and Trian also
each monitor conﬂicts of interest, and Trian maintains trade allocation procedures that are designed to
allocate investment opportunities on a fair and equitable basis, as disclosed in the Prospectus.

⚫ Valuation of the Shares. In some circumstances, the Company’s Share price may trade at a discount (or
premium) to the underlying market value of the Company’s investments. This discount level (or premium)
is expected to ﬂuctuate from time to time. The Board intends to regularly review Net Asset Value and
Share price performance in the context of market conditions. Any discount (or premium) will also be
monitored by the Investment Manager and the Corporate Brokers, who intend to maintain an ongoing
dialogue with the Board about potential strategies to address any signiﬁcant discount that may emerge,
including share buybacks.

The principal risks of the Company are mitigated and managed by the Board through continual review, policy
setting and quarterly review of the Company’s risk matrix to ensure that procedures are in place with the
intention of minimising the impact of the foregoing risks. In addition, the Board believes that the Investment
Manager, along with the Company’s other service providers, have the right skills and experience to help the
Company manage these risks. The Board can conﬁrm that the principal risks of the Company, including those
which could threaten its business model, future performance, solvency or liquidity, have been robustly
assessed for the Period.

The Company’s principal risk factors are more fully discussed in the Prospectus, available on the Company’s
website (www.trianinvestors1.com) and should be reviewed by shareholders. In addition, the Company’s
ﬁnancial instrument risks are discussed in Note 11 to the Financial Statements.

Viability statement
In accordance with provisions 30 and 31 of the UK Corporate Governance Code issued in July 2018 (the “Code”),
the Directors have assessed the going concern status and viability of the Company over the four-year period
ending 31 December 2022.

7

Trian Investors 1 Limited

Report of the Directors
(continued)

The holding period for Company and Investment Partnership investments is not ﬁxed, but the Company and
the Investment Partnership expect that a typical holding period would be greater than one year. As of the
date of the Prospectus, the average holding period of the ten portfolio company investments previously
realised by Trian Management, where it beneﬁcially owned greater than 5 per cent of all outstanding company
shares, was 3.9 years (although this ﬁgure should not be taken as being indicative of the holding period for
any future investment by the Company or the Investment Partnership). As such, the Directors have determined
that the four-year period to 31 December 2022 is the appropriate period over which to provide its viability
statement.

The Directors have identiﬁed the following factors as potential contributors to ongoing viability:

⚫ The principal risks documented in the Report of the Directors as set out above;

⚫ The liquidity of the Company’s portfolio; and

⚫ The ongoing relevance of the Company’s investment objective in the current environment.

The Company currently holds cash balances and money market funds. Following the selection of a Target
Company, the Company is expected to hold securities of the Target Company through its interest in the
Investment Partnership. The investment made by the Investment Partnership in the Target Company is
expected to be liquid.

Based on the foregoing, the Directors have a reasonable expectation that the Company will be able to continue
in operation and meet its obligations as and when they fall due over the four-year period to 31 December 2022.

AIFM directive
The Directors have considered the impact of the EU Alternative Investment Fund Managers Directive
(2011/61/EU) (“AIFMD”) on the Company and its operations. The Company is a non-EU domiciled Alternative
Investment Fund and the Investment Manager has been appointed as the Company’s non-EU Alternative
Investment Fund Manager (“non-EU AIFM”). As the Company is managed by a non-EU AIFM, only a limited
number of provisions of AIFMD apply. The Investment Manager has notiﬁed the UK Financial Conduct Authority
in accordance with regulation 59 of the UK Alternative Investment Fund Managers Regulations 2013 in order
to permit the marketing of the Company and the Shares in the UK, but the Company does not currently intend
to market the Shares in any other European Economic Area (“EEA”) member state.

Subsequent events
As disclosed in Note 17 to the Financial Statements, there are no subsequent events to report.

Annual General Meeting
The Annual General Meeting (‘‘AGM’’) of the Company will be held on 27 June 2019 at Floor 2, Trafalgar Court,
Les Banques, St Peter Port, Guernsey. Details of the resolutions to be proposed at the AGM, together with
explanations, will appear in the Notice of Meeting to be distributed to shareholders together with the Financial
Statements. Members of the Board will be in attendance at the AGM and will be available to answer
shareholder questions.

By order of the Board

Chris Sherwell
Chairman

11 April 2019

8

Corporate Governance Statement

Annual Report and Audited Financial Statements

As an unregulated Guernsey incorporated company quoted on the SFS, the Company is not required to comply
with the Code or the GFSC Finance Sector Code of Corporate Governance (the “GFSC Code”). Nevertheless,
the Directors place great importance on ensuring that high standards of corporate governance are maintained.
Accordingly, the Directors have taken appropriate measures to ensure that the Company operates with due
consideration to any codes of corporate governance that the Board deems appropriate. The Board perceives
that good corporate governance practice is necessary for delivering sustainable value, enhancing business
integrity and maintaining shareholder conﬁdence in the Company. To further these aims, the Board has decided
to voluntarily comply with the Code, which sets out guidance in the form of principles and provisions for
companies to follow to ensure good corporate governance practice. Further information on the Code can be
obtained from www.frc.org.uk. By complying with the Code, the Company is also deemed to be in compliance
with the GFSC Code.

Certain provisions of the Code, including provisions relating to the responsibilities of the chief executive,
executive directors’ remuneration and the responsibilities of the Board to employees and its workforce, are
not relevant to the Company as it has no executive directors or employees. The Company’s day-to-day
management and administrative functions are outsourced to the Investment Manager and other third parties.
The Company will, therefore, not report further in respect of these provisions.

Except as disclosed within these Financial Statements, the Board is of the view that the Company complies
with the principles and provisions of the Code. Key issues affecting the Company’s corporate governance
responsibilities, how they are addressed by the Board and the application of the Code are presented below.

SECTION 1: BOARD LEADERSHIP AND COMPANY PURPOSE
Board responsibilities
The Directors are responsible for ensuring compliance with the Company’s investment objective and
investment policy and have overall responsibility for the Company’s activities, including review of overall
investment performance. The Board has approved a formal schedule of Matters Reserved for the Board
which includes, amongst others: review of the Company’s overall strategy and business plans; approval of
any proposed amendments to the Company’s investment objective or policies; approval of the Company’s
half-yearly and annual ﬁnancial statements; review and approval of any alteration to the Company’s
accounting policies or practices or any proposal to change the Company’s accounting reference date;
declaration of any dividends or other distributions by the Company; approval of any material announcements
or communications; approval of changes in Board composition; appointment or termination of any of the
Company’s service providers; the issue of any share capital of the Company and the exercise by the Company
of its borrowing powers; and any proposed buyback or redemption of the Company’s shares by the Company.
In addition, the Board will undertake annual reviews of the Company’s service providers to ensure that the
Company’s contracts of engagement with the Investment Manager, Administrator and Company Secretary,
Corporate Brokers and other service providers are operating satisfactorily and to ensure the accurate
management and administration of the Company’s affairs and business and that they are competitive and
reasonable for the Company’s shareholders.
In particular, the Board is responsible for reviewing and
overseeing the performance of the Investment Manager and to monitor any conﬂicts of interests that may
arise. In addition, and if applicable, a non-executive Director may provide a written statement outlining any
concerns regarding the operation of the board or the management of the Company to the Chairman upon
resignation. Furthermore, any concerns of such a nature that cannot be resolved would be recorded in the
relevant board meeting minutes.

Management of the Investment Partnership is the responsibility of Trian Investors 1 General Partner, LLC, the
general partner of the Investment Partnership (the “Managing General Partner”), which has delegated
investment decisions and day-to-day management of the Investment Partnership to the Investment Manager
under the terms of an investment management agreement. Given that it currently has the majority interest
in the Investment Partnership, the Company and therefore the Board, has the ability to approve any proposed
Target Company and to remove the Managing General Partner and Investment Manager in certain
limited circumstances.

9

Trian Investors 1 Limited

Corporate Governance Statement
(continued)

Relations with shareholders
The Directors place a great deal of importance on communication with the Company’s shareholders. The
Investment Manager and the Corporate Brokers intend to meet with shareholders on a periodic basis at
appropriate times to discuss events and activities of the Company. The Board also receives regular updates
from the Corporate Brokers at each meeting relating to shareholder activity and other matters. The Company’s
ﬁnancial statements, when published, will be widely distributed to other parties who have an interest in the
Company’s performance and will be available on the Company’s website (www.trianinvestors1.com).

All Directors are available for discussions with the shareholders, in particular the Chairman and the Audit
Committee Chairman, as and when required.

With regard to the Directors’ duty to promote the success of the Company pursuant to Section 172 of
Companies Act 2006, the Board’s key focus, in conjunction with the Investment Manager, is on ensuring the
selection of a suitable Target Company that they anticipate will deliver the Company’s investment objective
for its shareholders and wider stakeholders. Due to the nature of the Company and its activities, the Board
do not consider its operations to negatively impact either the community or the environment, particularly as,
at the date of publication of these Financial Statements, the Target Company has not yet been identiﬁed and
no investment has been made. As previously noted, the Company has no employees.

SECTION 2: DIVISION OF RESPONSIBILITIES
Board composition
The Board consists of three non-executive members, each of whom has served as a Director since the
incorporation of the Company on 24 August 2018.

Chris Sherwell (Chairman), aged 71 years.
Mr Sherwell has worked in the offshore ﬁnance industry based in Guernsey for 25 years. Since 2004 he has
acted as a Non-Executive Director of a variety of listed investment funds and companies. Prior to January 2004,
Mr Sherwell was Managing Director of Schroders’ offshore investment and private banking operations in the
Channel Islands. He was previously Investment Director from 1993-2000 and also served on the boards of
various Schroder group companies and funds during his period there. Prior to Schroders he worked at Smith
New Court as a research analyst specialising in asset allocation for Asian markets. Mr Sherwell is a Rhodes
Scholar with degrees in science (B.Sc.(General) (London), Chemistry and Physics through the University College
of Rhodesia) and in economics and politics (MA (Oxon) and M Phil (Oxon) from the University of Oxford). He
has worked as a university lecturer and was for ﬁfteen years a journalist, 13 of them for the Financial Times.
He holds the Institute of Directors Diploma in Company Direction and is a member of the Guernsey fund
services interest group GIFA and of the NED Forum.

Mark Thompson, aged 56 years.
Mr Thompson is a Guernsey resident with over 25 years of experience in the offshore ﬁnance industry. He
worked for KPMG for 31 years in London, Hong Kong and Guernsey where his roles included Audit Partner,
Head of Audit and Senior Partner of KPMG in the Channel Islands and he has audited and advised the boards
of a variety of listed investment companies. Mr Thompson is a non-executive director of Rocq Capital Holdings
Limited and Utmost Worldwide Limited, a Chartered Accountant (ICAEW), Chartered Director (IoD) and a
former chairman of the Guernsey Branch of the Institute of Directors. He holds an MA in mathematics from
the University of Oxford.

10

Annual Report and Audited Financial Statements

Corporate Governance Statement
(continued)

Simon Holden, aged 43 years.
Mr Holden is a resident of Guernsey and has more than 15 years of experience in private equity investment
and portfolio company operation roles, working with Candover Investments and then Terra Firma Capital
Partners since 2008. Mr Holden left Terra Firma in late 2015 and currently serves as non-executive director of
HICL Infrastructure Company (where Mr Holden is Chair of the Risk Committee) and Hipgnosis Songs Fund
Limited which was admitted to trading on the Specialist Fund Segment in July 2018. Mr Holden is also a
director of a number of unlisted private equity funds with Permira and Blue Water Energy and holds a number
of trading company board roles in both the private sector and a States of Guernsey owned trading asset.
Mr Holden graduated from the University of Cambridge with an MEng and MA (Cantab) in Manufacturing
Engineering, holds both a DipIOD (Institute of Directors Diploma in Company Direction) and IMC (CFA) and is
a member of various ﬁnancial services interests groups including GIFA, the NED Forum and Guernsey’s IP
Commercial Group.

Independence
For the purposes of assessing compliance with the Code, the Board considers all of the Directors to be
independent of the Investment Manager and free from any business or other relationship that could materially
interfere with the exercise of their independent judgement. In particular, none of the Directors has any current
or historical employment with the Investment Manager, nor do they have any current directorships in any
other entities for which the Investment Manager or its key personnel provide services.

Commitment of each Director
Prior to the appointment of each of the non-executive Directors, discussions were undertaken with each
individual to ensure that each was sufficiently aware of the time needed for his role. Each Director has
conﬁrmed in his appointment letter that he is able to devote sufficient time to his duties. Upon appointment,
each Director notiﬁed the Board of signiﬁcant outside commitments and interests, including those which may
create a conﬂict situation, and agreed to notify the Board of any subsequent acceptance of, or entry into, a
signiﬁcant commitment or interest which amounts to a conﬂict situation.

Division of responsibilities
The Board is comprised wholly of non-executive Directors. The non-executive Directors’ responsibilities
are described above in Section 1 of this Corporate Governance Statement and are set out in greater detail
within the Schedule of Matters reserved for the Board. All day-to-day functions are outsourced to external
service providers.

The Chairman
Chris Sherwell was appointed as Chairman of the Board on 24 August 2018. As Chairman, Mr. Sherwell leads
the Board and is responsible for its overall performance in directing the Company, including by organising the
Board’s business and ensuring the effectiveness of the Board and individual Directors. He endeavours to
produce an open culture of debate within the Board.

Role of non-executive Directors
The Board is composed entirely of non-executive Directors, who meet as required without the presence of the
Investment Manager and service providers to scrutinise the achievement of agreed goals and objectives, and
monitor performance. Through the Audit Committee, and the leadership of Mark Thompson, the Directors
ensure the integrity of ﬁnancial information and conﬁrm that all ﬁnancial controls and risk management
systems are robust.

Due to the size and structure of the Board, the appointment of a senior independent director is not
deemed necessary.

11

Trian Investors 1 Limited

Corporate Governance Statement
(continued)

Company Secretary
In conjunction with the Chairman, the Company Secretary facilitates the ﬂow of information between the
Board, the Committees, the Investment Manager and other service providers through the development of
comprehensive meeting packs, agendas and other reports. Prior to each Board meeting, the Company
Secretary distributes a Board and Committee meeting pack, which contains relevant, concise and clear
information. When required, the Board has sought further clariﬁcation of matters directly with the Investment
Manager and other service providers, both in terms of further reports and via in-depth discussions.

Full access to the advice and services of the Company Secretary is available to the Board; in turn, the Company
Secretary is responsible for advising the board on governance matters. The appointment and resignation of
the Company Secretary is a matter for the whole Board pursuant to the Schedule of Matters reserved for the
Board. A review of the performance of the Company Secretary is undertaken by the Board on a regular basis
and forms a part of the annual service provider review process.

Board meetings
The Board meets on at least a quarterly basis. The dates for each scheduled meeting are planned and agreed
more than a year in advance. Meetings will be convened as and when required to consider any urgent matters
arising. In addition to formal Board and/or committee meetings and, to the extent practicable and appropriate,
the Directors maintain close contact with each other, the Administrator and the Investment Manager, by email
and conference calls, for the purpose of keeping themselves informed about the Company’s activities.

The Board met four times during the Period, including three meetings held in connection with the initial public
offering of the Company, and the Audit Committee met once during the Period. Subsequent to the Period and
prior to the ﬁling of this Annual Report, the Board met a further two times and, additionally, the Directors
visited with senior representatives of the Investment Manager at its New York offices to discuss matters of
investment strategy.

Name

Chris Sherwell
Mark Thompson
Simon Holden

Scheduled
board
meeting
(max 1)

Committee
of the
board
meeting
(max 1)

Other
board
meeting
(max 4)

Audit
Committee
meeting
(max 1)

1
1
1

1
1
1

3
4
4

1
1
1

SECTION 3: COMPOSITION, SUCCESSION AND EVALUATION
Board composition
The Board is responsible for reviewing its structure, size and composition, for considering succession planning
and for identifying and approving candidates to ﬁll Board vacancies. The Board believes that, as a whole, its
current members represent an appropriate balance of skills, experience and knowledge.

The Board remains open to the appointment of additional directors with relevant expertise that may enhance
the Company’s fulﬁlment of its investment objective. The Board also believes that diversity of background,
experience and approach amongst board members is of great importance and it is the Company’s policy to
give careful consideration to issues of board balance and diversity when making any new appointments.

Due to the size of the Board, and that it is established wholly of non-executive Directors, it has not been
deemed necessary to establish a separate nomination committee and this function will be fulﬁlled by the
Board as a whole.

12

Annual Report and Audited Financial Statements

Corporate Governance Statement
(continued)

Director re-election
Each Director shall stand for re-election by the Company’s shareholders at the upcoming annual general
meeting. The Board intends to set out in the papers accompanying the resolution to elect each director why
their contribution is, and continues to be, important to the Company’s long-term sustainable success.

Board succession
All of the current Directors were appointed to the Board within the last year. However, the Board intends to
arrange for appropriate succession arrangements in due course that will comply with the principles and the
provisions of the Code.

Director and Board evaluation
Using a pre-determined template based on the Code’s provisions as a basis for review, the Board intends to
undertake an annual evaluation of its performance and that of the Audit Committee. Due to the shorter than
usual ﬁrst ﬁnancial period covered by these Financial Statements, the Board has agreed that the ﬁrst
evaluation will be completed in 2019. Additionally, an evaluation focusing on the individual commitment,
performance and contribution of each Director will be conducted. The Chairman will meet with each Director
to fully understand their views of the Company’s strengths and to identify potential weaknesses. Due to the
size and structure of the Board the evaluation of the Chairman of the Board and Audit Committee is dealt with
within the annual Board evaluations.

Given the Company’s size and the structure of the Board, no external facilitator or independent third party is
expected to be used in the performance evaluation.

SECTION 4: AUDIT, RISK AND INTERNAL CONTROL
Internal control and ﬁnancing reporting
The Board acknowledges that it is responsible for establishing and maintaining the Company’s systems of
internal control and for maintaining their effectiveness. Internal control systems are designed to manage
rather than eliminate the risk of failure to achieve business objectives, and only provide reasonable rather
than absolute assurance against material misstatements or losses.

The Board has delegated the day-to-day operations of the Company to the Administrator and Investment
Manager; however the Board retains accountability for all delegated functions. The Board clearly deﬁnes the
duties and responsibilities of all service providers and advisers, and appointments are only made after due
and careful consideration.

The Administrator maintains a system of internal control over its activities. The Board receives reports from
the Company Secretary and Administrator in respect of compliance matters and other duties performed on
behalf of the Company.

The Board considers that the Company’s existing internal controls, coupled with the analysis of risks inherent
in the business models of the Company and its subsidiaries, continue to provide appropriate tools for the
Company to monitor, evaluate and mitigate its risks.

Going concern status and continued viability
The Financial Statements have been prepared on the going concern basis. The net current asset position as
at 31 December, 2018 is £266.1 million. After making suitable enquiries, and given the nature of the Company
and its sufficient cash reserves, the Directors are satisﬁed that the Company is able to continue for the
foreseeable future, and at least twelve months from the date of approval of the Financial Statements, and it
is appropriate to continue to adopt the going concern basis in preparing the Company’s ﬁnancial statements.

13

Trian Investors 1 Limited

Corporate Governance Statement
(continued)

Furthermore, as set forth on pages 6 through 7 of the Report of the Directors, the Board has conducted a
robust assessment of the principal risks facing the Company and the Directors have a reasonable expectation
that the Company will be able to continue in operation and meet its obligations as and when they fall due over
the four year period to 31 December 2022.

Preparation of Annual Report
An explanation of the Directors’ roles and responsibilities in preparing the Annual Report and Financial
Statements for the Period is provided in the Directors’ Responsibility Statement on pages 16 to 17. Further
information enabling shareholders to assess the Company’s performance, business model and strategy can
be located in the Chairman’s Statement on page 3, and the Report of Directors on pages 4 to 8.

Audit Committee
The Board has established an Audit Committee with formally delegated duties and responsibilities
documented within its terms of reference. The Audit Committee is responsible for assisting the Board in
discharging its responsibilities for the integrity of the Company’s ﬁnancial statements, as well as aiding the
assessment of the Company’s internal control effectiveness and the objectivity of the Company’s external
auditors. The Audit Committee is composed of all of the members of the Board, all of whom are independent
non-executive Directors. Due to the size and structure of the Board and the Company, the Chairman of the
Board has been included as a member of the Audit Committee to give him a fuller understanding of the issues
facing the Company and to maximise the effectiveness of the Committee. However, Mr. Sherwell is not
appointed as the Committee’s Chair, and the Committee is instead led by Mark Thompson, who has extensive
expertise in accounting and audit processes. Further information on the Audit Committee is provided in the
Report of the Audit Committee on pages 18 to 20.

The Board has reviewed the need for an internal audit function and has decided that the systems and
procedures employed by the Administrator and Investment Manager, including their own internal controls and
procedures, provide a sound system of risk management and internal control, which safeguards shareholders’
investment and the Company’s assets and as such no internal audit function is deemed necessary.

SECTION 5: REMUNERATION OF DIRECTORS
The Board endeavours to ensure the Company’s Remuneration Policy reﬂects and supports the Company’s
strategic aims and objectives. It has been agreed that, due to the size of the Board, and that it is comprised
wholly of non-executive Directors, a separate Remuneration Committee would be inefficient. Therefore the
Board as a whole is responsible for discussions regarding remuneration. No external remuneration consultants
were appointed during the Period.

In accordance with the Company’s Articles of Incorporation (the “Articles”), the aggregate amount of fees paid
to Directors may not exceed the annual equivalent of £400,000 per annum. Subject to this limit, it is the
Company’s policy to determine the level of Directors’ fees, having regard for the level of fees payable to non-
executive Directors in the industry generally, the role that individual Directors fulﬁl in respect of responsibilities
related to the Board and Audit Committee and the time dedicated by each Director to the Company’s affairs.

Each of the Directors is currently entitled to a fee payable by the Company at the rate of £40,000 per annum.
The Chairman currently receives an additional fee of £15,000 per annum and the Chairman of the Audit
Committee currently receives an additional fee of £5,000 per annum. The pro-rated fees payable to the
Directors during the Period were £14,194 for each Director, with the Chairman being entitled to receive an
additional £5,323 and the Chairman of the Audit Committee being entitled to receive an additional £1,774.

14

Annual Report and Audited Financial Statements

Corporate Governance Statement
(continued)

As outlined in the Prospectus, all of the Directors are also entitled to be reimbursed for all reasonable
expenses properly incurred by them in attending general meetings, board or committee meetings or otherwise
in connection with the performance of their duties.

None of the Directors has a service contract with the Company. Each of the Directors has entered into a letter
of appointment with the Company that states that his appointment and any subsequent termination or
retirement shall be subject to the Articles. Each Director’s appointment letter provides that upon the
termination of a Director’s appointment, that Director must resign in writing and all records remain the
property of the Company. Each Director’s appointment can be terminated in accordance with the Articles
and without compensation. There is no notice period speciﬁed in the Articles for the removal of Directors.

Directors’ and officers’ liability insurance cover is maintained by the Company but it is not considered a beneﬁt
in kind nor does it constitute part of the Directors’ remuneration. In addition, the Company’s Articles indemnify
each Director, former or present, out of assets and proﬁts of the Company in relation to actions, expenses and
liabilities incurred during the course of their duties, in so far as the law allows and provided that such
indemnity is not available in circumstances of negligence, default, breach of duty or breach of trust in relation
to the Company.

By order of the Board

Chris Sherwell
Chairman

11 April 2019

15

Trian Investors 1 Limited

Directors’ Responsibility Statement

Each of the Directors, whose names are set out on pages 10 to 11 in the Corporate Governance Statement of
the Annual Report, conﬁrms that, to the best of his knowledge and belief:

⚫

⚫

⚫

the Financial Statements, prepared in accordance with International Financial Reporting Standards (“IFRS”)
as adopted by the European Union, give a true and fair view of the assets, liabilities, ﬁnancial position and
proﬁt or loss of the Company;

the Annual Report, including the Chairman’s Statement, Report of the Directors, Corporate Governance
Statement and Report of the Audit Committee, 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 they face; and

the Annual Report, taken as a whole, is fair, balanced and understandable and provides information
necessary for shareholders to assess the Company’s performance, business model and strategy.

The Directors are responsible for preparing the Annual Report in accordance with applicable laws and
regulations. The Companies (Guernsey) Law, 2008 requires the Directors to prepare ﬁnancial statements for
each ﬁnancial year in accordance with IFRS. 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 ﬁnancial
performance and cash ﬂows of the Company for that period. In preparing these Financial Statements, the
Directors are required to:

⚫

select suitable accounting policies and apply them consistently;

⚫ make judgements that are reasonable and prudent;

⚫ present information, including accounting policies, in a manner that provides relevant, reliable, comparable

and understandable information;

⚫ provide additional disclosures when compliance with the 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 performance;

⚫

state that the Company has complied with IFRS, subject to any material departures disclosed and
explained in the Company’s ﬁnancial statements;

⚫ make an assessment of the Company’s ability to continue as a going concern; and

⚫ prepare the Company’s ﬁnancial statements on a going concern basis unless it is inappropriate to presume

that the Company will continue in business.

The Directors conﬁrm they have complied with the above requirements in preparing the Company’s
Financial Statements.

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 which enable them to ensure that the ﬁnancial statements comply with the Companies
(Guernsey) Law, 2008. 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.

The Directors conﬁrm that, so far as they are aware, there is no material information relevant to the audit of
which the Company’s auditor is unaware. The Directors also conﬁrm that they have taken all steps they ought
to have taken as Directors to make themselves aware of any material information relevant to the audit and
to establish that the Company’s auditors are aware of that information.

16

Annual Report and Audited Financial Statements

Directors’ Responsibility Statement
(continued)

The Directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information
included on the Company’s website (www.trianinvestors1.com). The work carried out by the external auditor
does not involve considerations of these matters and, accordingly, the external auditor accepts no
responsibility for any changes that may have occurred to the ﬁnancial statements after they were initially
presented on the website. Legislation in Guernsey governing the preparation and dissemination of ﬁnancial
statements may differ from legislation in other jurisdictions.

For Trian Investors 1 Limited

Chris Sherwell
Chairman

11 April 2019

17

Trian Investors 1 Limited

Report of the Audit Committee

Composition
The Audit Committee (the “Committee”) comprises the three members of the board with Mr Thompson as the
Chairman. The Board is satisﬁed that the Committee has recent and relevant skills and ﬁnancial experience
to fulﬁl its responsibilities and that its members have signiﬁcant business experience relevant to the asset
management industry. Further details on the experience and qualiﬁcations of members of the Committee can
be found on pages 10 and 11.

Meetings
The Committee meets no less than twice a year. It met once in the period to 31 December 2018 and once
since the period end through to the date of this report and all Directors were in attendance. The external
auditor has attended both meetings to discuss the audit approach and audit ﬁndings. In addition the Directors
met with the external auditor outside of an Audit Committee meeting to discuss the application of
accounting policies.

Principal duties
The principal duties of the Committee as set out in the terms of reference are:

⚫

⚫

⚫

⚫

⚫

to monitor the integrity of the ﬁnancial reporting of the Company including its annual and half yearly reports
and any other information relating to its ﬁnancial performance;

to monitor and review the adequacy and effectiveness of Company’s internal controls and risk
management systems;

to keep under review the scope, results, quality and effectiveness of the audit and the independence and
objectivity of the auditor;

to consider and make recommendations to the Board regarding the appointment, reappointment,
replacement, remuneration and terms of reference of the external auditor; and

to review the whistleblowing arrangements in place to enable directors and staff of service providers to,
in conﬁdence, raise concerns about possible wrongdoing in ﬁnancial reporting or other matters insofar as
they may affect the Company.

The Committee shall meet the external auditor at least once a year, without the Investment Manager or
Administrator being present, to discuss their remit and any issues arising from the audit.

The Committee’s terms of reference include all matters indicated by the Disclosure and Transparency Rule 7.1
and the Code and are available on the Company’s website.

Financial reporting
The primary role of the Committee in relation to ﬁnancial reporting is to review with the Administrator and the
Investment Manager the appropriateness of annual reports and interim reports, concentrating on, amongst
other matters:

⚫

⚫

the appropriateness of accounting policies and practices;

the clarity of the disclosures and compliance with ﬁnancial reporting standards and relevant ﬁnancial and
governance reporting requirements;

⚫ material areas in which signiﬁcant judgements and estimates have been applied or there has been

discussion with any external consultant or the external auditor;

18

Annual Report and Audited Financial Statements

Report of the Audit Committee
(continued)

⚫ whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s performance, business model and
strategy; and

⚫

any correspondence from regulators in relation to the Company’s ﬁnancial reporting.

To aid its review, the Committee considers reports from the Investment Manager and also reports from the
external auditor on the outcomes of their audit. The Committee supports Deloitte LLP in displaying the
necessary professional scepticism their role requires.

Signiﬁcant matters in relation to the ﬁnancial statements
The Committee determined that the most signiﬁcant area of judgement in connection with the ﬁnancial
statements was the determination that the Company is an investment entity and therefore records its
investment in the subsidiary at fair value. The basis for this judgement is explained in Note 3. This judgement
will be revisited and the requirement for additional disclosures assessed in future periods after the anticipated
acquisition of an investment in a Target Company.

The Committee believes a signiﬁcant ﬁnancial reporting risk could arise in future periods from the valuation
of the investment in the Target Company. The Committee will receive valuations from the Investment Manager
on a regular basis which will be reviewed to ensure they are in line with reporting standards.

Risk management
The Company’s risk assessment process and the way in which signiﬁcant business risks are identiﬁed and
managed is a key area of focus for the Committee. The work of the Committee was driven primarily by the
Company’s assessment of its principal risks and uncertainties as set out on pages 6 to 7 of the Report of the
Directors. The Committee receives reports from the Investment Manager and Administrator on the Company’s
risk evaluation process and reviews changes to signiﬁcant risks identiﬁed.

Internal audit
The Committee does not consider there to be a need for an internal audit function, given that there are no
employees in the Company and all outsourced functions are with parties who have their own internal controls
and procedures. The Committee will reconsider the need for an internal audit function at least once a year.

External auditor
Deloitte LLP has been appointed as the Company’s external auditor. The lead audit partner is David Becker
and under normal audit partner rotation arrangements he will be replaced after no more than ﬁve years. The
Companies Law requires the reappointment of the external auditor to be subject to shareholders’ approval at
the Annual General Meeting. There are no contractual obligations restricting the choice of external auditor
and the Company will consider putting the audit services contract out to tender at least every ten years.

The objectivity of the external auditor is reviewed by the Committee which also reviews the terms under
which the external auditor may be appointed to perform non-audit services. In order to safeguard external
auditor independence and objectivity, the Committee ensures that any non-audit services provided by the
external auditor does not conﬂict with its statutory audit responsibilities. A summary of the external auditor’s
remuneration for audit and non-audit services is shown in Note 9.

In order to safeguard auditor independence and objectivity, the Committee ensures that any non-audit services
provided by the auditor do not conﬂict with its statutory audit responsibilities. Non-audit services provided
by the auditor will generally only cover reviews of interim ﬁnancial statements and/or capital raising work. Any
non-audit services conducted by the auditor outside of these areas will require the consent of the Committee
before being initiated.

19

Trian Investors 1 Limited

Report of the Audit Committee
(continued)

To fulﬁl its responsibility regarding the independence of the external auditor, the Committee considered:

⚫

⚫

the audit personnel in the audit plan for the current year;

a report from the external auditor describing its arrangements to identify, report and manage any conﬂicts
of interest; and

⚫

the extent of non-audit services provided by the external auditor.

To assess the effectiveness of the external auditor, the Committee reviewed:

⚫

⚫

⚫

the external auditor’s fulﬁlment of the agreed audit plan and variations from it;

reports highlighting the major issues that arose during the course of the audit; and

feedback from the Investment Manager and Administrator evaluating the performance of the audit team.

Conclusions and recommendation
The Committee is satisﬁed with Deloitte LLP’s effectiveness and independence as external auditor having
considered the degree of diligence and professional scepticism demonstrated by them. As such, the
Committee has not considered it necessary this year to conduct a tender process for the appointment of its
external auditor. Having carried out the review described above, and having satisﬁed itself that the external
auditor remains independent and effective, the Committee has recommended to the Board that Deloitte LLP
be reappointed as external auditor for the year ending 31 December 2019.

The Committee has advised the Board that it considers that the Annual Report and Financial Statements to
be fair, balanced and understandable and provides the information necessary for shareholders to assess the
Company’s performance, business model and strategy. In reaching this conclusion the Committee has
considered the following:

⚫

⚫

⚫

its own assessment of the signiﬁcant risks,
statements;

judgements and estimates pertaining to the ﬁnancial

the controls of the Investment Manager and the Administrator to ensure complete and accurate ﬁnancial
records and security of the Company’s assets; and

a conﬁrmation from the external auditor that they identiﬁed no material misstatements in the course of
their work.

A member of the Committee will attend each Annual General Meeting to respond to any questions in respect
of the Audit Committee.

On behalf of the Audit Committee,

Mark Thompson
Audit Committee Chairman

11 April 2019

20

Annual Report and Audited Financial Statements

Independent Auditor’s Report
TO THE MEMBERS OF TRIAN INVESTORS 1 LIMITED

Report on the audit of the ﬁnancial statements
Opinion
In our opinion the ﬁnancial statements of Trian Investors 1 Limited (the ‘company’):

⚫

give a true and fair view of the state of the company’s affairs as at 31 December 2018 and of its proﬁt for
the period 24 August to 31 December 2018;

⚫ have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as

issued by the International Accounting Standards Board (IASB); and

⚫ have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

We have audited the ﬁnancial statements which comprise:

⚫

⚫

⚫

⚫

⚫

the statement of ﬁnancial position;

the statement of comprehensive income;

the statement of changes in equity;

the statement of cash ﬂows; and

the related notes 1 to 17.

The ﬁnancial reporting framework that has been applied in their preparation is applicable law and IFRSs as
issued by the IASB.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the
audit of the ﬁnancial statements section of our report.

We are independent of the company in accordance with the ethical requirements that are relevant to our
audit of the ﬁnancial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical
Standard as applied to listed entities, and we have fulﬁlled our other ethical responsibilities in accordance with
these requirements. We conﬁrm that the non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Summary of our audit approach

Key audit matter

The key audit matter that we identiﬁed in the current year was:

Materiality

Scoping

Signiﬁcant changes in our
approach

⚫ Management Override of Controls

The materiality that we used in the current year was £2,600,000 which
was determined on the basis of 1% of Net Asset Value (NAV).

Audit work to respond to the risk of material misstatement was
performed directly by the audit team.

This is our ﬁrst year of audit as the company was incorporated in 2018.

21

Trian Investors 1 Limited

Independent Auditor’s Report
(continued)

Conclusions relating to going concern, principal risks and viability statement

Going concern
We have reviewed the directors’ statement in note 2 to the ﬁnancial statements
about whether they considered it appropriate to adopt the going concern basis
of accounting in preparing them and their identiﬁcation of any material
uncertainties to the company’s ability to continue to do so over a period of at
least twelve months from the date of approval of the ﬁnancial statements.

We conﬁrm that we
have nothing material
to report, add or draw
attention to in respect
of these matters.

We are required to state whether we have anything material to add or draw
attention to in relation to that statement required by Listing Rule 9.8.6R(3) and
report if the statement is materially inconsistent with our knowledge obtained
in the audit.

Principal risks and viability statement
Based solely on reading the directors’ statements and considering whether they
were consistent with the knowledge we obtained in the course of the audit,
including the knowledge obtained in the evaluation of the directors’ assessment
of the company’s ability to continue as a going concern, we are required to state
whether we have anything material to add or draw attention to in relation to:

We conﬁrm that we
have nothing material
to report, add or draw
attention to in respect
of these matters.

⚫ the disclosures on pages 31-38 that describe the principal risks and explain

how they are being managed or mitigated;

⚫ the directors’ conﬁrmation on page 6 that they have carried out a robust
assessment of the principal risks facing the company, including those that
would threaten its business model, future performance, solvency or
liquidity; or

⚫ the directors’ explanation on page 7 as to how they have assessed the
prospects of the company, over what period they have done so and why
they consider 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.

We are also required to report whether the directors’ statement relating to the
prospects of the company required by Listing Rule 9.8.6R (3) is materially
inconsistent with our knowledge obtained in the audit.

22

Annual Report and Audited Financial Statements

Independent Auditor’s Report
(continued)

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most signiﬁcance in our
audit of the ﬁnancial statements of the current period and include the most signiﬁcant assessed risks of
material misstatement (whether or not due to fraud) that we identiﬁed. These matters included those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team.

These matters were addressed in the context of our audit of the ﬁnancial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.

Management Override of Controls

Key audit matter
description

The risk of management override of controls due to fraud is a pervasive risk of
material misstatement in the ﬁnancial statements. Management is in a unique
position because of their ability to manipulate accounting records and prepare
fraudulent ﬁnancial statements by overriding controls that otherwise appear to
be operating effectively.

We consider that the greatest risk in this respect relates to potential manipulation
and recording of inappropriate journal entries.

We also considered signiﬁcant transactions that are outside the normal course
of business of the entity.

How the scope of our
audit responded to the
key audit matter

We evaluated the design and implementation of key controls over the recording
of journal entries, segregation of duties and ﬁnancial reporting processes as part
of our consideration of this risk.

We also tested the appropriateness of journal entries recorded in the general
ledger and other adjustments made in the preparation of the ﬁnancial
statements.
In designing & performing audit procedures for such tests, we
performed the following:

⚫ made inquiries of individuals involved in the ﬁnancial reporting process
about inappropriate or unusual activity relating to the processing of journal
entries and other adjustments;

⚫ selected journal entries and other adjustments made during the reporting

period;

⚫ used data analytics to examine the general ledger for journals posted during
or at the end of the reporting period that may have fraud characteristics;
and

⚫ traced the selected journals to supporting documentation and critically

assessed their business rationale.

Key observations

Based on the work performed, there are no material exceptions to bring to your
attention.

23

Trian Investors 1 Limited

Independent Auditor’s Report
(continued)

Our application of materiality
We deﬁne materiality as the magnitude of misstatement in the ﬁnancial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or inﬂuenced. We use
materiality both in planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the ﬁnancial statements as a whole as
follows:

Materiality

Basis for determining
materiality

£2,600,000

1% of NAV.

Rationale for the benchmark
applied

The company is an investment entity and as such the holders of equity
will use NAV as the KPI. As such we have used NAV as the benchmark.

NAV £266m

Materiality £2.6m

NAV

Materiality

Audit Committee
reporting threshold
£0.13m

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess
of £130,000 as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we identiﬁed when assessing the
overall presentation of the ﬁnancial statements.

An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the company and its environment, including internal
control and assessing the risks of material misstatement. Our audit scope included the assessment of the
design and implementation of accounting processes and controls in place. Audit work to respond to the risks
of material misstatement was performed directly by the audit engagement team.

The administrator maintains the books and records of the entity. Our audit work therefore included obtaining
an understanding of the service organisation and its relationship with the company.

24

Annual Report and Audited Financial Statements

Independent Auditor’s Report
(continued)

Other information

The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the ﬁnancial
statements and our auditor’s report thereon.

We have nothing to
report in respect of
these matters.

Our opinion on the ﬁnancial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.

In connection with our audit of the ﬁnancial statements, our responsibility is to
in doing so, consider whether the other
read the other information and,
information is materially inconsistent with the ﬁnancial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements,
we are required to determine whether there is a material misstatement in the
ﬁnancial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.

In this context, matters that we are speciﬁcally required to report to you as
uncorrected material misstatements of the other information include where we
conclude that:

⚫ Fair, balanced and understandable – the statement given by the directors
that they consider 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, is materially inconsistent with our
knowledge obtained in the audit; or

⚫ Audit committee reporting – the section describing the work of the audit
committee does not appropriately address matters communicated by us to
the audit committee; or

⚫ Directors’ statement of compliance with the UK Corporate Governance Code –
the parts of the directors’ statement required under the Listing Rules relating
to the company’s compliance with the UK Corporate Governance Code
containing provisions speciﬁed for review by the auditor in accordance with
Listing Rule 9.8.10R (2) do not properly disclose a departure from a relevant
provision of the UK Corporate Governance Code.

Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the ﬁnancial statements and for being satisﬁed that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of ﬁnancial statements that
are free from material misstatement, whether due to fraud or error.

In preparing the ﬁnancial statements, the directors are responsible for assessing the company’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the company or to cease operations,
or have no realistic alternative but to do so.

25

Trian Investors 1 Limited

Independent Auditor’s Report
(continued)

Auditor’s responsibilities for the audit of the ﬁnancial statements
Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements.

A further description of our responsibilities for the audit of the ﬁnancial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Report on other legal and regulatory requirements

Report matters on which we are required to report by exception

Adequacy of explanations received and accounting records
Under the Companies (Guernsey) Law, 2008 we are required to report to you if,
in our opinion:

⚫ we have not received all the information and explanations we require for our

We have nothing to
report in respect of
these matters.

audit; or

⚫ proper accounting records have not been kept by the company; or

⚫ the ﬁnancial statements are not in agreement with the accounting records.

Use of our report
This report is made solely to the company’s members, as a body, in accordance with Section 262 of the
Companies (Guernsey) Law, 2008. 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.

David Becker
For and on behalf of Deloitte LLP
Recognised Auditor
St Peter Port, Guernsey

11 April 2019

26

Statement of Financial Position
As at 31 December 2018

Non-current assets
Investment at fair value through proﬁt or loss

Total non-current assets

Current assets
Cash and cash equivalents
Receivables and prepayments

Total current assets

Current liabilities
Trade and other payables

Total liabilities

Net assets

Equity
Share capital
Retained earnings

Total equity

Number of shares in issue at period end

NAV per share (pence)

Annual Report and Audited Financial Statements

Notes

£’000

15

2
5

6

7

–

–

266,167
165

266,332

210

210

266,122

265,876
246

266,122

270,585,977

8

98.35

The ﬁnancial statements on pages 27 to 38 were approved by the Board and authorised for issue on
11 April 2019.

Chris Sherwell
Director

Mark Thompson
Director

27

Trian Investors 1 Limited

Statement of Comprehensive Income
For the period from 24 August 2018 to 31 December 2018

Income

Expenses
Administration fees
Directors’ fees
Audit fees
Trademark licence fees
Other operating expenses

Total Expenses

Operating loss for the ﬁnancial period

Finance income and expense
Interest income

Proﬁt for the period

Total comprehensive income for the period

Notes

£’000

14
13
9
14

2

—

—

27
50
25
19
68

189

(189)

435

246

246

Basic earnings per share (pence)

10

0.0909

All activities derive from continuing operations.

28

Annual Report and Audited Financial Statements

Statement of Changes in Equity
For the period from 24 August 2018 to 31 December 2018

Notes

Share
capital
£’000

Retained
earnings
£’000

As at 24 August 2018
Proﬁt for the period

Total comprehensive income

Issue of share capital
Transaction costs on issue of shares

As at 31 December 2018

—
—

—

7
7

270,586
(4,710)

265,876

Total
£’000

—
246

246

270,586
(4,710)

—
246

246

—
—

246

266,122

29

Trian Investors 1 Limited

Statement of Cash Flows
For the period from 24 August 2018 to 31 December 2018

Operating activities
Proﬁt before tax
Adjustments to reconcile proﬁt before tax to net cash ﬂows:

Net ﬁnance income for the period
Increase in receivables and prepayments
Increase in trade and other payables

Net cash ﬂows from operating activities

Investing activities
Finance income

Net cash ﬂows from investing activities

Financing activities
Proceeds from issue of shares
Transaction costs on issue of shares

Net cash ﬂows from ﬁnancing activities
Net increase in cash and cash equivalents
Opening cash and cash equivalents

Closing cash and cash equivalents

Notes

£’000

246

(435)
(165)
210

(144)

435

435

7

270,586
(4,710)

265,876
266,167
—

266,167

30

Annual Report and Audited Financial Statements

Notes to the Financial Statements
For the period from 24 August 2018 to 31 December 2018

1. Corporate information
Trian Investors 1 Limited (the “Company”) is incorporated in and controlled from Guernsey as a company
limited by shares with registered number 65419. The shares of the Company are admitted to the Specialist
Fund Segment of the London Stock Exchange (the “SFS”).

2. Accounting policies
The principal accounting policies applied in the preparation of these ﬁnancial statements are set out below.

Basis of preparation
The ﬁnancial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as adopted by the European Union, which comprise standards and interpretations approved by the
International Accounting Standards Board and International Financial Reporting Interpretations Committee
and the Companies (Guernsey) Law, 2008. The ﬁnancial statements have been prepared on a historical cost
basis as amended from time to time by the fair valuing of certain ﬁnancial assets and liabilities. The ﬁnancial
statements cover the period from incorporation on 24 August 2018 to 31 December 2018.

The preparation of ﬁnancial statements in accordance with IFRS requires the Directors to make critical
accounting estimates and judgements. The areas involving a higher degree of judgement or complexity are
disclosed in note 3.

Going concern
The Directors monitor the capital and liquidity requirements of the Company on a regular basis. They have
undertaken a rigorous review of the Company’s ability to continue as a going concern including reviewing the
ongoing cash ﬂows and the level of cash balances as at the reporting date as well as taking forecasts of future
cash ﬂows into consideration and are of the opinion that the Company has adequate resources to continue
its operational activities for the foreseeable future.

Based on these sources of information and their own judgement, the Directors believe it is appropriate to
prepare the ﬁnancial statements of the Company on a going concern basis.

New and amended standards and interpretations applied
On incorporation, the Company adopted all of the IFRS standards and interpretations that were in effect at
that date and are applicable to the Company.

New and amended standards and interpretations not applied
The following new and amended standards and interpretations in issue are applicable to the Company but
are not yet effective or have not been adopted by the European Union and therefore, have not been adopted
by the Company:

– IFRS 16: Leases (effective 1 January 2019)

– IFRS 17: Insurance Contracts (effective 1 January 2021)

The Company has considered the IFRS standards and interpretations that have been issued, but are not yet
effective. None of these standards or interpretations are likely to have a material effect on the Company, as
the Company does not expect to carry out any transactions that fall within their scope.

Accounting for subsidiaries
As explained in more detail in note 3 the Company is an investment entity and accordingly accounts for its
investments in subsidiaries as investments at fair value through proﬁt and loss. As at 31 December 2018, the
Company held one ordinary share in Trian Investors 1 Midco Limited (“Midco”). Trian Investors 1, L.P. (the
“Investment Partnership”) was registered as at 31 December 2018, however, no monies had been transferred
from Midco.

31

Trian Investors 1 Limited

Notes to the Financial Statements
For the period from 24 August 2018 to 31 December 2018 (continued)

2. Accounting policies (continued)
Segment reporting
The decision maker is the Board of the Directors of the Company (the “Board”). The Directors are of the opinion
that the Company is engaged in a single segment of business, being the investment in one target company
(the “Target Company”).

Revenue recognition
All income is accounted for on an accruals basis and recognised in the Statement of Comprehensive Income.

Expenses
Expenses are accounted for on an accruals basis. Expenses borne by subsidiaries are reﬂected in the
Statement of Comprehensive Income through the revaluation of the investments.

All costs associated with the issue of shares are netted off against share capital in the Statement of Changes
in Equity.

Dividends to shareholders
Dividends are accounted for in the period in which they are declared and approved by the Board.

Financial instruments
The classiﬁcation of ﬁnancial assets at initial recognition depends on the purpose for which the ﬁnancial asset
was acquired and its characteristics.

The Company’s only signiﬁcant ﬁnancial assets comprise cash and cash equivalents and investments in
subsidiaries held at fair value through proﬁt and loss.

Cash and cash equivalents
Cash at bank and short term deposits which are held to maturity are carried at cost. Cash and cash
equivalents consist of cash in hand, short-term deposits in banks and investments in money market funds
with an original maturity of three months or less.

Receivables and prepayments
Receivables are initially recognised at fair value. A provision for impairment of trade receivables is established
when there is objective evidence the Company will not be able to collect all amounts due according to the
original terms of the receivables.

Payables and accruals
Payables and accruals are recognised initially at fair value plus transaction costs and are subsequently
measured at amortised cost using the effective interest rate method.

Investments at fair value through proﬁt and loss
i. Classiﬁcation

As explained in more detail in note 3 the Company is an investment entity and accordingly accounts for
its investment in subsidiaries as investments at fair value through proﬁt and loss.

ii. Recognition

Purchases and sales of investments are recognised on the trade date – the date on which the Company
commits to purchase or sell the investment.

32

Annual Report and Audited Financial Statements

Notes to the Financial Statements
For the period from 24 August 2018 to 31 December 2018 (continued)

2. Accounting policies (continued)
iii. Measurement

Investments treated as “investments at fair value through proﬁt or loss” will initially be recognised at fair
value, being the fair value of consideration given. They will subsequently be measured at fair value. Fair value
is deﬁned as the amount for which an asset could be exchanged between knowledgeable willing parties
in an arm’s length transaction.

Realised and unrealised gains or losses will be recognised in the Statement of Comprehensive Income.

iv. Fair value estimation

The level in the fair value hierarchy within which the ﬁnancial assets or ﬁnancial liabilities are categorised
is determined on the basis of the lowest level input that is signiﬁcant to the fair value measurement.

Financial assets and ﬁnancial liabilities are classiﬁed in their entirety into only one of the three levels.

The fair value hierarchy has the following levels:

– Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.

– Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets or

liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

– Level 3 – inputs for the assets or liabilities that are not based on observable market data (unobservable

inputs).

Functional currency
Items included in the ﬁnancial statements are measured using Pounds Sterling (“sterling”) which is the
currency of the primary economic environment in which the Company operates.

At each statement of ﬁnancial position date, monetary assets and liabilities that are denominated in foreign
currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was
determined. Transactions denominated in foreign currencies are translated into sterling at the rate of exchange
presiding at the date of the transaction. Exchange differences are recognised in the Statement of
Comprehensive Income in the period in which they arise.

3. Signiﬁcant accounting judgements, estimates and assumptions
The preparation of ﬁnancial statements requires management to make estimates and assumptions that affect
the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for
revenue and expenses during the period. The nature of the estimation means that actual outcomes could differ
from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and in any future periods
affected. In the future, when investments have been made, the below critical judgements will apply.

Critical judgements in applying the Company’s accounting policies – investment entity exception:
The Directors have considered whether the Company meets the deﬁnition of an investment entity as
stipulated in the provisions of IFRS 10. Entities that meet the deﬁnition of an investment entity within IFRS 10
are required to measure their subsidiaries, other than those that provide investment services to the Company
and do not themselves meet the deﬁnition of an investment entity, at fair value through proﬁt or loss rather
than consolidate them.

33

Trian Investors 1 Limited

Notes to the Financial Statements
For the period from 24 August 2018 to 31 December 2018 (continued)

3. Signiﬁcant accounting judgements, estimates and assumptions (continued)
When entities are formed in connection with each other, the criteria for qualiﬁcation as an investment entity
is applied to the structure as a whole rather than for the entity in isolation.

The criteria which deﬁne an investment entity are, as follows:

⚫ An entity that obtains funds from one or more investors for the purpose of providing those investors with

investment services;

⚫ An entity that commits to its investors that its business purpose is to invest funds solely for returns from

capital appreciation, investment income or both; and

⚫ An entity that measures and evaluates the performance of substantially all of its investments on a fair value

basis.

The Company’s purpose is to invest in a Target Company for capital appreciation and it will measure its
performance (of the Target Company) on a fair value basis. The Company will make its investment in the Target
Company through its wholly owned subsidiary, Midco which in turn will invest the Investment Partnership. The
Board has assessed whether the Company will have all the elements of control as prescribed by IFRS 10 in
relation to the Company’s investment in the Investment Partnership and has concluded that the Company
does have control of the Investment Partnership. Midco and the Investment Partnership are both classiﬁed
as subsidiaries of the Company; the Board has also assessed that the Company meets the criteria of an
investment entity and therefore the subsidiaries are recorded at fair value through proﬁt and loss rather than
consolidated. The Board’s determination that the Company is classiﬁed as an investment entity involves a
degree of judgement due to the complexity within the wider structure of the Company, Midco and the
Investment Partnership.

As at 31 December 2018, the Company holds one ordinary share in Midco and will transfer monies once a Target
Company has been identiﬁed.

Income tax

4.
The Company is exempt from taxation in Guernsey under the provisions of the Income Tax (Exempt Bodies)
(Guernsey) Ordinance, 2008 and is charged an annual exemption fee of £1,200.

5. Receivables and prepayments

Accrued interest receivable
Other prepaid expenses

The carrying value of receivables and prepayments approximates their fair value.

6. Trade and other payables

Administration fees
Audit fees
Transaction costs on issue of shares
Trademark fees
Other professional fees

The carrying value of trade payables and other payables approximates their fair value.

34

£’000

91
74

165

£’000

27
25
84
6
68

210

Annual Report and Audited Financial Statements

Notes to the Financial Statements
For the period from 24 August 2018 to 31 December 2018 (continued)

7. Share capital and capital management
Capital risk management
The Company’s objective for capital risk management is to safeguard the Company’s ability to continue as a
going concern and to provide returns for shareholders. The Company considers its capital to consist of the
shares issued, less shares held in treasury.

The Company does not currently have an active discount management policy. The Board regularly reviews the
NAV, as calculated in accordance with IFRS, and share price performance in the context of market conditions
with input from the Investment Manager and its Corporate Brokers. The Company expects that there will be
an ongoing dialogue between the Corporate Brokers and the Board about investors’ views on any discount or
premium that may emerge and the need to introduce an active discount or premium management policy.

The Company has the ability to hold its own shares in treasury, and may use this ability for any future discount
or premium management policy. The Company’s Articles of Incorporation and the Companies Law, do not limit
the number of shares held in treasury provided that at least one share of any class is held by a person other
than the Company.

Ordinary shares of no par value

Issued and fully paid:
Founder member share on 24 August 2018
Founder member share redeemed
Shares issued on 27 September 2018

Shares as at 31 December 2018

Issued and fully paid:
Founder member share on 24 August 2018
Founder member share redeemed
Shares issued on 27 September 2018
Share issue costs

As at 31 December 2018

8. Net Asset Value per Share
IFRS Net Assets (£’000)

Number of Ordinary Shares in issue
IFRS NAV per Share (pence)

No.

1
(1)
270,585,977

270,585,977

£’000

—
—
270,586
(4,710)

265,876

266,122

270,585,977
98.35

The IFRS NAV per Share is arrived at by dividing the IFRS Net Assets by the number of Ordinary Shares in issue.

9. Auditors’ remuneration
Other expenses in the Statement of Comprehensive Income include the following in respect of auditors’
remuneration:

Audit fees
Non-audit fees

£’000

25
124

149

Non-audit fees relate to reporting accountant work performed in relation to the listing of the Ordinary Shares
on the SFS.

35

Trian Investors 1 Limited

Notes to the Financial Statements
For the period from 24 August 2018 to 31 December 2018 (continued)

10. Earnings per share
Proﬁt for the period (£’000)

Weighted average number of Ordinary Shares in issue
Earnings per share (pence)

246

270,585,977
0.0909

The earnings per share is based on the proﬁt of the Company for the period and on the weighted average
number of Ordinary Shares from the date of IPO that the Company had in issue for the period from Admission
to 31 December 2018.

There were no dilutive potential Ordinary Shares in issue as at 31 December 2018.

11. Financial risk management
Financial risk management objectives
The Company’s activities expose it to various types of ﬁnancial risk, principally market risk, liquidity risk and
credit risk. The Board has overall responsibility for the Company’s risk management and sets policies to
manage those risks at an acceptable level.

Financial risk factors
The Company’s investment objective is to realise capital growth from its investment in the Target Company
with the aim of generating signiﬁcant capital return for shareholders. At present the Company’s only signiﬁcant
ﬁnancial assets are cash and cash equivalents.

Credit risk
Credit risk is the risk that one party to a ﬁnancial instrument will cause a ﬁnancial loss for the other party by
failing to discharge an obligation. The Company manages its credit risk by scrutinising the ﬁnancial standing
of counterparties with which it enters into transactions, using external credit ratings where available. Credit
risk is reviewed periodically to identify balances that may have become impaired or uncollectable.

The Company is exposed to credit risk through its balances with banks and its holdings of money market funds
which are classiﬁed as cash equivalents for the purposes of these ﬁnancial statements. The table below
shows the Company’s material cash balances and the short-term issuer credit rating or money-market fund
credit rating as at the period end date:

Bank of New York Mellon
JP Morgan
Goldman Sachs
BlackRock

Location

Rating

UK
UK
UK
UK

AA-
AAA
AAA
AAA

31 December
2018
£’000

100,051
54,818
54,818
56,480

266,167

Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with ﬁnancial
liabilities that are settled by delivering cash or another ﬁnancial asset. The Company maintains a prudent
approach to liquidity management by maintaining sufficient cash reserves to meet foreseeable working capital
requirements.

36

Annual Report and Audited Financial Statements

Notes to the Financial Statements
For the period from 24 August 2018 to 31 December 2018 (continued)

11. Financial risk management (continued)
As at 31 December 2018, the Company had no ﬁnancial liabilities other than trade and other payables. The
Company had sufficient cash reserves to meet these obligations. The following table details these obligations:

Trade and other payables

On demand
£’000

0-4 months
£’000

—

—

210

210

Total
£’000

210

210

Market risk
Market risk is the risk that the fair value or future cash ﬂows of a ﬁnancial instrument will ﬂuctuate as a result
of market price changes. The Company is exposed to interest rate risk. As at 31 December 2018 the Company
had no signiﬁcant exposure to currency risk.

Interest rate risk
The Company is subject to risks associated with changes in interest earned on its cash and cash equivalents
which it seeks to mitigate by monitoring the placement of cash balances on an on-going basis in order to
maximise the interest rates obtained.

As at 31 December 2018, the total interest sensitivity gap for interest bearing items was a surplus of
£266,167,000. The following table summarises the Company’s interest bearing assets:

Financial Assets
Cash and cash equivalents
Receivables

Total Financial Assets

Liabilities
Trade and other payables

Total Liabilities

Interest bearing

On demand
£’000

0-4 months
£’000

Non-interest
bearing
£’000

Total
£’000

266,167
—

266,167

—

—

—
—

—

—

—

—
91

91

266,167
91

266,258

(210)

(210)

(210)

(210)

As at 31 December 2018, interest rates reported by the Bank of England of 0.75 per cent would equate to net
income of £1,996,000 per annum if interest bearing assets and liabilities remained constant. If interest rates
were to ﬂuctuate by 0.25 per cent, this would have a positive or negative effect of £665,000 on the Company’s
annual income.

12. Commitments and contingencies
The Directors are not aware of any contingent liabilities as at 31 December 2018.

37

Trian Investors 1 Limited

Notes to the Financial Statements
For the period from 24 August 2018 to 31 December 2018 (continued)

13. Related parties
Key management personnel
The Directors are considered to be the Key Management Personnel of the Company. They are all non-executive
and receive only an annual fee denominated in Pounds Sterling.

The Chairman receives an annual fee of £55,000, the Chairman of the Audit Committee receives £45,000, and
the other non-executive director receives £40,000.

Directors’ fees and expenses for the period to 31 December 2018 amounted to £50,000, of which £nil was
outstanding at the period end.

Directors’ shareholdings are disclosed in the Report of the Directors. The Directors received no dividends on
their shares during the period to 31 December 2018.

14. Signiﬁcant agreements
Trademark fees
Trian Fund Management, L.P. has granted to the Company, Midco and the Investment Partnership a non-
exclusive licence to use the name, logo and graphic identity “Trian” in the UK and the Channel Islands in the
corporate name of these entities and in connection with the conduct of their business affairs, and the
Company is using the name, logo and graphic identity “Trian” within the Annual Report and these Financial
Statements pursuant to such licence. Trian Fund Management, L.P. receives a fee of £70,000 per annum for
the use of the licensed name, logo and graphic indentity. For the period ended 31 December 2018 fees of
£19,000 were paid by the Company in relation to the licence.

Administration Agreement
On 19 September 2018, the Company and Estera International Fund Managers (Guernsey) Limited entered into
an administration agreement. Under the terms of the agreement the Company (alongside the Investment
Partnership) is charged a ﬁxed administration fee of £95,000 per annum from 27 September 2018 payable
quarterly in arrears, compliance officer services of £6,000 per annum, MLRO services of £3,000 per annum
and data protection officer services of £2,000 per annum.

Management Agreement
On 19 September 2018, the Investment Partnership and the Investment Manager entered into a management
agreement. The Investment Manager is entitled to management fees in consideration of its work equal to one
twelfth of 1 per cent of the adjusted net asset value of the Investment Partnership, calculated as of the last
business day of the preceding month. The management fee is payable in advance to the Investment Manager
on the ﬁrst business day of each calendar month. For the period ended 31 December 2018 no fee was payable.

Investment Partnership Agreement
Under the terms of the Investment Partnership Agreement dated as of 21 September 2018, Trian Investors 1
SLP, L.P., the special limited partner of the Investment Partnership, is entitled to receive an incentive allocation
based on the investment performance of the Investment Partnership. The incentive allocation may be between
0 to 25 per cent of the net returns of the Investment Partnership. The calculation of the incentive allocation
is described in more detail in the Company’s Prospectus dated 21 September 2018. For the period ended
31 December 2018 there was no incentive allocation applicable.

15. Subsidiaries
Midco was incorporated on 10 September 2018 and the Investment Partnership was registered on
13 September 2018. The Company holds one ordinary share in Midco and will transfer monies once a Target
Company has been identiﬁed.

16. Ultimate beneﬁcial owner
There was no ultimate beneﬁcial owner of the Company as at the date of signing.

17. Subsequent events
There were no events after the reporting date that require disclosure in these ﬁnancial statements.

38

Annual Report and Audited Financial Statements

General Information

Directors
Chris Sherwell (Chairman) (appointed 24 August 2018)
Mark Thompson (appointed 24 August 2018)
Simon Holden (appointed 24 August 2018)

Website: www.trianinvestors1.com

Managing General Partner
Trian Investors 1 General Partner, LLC
280 Park Avenue, 41st Floor
New York, NY 10017
United States

Corporate Brokers
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
United Kingdom

Investment Partnership
Trian Investors 1, L.P. (Incorporated)
Heritage Hall, PO Box 225
Le Marchant Street
St Peter Port
Guernsey, GY1 4HY

Investment Manager
Trian Investors Management, LLC
280 Park Avenue, 41st Floor
New York, NY 10017
United States

Corporate Brokers
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
United Kingdom

Administrator and Company Secretary
Estera International Fund Managers (Guernsey) Limited
Heritage Hall, PO Box 225
Le Marchant Street
St Peter Port
Guernsey, GY1 4HY

Solicitors to the Company
As to English law and US Securities law
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
United Kingdom

Advocates to the Company
As to Guernsey law
Ogier (Guernsey) LLP
Redwood House
St Julian’s Avenue
St Peter Port
Guernsey, GY1 1WA

Registrar
Link Market Services (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey, GY2 4LH

Registered Office
Heritage Hall, PO Box 225
Le Marchant Street
St Peter Port
Guernsey, GY1 4HY

Independent auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey, GY1 3HW

Custodian to the Investment Partnership
The Bank of New York Mellon – London Branch
One Canada Square
London E14 5AL
United Kingdom

GG00BF52MW15

Identiﬁers
ISIN:
SEDOL: BF52MW1
Ticker:
LEI:

TI1
213800UQPHIQI5SPNG39

39

Trian Investors 1 Limited

For Your Notes

40

Registered Office
Heritage Hall, PO Box 225
Le Marchant Street
St Peter Port
Guernsey, GY1 4HY

Website: www.trianinvestors1.com