Pemberton Asset Management S.A. - Germany

Pemberton Asset Management S.A. - Germany

Frankfurt am Main

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

Pemberton Asset Management S.A.

Luxemburg/Luxemburg

Registre de Commerce et des Sociétés

Numéro RCS: B196697

Référence de dépôt: L240178531

Déposé et enregistré le 01/08/2024

BALANCE SHEET Financial year from 01 01/01/2023 to 02 31/12/2023 (in 03 EUR)

Pemberton Asset Management S.A.

Luxembourg

ASSETS

The notes in the annex form an integral part of the annual accounts

CAPITAL, RESERVES AND LIABILITIES

The notes in the annex form an integral part of the annual accounts

PROFIT AND LOSS ACCOUNT

Financial year from 01 01/01/2023 to 02 31/12/2023 (in 03 EUR)

Pemberton Asset Management S.A.

Luxembourg

The notes in the annex form an integral part of the annual accounts

Pemberton Asset Management S.A.

Société anonyme

Siège social: 70, Route d'Esch, L - 1470 Luxembourg

R.C.S. Luxembourg: B196697

Conseil d'Administration

Délégué à la gestion journalière

Réviseur d'entreprises agréé

Affectation du résultat Lors de l'assemblée générale annuelle tenue en date du 16 mai 2024, l'actionnaire unique a décidé de reporter le bénéfice d'un montant de EUR 1,393,076 pour l'exercice social se clôturant au 31 décembre 2023.

Management Report

1. Introduction

Pemberton Asset Management S.A. (hereafter the "Company") acts as an Alternative Investment Fund Manager ("AIFM") within the meaning of article 4 of the Luxembourg act of 12 July 2013 as amended (the "AIFM Law").

The main activity of the Company is to carry out any activities under article 125-2 of the Undertakings for Collective Investment Act of 2010 as amended (the "UCI Law") and any activities in relation to the tasks listed under Annex I of the AIFM Law including portfolio management, risk management, administration and marketing of any type of Luxembourg and non-Luxembourg Alternative Investment Funds ("AIFs") within the widest meaning of the AIFM Law.

The Company appointed Pemberton Capital Advisors LLP as Investment Advisor (the "Investment Advisor").

The Company has branches in Denmark, Netherlands, France and Germany. The staff in these branches provides distribution and origination related services (client introduction, negotiation, product training and promotion support) to the Company for Luxembourg domiciled funds and to various other Pemberton Group companies in respect of other fund domiciles and segregated institutional accounts.

2. Important events from 1 January 2023 to 31 December 2023 and future developments

During the year, the Company increased its product offering with the addition of: a. New branches

3. Review and development of the Company's business and financial position

Management is satisfied with the performance of the Company and the results for financial year ended 31 December 2023. The results for the period are set out in the Profit and Loss account on page 8. Due to the nature of the business performed by the Company, management deem assets under management as the key driver of the business.

The assets under management as at 31 December 2023 were EUR 12.1bn (2022: EUR 11bn). The increase is due to further deployment of existing capital, further closings within the existing funds and new funds launching.

Income increased by 14% in 2023 to EUR 113.8m (2022: EUR 99.8m). This increase is mainly due to the additional deployment and new funds launched. Other external expenses and staff costs increased by 15.3% to EUR 111.9m (2022: EUR 97.1m).

The Company's profit for the financial year 2023 was EUR 1,393k (2022: EUR 1,940k). Management expects to continue to be profitable in the future.

4. Principal risk and uncertainties

The Company is exposed to inherent risk of providing fund management and sub-delegating activities to other entities within the Pemberton Group and/or external parties.

The company manages all aspects of risk in order to deliver outcomes to clients and shareholders in line with the Group strategy and regulatory expectations.

The Risk Management Function has established a Risk Framework and risk appetites both at the Fund and Group level, categorising risks into several classes (i.e. Credit & Counterparty Risk, Market Risk, Liquidity Risk, Operational Risk, Business & Strategic Risk, IT & Information Security Risk, Legal & Compliance Risk).

Risk appetite is rated on a low risk to very high-risk scale; the scale - or severity grading - combines the impact and the likelihood that a risk occurs. Any breach in limits is escalated to the relevant committees and boards to take appropriate actions.

Economic review

Facing the risk of a recession in 2023, European central banks and the Bank of England adopted stricter monetary policies, raised interest rates and cut asset purchase programs to deal with persistent core inflation. The Fiscal tightening and higher interest rates have increased the cost of borrowing which has considerably slowed down economic growth and investment.

Europe is not likely to achieve its inflation targets before 2025, which along with its low productivity growth, affected by the shift in geopolitical fragmentation and climate change are slowing down its ability to reduce inflation as it expected. Despite this, the economy is experiencing a decrease in inflation with 12-month EURIBOR rates dropping from its highest point of 4.2% in September 2023 to 3.6% in December 2023. Analysts predict this will further fall to around 3.5% by Spring 2024.

Pemberton funds are directly exposed to the current European economic environment. The Board of Managers will continue to actively monitor the portfolios given the economic environment.

2024 is expected be a year of opportunity for European Direct Lending. A stabilisation in base rate levels will help market participants accept and adjust to the new normal of lower exit multiples, lower leverage and more equity-heavy capital structures.

Q1 2024 carries a lot of positive momentum from the year-end rally in 2023, and with a potential tapering in sight, the expectation is that sponsor-backed M&A activity increases throughout the year versus 2023. As a result, direct lending solutions will be in high demand in 2024 and will continue to offer attractive returns at enticing all-in yield levels.

Despite facing higher borrowing costs and political turmoil in recent years, the global economy and markets have shown resilience, with economic growth outperforming most forecasts.

Global growth may weaken in 2024 as factors such as delayed effects of higher interest rates, fading benefits from economic re-opening, fiscal restraint, and reduced Covid "extra" savings drag on domestic demand.

However, structural advantages, such as solid household finances, sound banking systems and healthy private company finances, should prevent prolonged deep downturns.

Economists think the most likely scenario is a phase of weak growth, with interest rates remaining high compared to history as wages and core inflation take time to decline towards major central banks medium- term objectives.

Two key possible positive upside factors to the growth and earnings outlook are 1) a recovery of the global goods re-stocking cycle and a related rise in manufacturing activity and 2) more aggressive monetary and fiscal stimulus in China giving a lift to the global economy.

Geopolitical risk, however, is still a factor, with spillovers from ongoing conflicts in the Middle East and Ukraine, US-China frictions and an unusually busy schedule of national elections having the potential to quickly and drastically change the economic and investment environment. The Board of Managers will continue to watch the broader of the above and will take further action as needed, in response to any business disruptions.

5. Corporate Governance

Strong corporate governance is an integral part of the Company's core values, supporting the Company's vision of moving towards a sustainable future.

The compliance function is composed of a team that works with senior leaders across the Group to elevate the importance of core values throughout, by promoting and fostering a corporate culture of the highest ethical standards, internal controls, and compliance with laws.

6. Acquisition of own shares

There was no acquisition of own shares in 2023.

7. Activity in the field of research and development

The Company did not perform any activities during the financial year in the field of research and development.

8. Use of financial instruments

The Company did not utilise any financial instruments during the financial year.

9. Subsequent events since the balance sheet date

The Company does not have any subsequent events to report since 31 December 2023.

Audit report

To the Shareholder of Pemberton Asset Management S.A.

Report on the audit of the annual accounts

Our opinion

In our opinion, the accompanying annual accounts give a true and fair view of the financial position of Pemberton Asset Management S.A. (the "Company") as at 31 December 2023, and of the results of its operations for the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the annual accounts.

What we have audited

The Company's annual accounts comprise:

Basis for opinion

We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (Law of 23 July 2016) and with International Standards on Auditing (ISAs) as adopted for Luxembourg by the "Commission de Surveillance du Secteur Financier" (CSSF). Our responsibilities under the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the "Responsibilities of the "Reviseur d'entreprises agree" for the audit of the annual accounts" section of our report.

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

We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the annual accounts. We have fulfilled our other ethical responsibilities under those ethical requirements.

Other information

The Board of Directors is responsible for the other information. The other information comprises the information stated in the management report but does not include the annual accounts and our audit report thereon.

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

In connection with our audit of the annual accounts, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the annual accounts or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors for the annual accounts

The Board of Directors is responsible for the preparation and fair presentation of the annual accounts in accordance with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the annual accounts, and for such internal control as the Board of Directors determines is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts, the Board of Directors is 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 Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Responsibilities of the "Reviseur d'entreprises agree" for the audit of the annual accounts

The objectives of our audit are to obtain reasonable assurance about whether the annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit 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 the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF 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 annual accounts.

As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on other legal and regulatory requirements

The management report is consistent with the annual accounts and has been prepared in accordance with applicable legal requirements.

Notes to the annual accounts for the year ended 31 December 2023

1. General information

Pemberton Asset Management S.A. with an address in 70, Route d'Esch, L-1470 Luxembourg (hereafter the "Company") was incorporated on 29 April 2015 and is organised under the laws of Luxembourg as a Société Anonyme for an unlimited period. The Company is registered with the Luxembourg Register of Commerce and Companies under number B196697.

The Company has branches in Denmark, Netherlands, France and Germany. The staff in these branches provide distribution and origination related services (client introduction, negotiation, product training and promotion support) to the Company for Luxembourg domiciled funds and to various other Pemberton Group companies in respect of other fund domiciles and segregated institutional accounts.

The Company's financial year starts on 1 January and ends on 31 December of each year.

The main activity of the Company is to carry out any activities under article 125-2 of the Undertakings for Collective Investment Act of 2010 as amended (the "UCI Law") and any activities in relation to the tasks listed under Annex I of the Alternative Investment Fund Managers Act of 2013 as amended (the "AIFM Law") including portfolio management, risk management, administration and marketing of any type of Luxembourg and non-Luxembourg alternative investment funds within the widest meaning of the AIFM Law as amended ("AIFs"). The Company is subject to the Luxembourg law dated 10 August 1915 on commercial companies as amended (the "Companies Law").

In particular, the Company may, on behalf of AlFs, enter into any contracts, purchase, sell, exchange and deliver any financial instruments, securities and other assets, including any form of private debt, process any registration and transfer into the register of shares or debentures of any Luxembourg or foreign companies, undertake facilities management, real estate administration activities, provide advice to undertakings on capital structure, industrial strategy and related matters, and exercise on behalf of AIFs all rights and privileges, especially all voting rights attached to the securities or other assets constituting the AlFs' assets. The foregoing powers are not considered exhaustive, but only declaratory.

The Company may, in general, carry out itself or delegate activities deemed necessary or useful for the accomplishment of its objective, while remaining always within the limitations set forth by the AIFM Law.

The Company may also administer its own assets and perform all operations and activities considered useful for the accomplishment of its purposes, while remaining within the limits of the Companies Law, the UCI Law and the AIFM Law.

As at 31 December 2023, the Company was acting as AIFM for:

- 1 open-ended investment company organised under the laws of the Grand Duchy of Luxembourg which qualify as a société d'investissement à capital variable;

- 2 closed-ended investment funds organised under the laws of the Grand Duchy of Luxembourg which qualify as Specialized investment fund;

- 26 closed-ended investment funds organised under the laws of the Grand Duchy of Luxembourg which qualify as Reserved Alternative Investment Fund;

The Company is included in the consolidated accounts of Pemberton Asset Management Holdings Limited (the "Sole Shareholder"), which is the undertaking which draws up the consolidated accounts of the smallest and the largest body of undertakings of which the Company forms a part as a subsidiary undertaking.

The registered office of the Sole Shareholder is located at 44 Esplanade, St Helier, Jersey JE4 9WG, Channel Islands; the consolidated accounts can be obtained at the Sole Shareholder's registered office.

2. Summary of significant accounting policies

2.1. Basis of preparation

The annual accounts have been prepared in conformity with the Luxembourg legal and regulatory requirements and according to generally accepted accounting principles applicable in Luxembourg under the historical cost convention. The accounting policies and valuation principles are, apart from those enforced by the Law of 19 December 2002 as amended, determined and implemented by the Board of Directors.

The preparation of annual accounts requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgement in the process of applying the accounting policies. Changes in assumptions may have a significant impact on the annual accounts in the period in which the assumptions changed. The Board of Directors believes that the underlying assumptions are appropriate and that the annual accounts therefore present the financial position and results fairly.

2.2. Significant accounting policies

2.2.1. Foreign currency translation

The Company maintains its books and records in EUR.

Transactions expressed in currencies other than EUR are translated into EUR at the exchange rate effective at the time of the transaction. Formation expenses and long-term assets expressed in currencies other than EUR are translated into EUR at the exchange rate effective at the time of the transaction. At the balance sheet date, these assets remain translated at historical exchange rates.

Cash at bank is translated at the exchange rate effective at the balance sheet date. Exchange losses and gains are recorded in the profit and loss account of the year.

Other assets and liabilities are translated separately respectively at the lower or at the higher of the value converted at the historical exchange rate or the value determined on the basis of the exchange rates effective at the balance sheet date. Solely the unrealised exchange losses are recorded in the profit and loss account. The exchange gains are recorded in the profit and loss account at the moment of their realisation.

Where there is an economic link between an asset and a liability, these are valued in total according to the method described above and the net unrealised losses are recorded in the profit and loss account whereas the net unrealised gains are not recognised.

2.2.2. Valuation of tangible assets

Tangible fixed assets are valued at purchase price including the expenses incidental thereto or at production cost. They are depreciated over their estimated economic lives.

Where the Company considers that a tangible fixed asset has suffered a durable depreciation in value, an additional write-down is recorded to reflect this loss. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.

2.2.3. Debtors

Debtors are recorded at their nominal value. A value adjustment is made when the recovery of a debt is partly or completely in doubt. These value adjustments are not continued if the reasons for which they were made cease to apply.

2.2.4. Cash at bank and in hand

Cash and cash equivalents include cash in hand and deposits held at call with banks in EUR, USD, JPY and GBP currencies.

2.2.5. Prepayments

Prepayments are made up of the deferred charges that incurred during the financial period but are attributable to a subsequent accounting period.

2.2.6. Creditors

Creditors are recorded at their repayment value. When the amount repayable on account is greater than the amount received, the difference is shown as an asset and is written off over the period of the debt.

2.2.7. Net turnover

The net turnover comprises the amounts derived from the provision of services falling within the Company's ordinary activities, after deduction of value added tax and other taxes directly linked to turnover.

3. Trade debtors becoming due and receivable within one year

4. Capital and reserves

4.1. Subscribed capital

As of 31 December 2023, the subscribed capital, amounting to EUR 250,000.00, is represented by 250 shares fully paid with a nominal value of EUR 1,000.00 each.

4.2. Share premium Account

The capital contribution without issuance of new shares is counted as own funds for the purposes of calculating the regulatory capital requirements of the Company under the AIFM Law.

4.3. Reserves

In accordance with Luxembourg company law, the Company is required to transfer a minimum of 5% of its net profit for each financial year / period to a legal reserve. This requirement ceases to be necessary once the balance on the legal reserve reaches 10% of the issued share capital. The legal reserve is not available for distribution to the Sole Shareholder.

As at 31 December 2023, the Company reduced its Net Wealth Tax liability in accordance with paragraph 8a of the Luxembourg Net Wealth Tax law. The Company allocates under non-distributable reserves an amount that corresponds to five times the amount of the Net Wealth Tax. This reserve is non-distributable for a period of five years from the year following the one during which the Net Wealth Tax was reduced.

4.4. Movement of capital and reserves

5. Trade creditors becoming due and payable within one year and more

Amounts due and payable for the accounts shown under creditors are as follows:

Other payables consist of accruals relating to invoices not yet received for audit, staff salary payable and other miscellaneous accruals. There are no liabilities with maturity above 5 years from the balance sheet date.

6. Net turnover

A breakdown of the net turnover by investment strategy is omitted because its nature is such that it would be seriously prejudicial to the Company. The entirety of the company net turnover has been obtained from Luxembourg based investments funds.

The net turnover is comprises:

The management fees received from the General Partners represent the total fee received by the respective General Partner from the respective AIF, net of any fee rebates payable by the respective General Partner to investors in the respective AIF.

Co-Investment fees comprises of fees from the General Partner or its affiliates for various projects which are entitled to a Co-invest fee. Third Party sales Management fees comprises of fees from 3rd party sales resulting from Co-investment deals.

Third Party sales revenue relates to co-invest fees from third parties.

7. Other operating income

Other operating incomes comprises:

8. Other external expenses

Other external expenses comprises:

^* The Company paid investment advisory fees to the Investment Advisor. Investment Advisory fees must be sufficient to cover the Investment Advisor's non-reimbursable operating expenses.

9. Staff

The number of employees as at 31 December 2023 is twenty three, including twenty full-time employees and one employee on a part-time contract.

The number of employees as at 31 December 2022 was nine, including eight full-time employees and one employee on a part-time contract.

10. Tax on profit or loss

The Company is subject in Luxembourg and the branches local jurisdiction's applicable general tax regulations. The Company and its branches are all subject to payroll taxes and indirect taxes charged in the jurisdiction they operate in.

Furthermore, in Luxembourg the Company is subject to Corporate Income Tax (CIT), Municipal Business Tax (MBT) and Net Wealth Tax (NWT). The branches are subject to Corporate Income Tax at the published rates of tax.

11. Related parties' transactions

The Company is engaged into transactions with related parties as the Company received management fees from the alternative investment funds and paid Investment Advisory fees to Pemberton Capital Advisors (Jersey) Limited and Pemberton Capital Advisors LLP as well as recharged costs for the operational and legal expenses per note 7.

12. Off-balance sheet commitments

The Company has future minimum lease payments under non-cancellable operating leases. The Luxembourg rental lease which expires on 31 August 2028, the Danish rental lease which expires on 30 June 2024, the Dutch rental lease which expires on 31 January 2024, the French rental lease which expires on 30 November 202 and the German rental leases which expire on the 31 December 2024 as follows:

13. Branches Profit or Loss for the financial year

The net profit or loss realised by the branches during year are as follows:

14. Emoluments granted to the members of the management and supervisory bodies and commitments in respect of retirement pensions for former members of those bodies

The Company has not paid any emoluments in 2023 to the Directors acting in that capacity (2022 NIL).

The Company offers its employees a defined contribution plan.

15. Advances and loans granted to the members of the management and supervisory bodies

The Company did not grant any advances or loans to the Directors in 2023 (2022 NIL).

16. Subsequent events

The Company does not have any subsequent events to report since 31 December 2023.