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Company No: 03008401 (England and Wales)

CADOGAN SETTLED ESTATES LIMITED

Annual Report and Financial Statements
For the financial year ended 31 December 2023

CADOGAN SETTLED ESTATES LIMITED

Annual Report and Financial Statements

For the financial year ended 31 December 2023

Contents

CADOGAN SETTLED ESTATES LIMITED

COMPANY INFORMATION

For the financial year ended 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

COMPANY INFORMATION (continued)

For the financial year ended 31 December 2023
DIRECTORS Charles Kane Antelme
The Honourable James Henry Morys Bruce
Charles Vincent Ellingworth
John David Gordon
Andrew John Shirley Ross
SECRETARY St Andrew Trustees Limited
REGISTERED OFFICE 5 Fleet Place
London
EC4M 7RD
England
United Kingdom
COMPANY NUMBER 03008401 (England and Wales)
AUDITOR BDO LLP
55 Baker Street
London
W1U 7EY
CADOGAN SETTLED ESTATES LIMITED

STRATEGIC REPORT

For the financial year ended 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

STRATEGIC REPORT (continued)

For the financial year ended 31 December 2023

The directors present their Strategic Report for the financial year ended 31 December 2023.

REVIEW OF THE BUSINESS

**Cazenove investment portfolio**

2023 saw the investment portfolio make a return of +7.4% in comparison to CPI +4.0% which also returned +7.4%.

This return was similarly in line with the short-term industry comparators, the Asset Risk Consulting (ARC) Steady Growth Private Client and the Investment Association (IA) Mixed Shares 40-85% shares indices, which returned +7.3% and +8.1% respectively over the same period.

Over the longer term time period of seven years, the portfolio (+36.7%) is behind CPI+4.0% (+69.5%) whilst remaining ahead of both the ARC (+31.8%) and IA (+36.5%) industry comparators.

For the economy and markets, 2023 turned out to be a much better year than expected. Inflation fell steadily and global GDP continued to rise, despite very steep increases to interest rates in many countries. The 12-month period was generally a positive one for risk assets with global equities rallying by over +15%. However, that headline number masks periods of significant volatility where returns were concentrated to a small group of individual companies. Nonetheless, after a challenging third quarter, the final quarter of the year delivered a welcome present for investors. Growing excitement that central banks would cut interest rates sooner than previously expected in 2024 resulted in both equities and bonds finishing the year strongly.

US shares rallied strongly as inflation came in softer than expected and economic growth was revised down, reinforcing market expectations that the Federal Reserve has finished its rate hiking cycle and will move towards cutting interest rates in 2024. Spyglass US Growth, Findlay Park America and JPM America Equity Fund all benefitted given their exposure to sectors which are interest rate sensitive, such as technology and consumer discretionary. We maintain a reasonable allocation to the technology sector, but our underweight stance, driven by expensive valuations, has led to underperformance versus the market this year. The “Super-7” (Apple, Alphabet, Amazon, Microsoft, Meta, Nvidia, Tesla) are now worth more than the entire stock markets of the UK, France, China and Japan combined. It is possible that this is an accurate reflection of today’s economic reality; It is perhaps more likely that the biggest US tech firms are overvalued or that markets outside the US are undervalued. We would lean towards the latter explanation which suggests that global markets may rise in value relative to the US in 2024.

Outside of the US, there were positive returns within the European, Japanese and UK equity markets. A large portion of their respective returns coming in Q4, and again, can be attributed to investor expectations that interest rate cuts could soon be on the way in 2024. Asia and Emerging Markets performed less well over the period. China equity markets were weak amid ongoing worries over their debt laden real estate sector and uncertainty over China’s regulatory regime.

At the start of the year, our equity positioning had been relatively cautious. We acknowledged that there would be a requirement for a higher allocation to equities to outperform the core long term inflation benchmark. A peak in interest rates and a continued decline in inflation were two of the key signals we have been monitoring before turning more positive on equities. As we have seen these conditions unfold, we have incrementally been adding back to equities and taking advantage of the de-rating that occurred in Q3. By the year end, our equity exposure reflects a more ‘neutral’ stance.

Having produced very little in the way of returns in the first nine months of the years, fixed income as an asset class was aided by the perceived shift in monetary policy direction, from a “higher-for-longer” stance to prospective rate cuts. Despite a slowing growth outlook, the corporate bond market staged an impressive rally on hopes that a deep recession could be averted as financial conditions eased. The positive equity-bond correlation was a favourable dynamic for multi-asset investors.

The fixed income allocation delivered strong relative performance, with our global corporate bond exposure standing out particularly. Similarly, the longer dated fixed income benefitted due to the Office for National Statistics (ONS) reporting a larger-than-expected decrease in the UK consumer prices index to below 4% in November which led to a rally in longer dated Gilts.

There were mixed returns from the alternatives allocation within the strategy. The hedge funds performed well in a period of heightened volatility. The Schroder GAIA Contour fund (long/short technology strategy) was the standout performer. The listed private and real investment trust allocation was weak over the 12 months. During the period, discounts between the share price and NAV of the underlying investments reached quite extreme levels. Some of this has since started to narrow as reports of a merger in the renewable energy sector supported our thesis that the underlying businesses are attractively valued. The avoidance of a global recession has also provided encouragement to the listed private equity vehicles.

The Commodities exposure was a detractor to returns. After strong returns in 2022, Energy endured a weak 12 months. This came despite output cuts from Opec+ (the Organisation of the Petroleum Exporting Countries, plus some other oil-producing countries). On a brighter note, our standalone allocation to gold was beneficial. The gold price reached an all-time high in December, validating its function as an effective geopolitical hedge.

**Private investments portfolio**

The private equity portfolio is mature and well diversified across strategy and geography. Excluding cash, the portfolio comprises 48 commitments to private investments funds completed across 23 high quality manager relationships. 15 managers are classified as active manager relationships, 5 are under review and 3 are in run-off. Portfolio performance since inception has been robust in all categories (buyouts, growth, venture and secondaries) but performance in 2023 was weaker especially when compared to public markets. Macro factors such as high inflation and interest rate hikes have put pressure on the portfolio, particularly pre-revenue and pre-profit businesses within the venture capital category. However, the diversification within the CSEL portfolio proved beneficial with buyouts and secondaries managers generating gains. Given the prevailing market environment, the portfolio experienced a lower amount of distributions than expected in 2023 and therefore the cashflow profile and level of unfunded commitments are front of mind. Cambridge Associates expects this to be a continuing theme in 2024 and therefore expects to keep new commitments at a moderate level.

PRINCIPAL RISKS AND UNCERTAINTIES

**Cazenove investment portfolio**

The objectives for the investment portfolio are to achieve UK inflation (measured by UK Consumer Price Index - CPI) +4%, whilst not exceeding 80% of the volatility of global equity markets (as measured by the MSCI All Country World Index) on an ex-ante basis. This is to be measured over rolling 5-7 years periods.

In order to meet the long-term objectives, the investment portfolio is predominantly invested in global equity markets, but also invests in other assets, including fixed income, commodities and absolute return focussed funds, held with the objectives of reducing volatility and moderating risk.

As at 31 December 2023, the ex-ante volatility of the investment portfolio was 69% of the volatility of global equity markets (below the upper limit of 80%). Over the last five years, the ex-post rolling portfolio volatility has averaged 69%, with the lowest reading 64% and the highest 73%.

Further diversification is provided by the multi-manager approach; investing in third-party funds to gain access to asset classes. This limits ‘manager risk’ as investments are spread across fund management houses (currently over 25). Where possible, investments are made in a unit trust structure, which is regulated by the UK Financial Conduct Authority (FCA). This structure is subject to risk controls and legislation on the types and limits of investments that can be held and are governed by the FCA’s COLL Rules (Collective Investment Schemes Sourcebook).

Overall investment decisions are made by Cazenove Capital which are part of Schroders group. Cazenove Capital are responsible for fund selection and ensuring that the risk controls are adhered too. Overall investment risk, performance and asset allocation is monitored by Cazenove Capital. This is overseen by a non-executive board member with specific responsibility for non-property related investments on a frequency no less than quarterly. Full written reports are provided to the board quarterly and presentations are given on a six month basis.

Overall investment decisions are made by Cazenove Capital which are part of Schroders group. Cazenove Capital are responsible for fund selection and ensuring that the risk controls are adhered too. Overall investment risk, performance and asset allocation is monitored by Cazenove Capital. This is overseen by a non-executive board member with specific responsibility for non-property related investments on a frequency no less than quarterly. Full written reports are provided to the board quarterly and presentations are given on a six month basis.

Fund selection at Cazenove Capital is carried out by a team, who utilise sophisticated software to monitor risk. This ensures that the portfolio accurately reflects the investment strategy and that an appropriate level of risk is being taken in comparison to global equity markets.

**Private investments portfolio**

The private investment portfolio is managed with the objective of outperforming public markets (MSCI All Country World Index) by a substantial premium per annum. The target premium for illiquidity is 300-500 basis points per annum in excess of public markets over the long term. Given the high return target for the portfolio, the portfolio is inherently risk-seeking and managers in the portfolio regularly underwrite investments with high operational complexity, science/technology risk, and business model & execution risk. In order to become comfortable with these risks, Cambridge Associates conducts extensive due diligence on managers to ensure that private investment managers have appropriate expertise and resources to manage investments effectively using repeatable strategies for creating value. Portfolio-level risk is managed through significant diversification across the portfolio by sector, geography and strategy, and by ensuring sufficient vintage year diversification (ensuring a relatively consistent commitment pace each year).

Approved by the Board of Directors and signed on its behalf by:

Charles Kane Antelme
Director
Charles Vincent Ellingworth
Director

05 July 2024

CADOGAN SETTLED ESTATES LIMITED

DIRECTORS' REPORT

For the financial year ended 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

DIRECTORS' REPORT (continued)

For the financial year ended 31 December 2023

The directors present their report and the financial statements for the financial year ended 31 December 2023.

DIRECTORS

The directors, who served during the financial year and to the date of this report except as noted, were as follows:

Charles Kane Antelme
The Honourable James Henry Morys Bruce
Charles Vincent Ellingworth
John David Gordon
Andrew John Shirley Ross

DIRECTORS' INDEMNITIES

The Company has made qualifying third party indemnity provisions for the benefit of its directors which remain in force at the date of this report.

Financial instruments - objectives and policies

The company's principal financial instruments consist of financial assets and liabilities such as cash, trade creditors and other debtors. These arise directly from its operations.

Credit risk

Investments of cash surpluses are made through reputable banks with suitably high credit ratings. Receivables are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

Liquidity risk

The company manages its cash and term deposit balances to maximise interest income whilst maintaining sufficient liquid resources to meet the operating needs of the company and its subsidiaries.

Foreign currency risk

The principal foreign currency exposure arises from foreign currency cash balances and overseas investments.

Going Concern

The directors have considered the appropriateness of adopting the going concern basis in preparing the financial statements for the year ended 31 December 2023.

After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence at least to 31 August 2025. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Disclosure of information to the auditors

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made inquiries of fellow directors and the Company's auditor, each director has taken all steps that he/she is obliged to take as director in order to make himself/herself aware of any relevant audit information and to establish that the auditor is aware of that information.

AUDITOR

BDO LLP have expressed their willingness to continue in office as auditor and appropriate arrangements have been put in place for them to be deemed reappointed as auditor in the absence of an Annual General Meeting, in accordance with section 485 of the Companies Act 2006.



Approved by the Board of Directors and signed on its behalf by:

Charles Kane Antelme
Director
Charles Vincent Ellingworth
Director

05 July 2024

CADOGAN SETTLED ESTATES LIMITED

DIRECTORS' RESPONSIBILITIES STATEMENT

For the financial year ended 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

DIRECTORS' RESPONSIBILITIES STATEMENT (continued)

For the financial year ended 31 December 2023

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that financial period.

In preparing these financial statements, the directors are required to:
* Select suitable accounting policies and then apply them consistently;
* Make judgements and accounting estimates that are reasonable and prudent; and
* State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
* Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. The directors 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.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CADOGAN SETTLED ESTATES LIMITED

For the financial year ended 31 December 2023

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CADOGAN SETTLED ESTATES LIMITED (continued)

For the financial year ended 31 December 2023

Report on the audit of the financial statements

Opinion on the financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the Company’s affairs as at 31 December 2023 and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Cadogan Settled Estates Limited (“the Company”) for the year ended 31 December 2023 which comprise The Income Statement, Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Financial Position and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

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

Independence

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 FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the Strategic Report, Director's Report and The Financial Statements, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.

Report on other legal and regulatory requirements

Other Companies Act 2006 reporting

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Director's 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.

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.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Non-compliance with laws and regulations
Based on:
• Our understanding of the Company and the industry in which it operates;
• Discussion with management and those charged with governance; and
• Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and regulations.

we considered the significant laws and regulations to be the Companies Act 2006, United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and UK tax legislation.

The Company is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be health and safety legislations.

Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations;
• Review of financial statement disclosures and agreeing to supporting documentation; and
• Enquiry with management and those charged with governance regarding any non-compliance with laws and regulations.

Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
• Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
• Obtaining an understanding of the Company’s policies and procedures relating to:
• Detecting and responding to the risks of fraud; and
• Internal controls established to mitigate risks related to fraud.
• Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; and
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud

Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls and estimation bias over fair value of unlisted investments.

Our procedures in respect of the above included:
• Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;
• Assessing significant estimates made by management for bias in the valuation methodologies, mechanics of valuation calculations and the inputs and judgements adopted therein in valuing the unlisted investments.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at:
https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Thomas Edward Goodworth (Senior Statutory Auditor)
For and on behalf of
BDO LLP
Statutory Auditor

55 Baker Street
London
W1U 7EY

05 July 2024

CADOGAN SETTLED ESTATES LIMITED

PROFIT AND LOSS ACCOUNT

For the financial year ended 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

PROFIT AND LOSS ACCOUNT (continued)

For the financial year ended 31 December 2023
Note 2023 2022
£ £
Administrative expenses ( 381,588) ( 269,212)
Other operating income 3 3,000 3,000
Operating loss ( 378,588) ( 266,212)
Income from shares in a Group undertaking 31,150,002 71,172,827
Income from other fixed asset investments 4 9,631,692 6,909,795
Other non-operating income/(loss) 9 32,926,829 ( 45,780,335)
Profit before interest and taxation 73,329,935 32,036,075
Interest receivable and similar income 4 220,450 152,249
Interest payable and similar expenses 4 0 ( 276,293)
Profit before taxation 73,550,385 31,912,031
Tax on profit 8 ( 9,150,813) 10,016,415
Profit for the financial year 64,399,572 41,928,446
CADOGAN SETTLED ESTATES LIMITED

STATEMENT OF COMPREHENSIVE INCOME

For the financial year ended 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

STATEMENT OF COMPREHENSIVE INCOME (continued)

For the financial year ended 31 December 2023
2023 2022
£ £
Profit for the financial year 64,399,572 41,928,446
Other comprehensive income 0 0
Total comprehensive income 64,399,572 41,928,446
CADOGAN SETTLED ESTATES LIMITED

BALANCE SHEET

As at 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

BALANCE SHEET (continued)

As at 31 December 2023
Note 2023 2022
£ £
Fixed assets
Investments 11 832,395,438 769,265,180
832,395,438 769,265,180
Current assets
Debtors 12 10,723,257 9,475,329
Cash at bank and in hand 13 4,697,143 9,008,580
15,420,400 18,483,909
Creditors: amounts falling due within one year 14 ( 69,371) ( 35,861)
Net current assets 15,351,029 18,448,048
Total assets less current liabilities 847,746,467 787,713,228
Provision for liabilities 15 ( 79,541,301) ( 71,295,038)
Net assets 768,205,166 716,418,190
Capital and reserves 17
Called-up share capital 40,463,896 40,463,896
Capital redemption reserve 1,243,000 1,243,000
Profit and loss account 726,498,270 674,711,294
Total shareholder's funds 768,205,166 716,418,190

The financial statements of Cadogan Settled Estates Limited (registered number: 03008401) were approved and authorised for issue by the Board of Directors on 05 July 2024. They were signed on its behalf by:

Charles Kane Antelme
Director
Charles Vincent Ellingworth
Director
CADOGAN SETTLED ESTATES LIMITED

STATEMENT OF CHANGES IN EQUITY

For the financial year ended 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

STATEMENT OF CHANGES IN EQUITY (continued)

For the financial year ended 31 December 2023
Called-up share capital Capital redemption reserve Profit and loss account Total
£ £ £ £
At 01 January 2022 40,463,896 1,243,000 644,780,393 686,487,289
Profit for the financial year 0 0 41,928,446 41,928,446
Total comprehensive income 0 0 41,928,446 41,928,446
Dividends paid on equity shares (note 10) 0 0 ( 11,997,545) ( 11,997,545)
At 31 December 2022 40,463,896 1,243,000 674,711,294 716,418,190
At 01 January 2023 40,463,896 1,243,000 674,711,294 716,418,190
Profit for the financial year 0 0 64,399,572 64,399,572
Total comprehensive income 0 0 64,399,572 64,399,572
Dividends paid on equity shares (note 10) 0 0 ( 12,612,596) ( 12,612,596)
At 31 December 2023 40,463,896 1,243,000 726,498,270 768,205,166
CADOGAN SETTLED ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2023
CADOGAN SETTLED ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2023
1. Accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

General information and basis of accounting

The company is a private company limited by share capital incorporated in England and Wales.

The address of its registered office is:
5 Fleet Place
London
EC4M 7RD

The single entity financial statements for Cadogan Settled Estates Limited were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies.

The financial statements are presented in Sterling which is the functional currency of the company and rounded to the nearest £.

Going concern

The directors have considered the appropriateness of adopting the going concern basis in preparing the financial statements for the year ended 31 December 2023.

The key asset of the company include the Cazenove portfolio valued at c. £634m as at 31 December 2023. The portfolio is well diversified and closely monitored for risk and volatility. Furthermore, most of the investments can be realised at short notice. Based on this assessment, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence until 31 August 2025. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Group accounts exemption

Group accounts exemption s400
The Company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

Cadogan Settled Estates Limited is a wholly owned subsidiary of Cadogan Settled Estates Holdings Limited and the results of Cadogan Settled Estates Limited are included in the consolidated financial statements of Cadogan Settled Estates Holdings Limited which are available from 5 Fleet Place, London, EC4M 7RD.

Foreign currency

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the initial transaction dates.

Turnover

Other operating income

Dividends and interest received from investments are recognised in the profit and loss account. Dividends are recognised on the date they become ex-div without making any adjustment for amounts accrued at the dates of purchase and sale of the securities. Interest is recognised on the accruals basis.

Taxation

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

The company has recognised the deferred tax liability that arises as a result of temporary differences between the recognition of gains on revaluation in the accounts and tax return.

Deferred tax has been calculated using the tax rates that are expected to apply in the periods in which timing differences reverse.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade and other creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Investments
Investments in equity shares and other securities which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares and other securities which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.

Subsidiaries, jointly controlled entities, and associates where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Subsidiaries, jointly controlled entities, and associates where fair value cannot be measured reliably are measured at cost less impairment.

Ordinary share capital

Ordinary shares are classified as equity.

Dividends

Dividend distributions to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are approved by the shareholders. These amounts are recognised in the statement of changes in equity.

2. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company’s accounting policies, which are described in note 1, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial year in which the estimate is revised if the revision affects only that financial year, or in the financial year of the revision and future financial years if the revision affects both current and future financial years.

The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are outlined below.

Fair value of fixed asset investments

Investments in equity shares and other securities which are publicly traded or where the fair value can be measured reliably are carried at fair value.

The valuation of investments is subjective and hard to value investments require a material degree of estimation.

Deferred tax liability

Deferred tax is provided in respect of the fixed asset investment valuations and is therefore subject to the same uncertainty.

Management estimation is required to determine the tax rates that are expected to apply in the periods in which timing differences reverse.

3. Other operating income

2023 2022
£ £
Guarantee fee income 3,000 3,000

4. Finance income/(costs) (net)

2023 2022
£ £
Income from other fixed asset investments 9,631,692 6,909,795
Interest receivable and similar income 220,450 152,249
Interest payable and similar expenses 0 ( 276,293)
9,852,142 6,785,751

5. Auditor's remuneration

An analysis of the auditor's remuneration is as follows:

2023 2022
£ £
Fees payable to the Company’s auditor and its associates for the audit of the Company's annual financial statements: 88,880 14,964
Total audit fees 88,880 14,964

6. Staff number and costs

2023 2022
Number Number
The average monthly number of employees (including directors) was:
Directors 2 2

Their aggregate remuneration comprised:

2023 2022
£ £
Wages and salaries 121,250 118,750

7. Directors' remuneration

2023 2022
£ £
Directors' emoluments 121,250 118,750

8. Tax on profit

2023 2022
£ £
Current tax on profit
UK corporation tax 904,550 1,428,669
Total current tax 904,550 1,428,669
Deferred tax
Origination and reversal of timing differences 8,246,263 ( 11,445,084)
Total deferred tax 8,246,263 ( 11,445,084)
Total tax on profit 9,150,813 ( 10,016,415)
Tax reconciliation

The tax assessed for the year is lower than (2022: lower than) the standard rate of corporation tax in the UK:

2023 2022
£ £
Profit before taxation 73,550,385 31,912,031
Tax on profit at standard UK corporation tax rate of 25.00% (2022: 19.00%) 18,387,596 6,063,286
Effects of:
(Decrease)/increase in current tax from adjustment for prior periods (281,251) 811,591
Tax decrease from effect of dividends from UK companies (10,195,776) (14,835,698)
Other tax effects for reconciliation between accounting profit and tax expense/(income) 1,314,831 (2,055,594)
Decrease in current tax from changes in tax rates (74,587) 0
Total tax charge/(credit) for year 9,150,813 (10,016,415)

9. Other non-operating income/(loss)

2023 2022
£ £
Gain/(loss) on revaluation of fixed asset investments 32,926,829 (45,780,335)

10. Dividends on equity shares

2023 2022
£ £
Amounts recognised as distributions to equity holders in the financial year:
Interim dividend for the financial year ended 31 December 2023 of £0.31 (2022: £0.30) per ordinary share 12,612,596 11,997,545

11. Fixed asset investments

2023 2022
£ £
Subsidiary undertakings 156,899,801 151,550,139
Other investments and loans 675,495,637 617,715,041
832,395,438 769,265,180

Investments in subsidiaries

2023
£
Cost
At 01 January 2023 151,550,139
Additions 5,000,000
Revaluation 349,662
At 31 December 2023 156,899,801
Carrying value at 31 December 2023 156,899,801
Carrying value at 31 December 2022 151,550,139

Listed investments Other investments Total
£ £ £
Cost or valuation before impairment
At 01 January 2023 572,210,696 45,504,345 617,715,041
Additions 43,204,842 0 43,204,842
Disposals ( 18,001,412) 0 ( 18,001,412)
Movement in fair value 31,709,138 868,028 32,577,166
At 31 December 2023 629,123,264 46,372,373 675,495,637
Carrying value at 31 December 2023 629,123,264 46,372,373 675,495,637
Carrying value at 31 December 2022 572,210,696 45,504,345 617,715,041

Investments in shares

Name of entity Registered office Principal activity Class of
shares
Ownership
31.12.2023
Ownership
31.12.2022
Cadogan Group Holdings Limited 10 Duke Of York Square, London, United Kingdom, SW3 4LY Holding Company Ordinary shares 85.01% 85.01%
Cadogan Group Limited 10 Duke Of York Square, London, United Kingdom, SW3 4LY Property Investment Ordinary shares 85.01% 85.01%
Cadogan Estates (Agricultural Holdings) Limited 5 Fleet Place, London, United Kingdom, EC4M 7RD Farming, fishing, and estate management in Scotland Ordinary shares 100.00% 100.00%
CEAH (Hydro) Limited 5 Fleet Place, London, United Kingdom, EC4M 7RD Renewable energy generation Ordinary shares 100.00% 100.00%
CSEL (Guernsey) LP Inc 1 Le Marchant Street, St. Peter Port, Guernsey, GY1 4HP Equity Investment Partnership 100.00% 100.00%

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are shown above.

12. Debtors

2023 2022
£ £
Short term loans to Group companies (note 19) 10,014,758 9,092,408
Corporation tax 708,499 382,921
10,723,257 9,475,329

The loan of £10,014,758 (2022 - £9,092,408) to a group company is expected to be recovered in more than one year.

13. Cash and cash equivalents

2023 2022
£ £
Cash at bank and in hand 4,697,143 9,008,580

14. Creditors: amounts falling due within one year

2023 2022
£ £
Trade creditors 0 10,139
Amounts owed to own subsidiaries (note 19) 4,542 4,542
Accruals 64,829 21,180
69,371 35,861

15. Provision for liabilities

Deferred taxation Total
£ £
At 01 January 2023 71,295,038 71,295,038
Charged to the Profit and Loss Account 8,246,263 8,246,263
At 31 December 2023 79,541,301 79,541,301

Deferred tax

2023 2022
£ £
Accelerated capital allowances 79,541,301 71,295,038
Provision for deferred tax 79,541,301 71,295,038

16. Financial instruments

The carrying values of the Company’s financial assets and liabilities are summarised by category below:

2023 2022
£ £
Financial assets
Measured at fair value through profit or loss
Investments in listed equity instruments (note 11) 789,390,437 726,260,179
Measured at cost less impairment
Unlisted investments 43,005,001 43,005,001
832,395,438 769,265,180

17. Called-up share capital and reserves

2023 2022
£ £
Allotted, called-up and fully-paid
40,463,896 Ordinary shares of £ 1.00 each 40,463,896 40,463,896
Presented as follows:
Called-up share capital presented as equity 40,463,896 40,463,896

The share capital reserve represents the nominal value of shares that have been issued.

The Company's other reserves are as follows:

The profit and loss reserve includes all current and prior period distributable retained profits and losses.

The capital redemption reserve arose on the historic acquisition and consolidation of a subsidiary company.

18. Financial commitments

Commitments

The company made further capital commitments to CSEL (Guernsey) LP Inc of £5,000,000 (2022 - £6,000,000) in the period. At the balance sheet date £53,800,000 (2022 - £48,800,000) had been paid to CSEL (Guernsey) LP Inc.

The capital commitments are for the purpose of making portfolio investments, satisfying expenses, and fulfilling the obligations to underlying Funds.

The total amount contracted for but not provided in the financial statements was £97,200,000 (2022 - £87,200,000).

19. Related party transactions

Transactions with group companies

Short term loans to group companies

2023 2022
£ £
Short term loan to subsidiary ( 10,014,758) ( 9,092,408)

The company has an unsecured interest-free loan made to its subsidiary, Cadogan Estates (Agricultural Holdings) Limited.
The company has guaranteed financial support to the subsidiary in order for it to continue with ongoing business activities.
The loan outstanding at year-end is £10,014,758 (2022 - £9,092,408) and is repayable on demand.

Amounts owed to own subsidiaries

2023 2022
£ £
Amounts owed to own subsidiaries 4,542 4,542

At the year-end the company owed CEAH (Hydro) £4,542 (2022 - £4,542). The loan is interest-free and repayable on demand.

Transactions with the entity’s directors (or members of its governing body)

Key management compensation

2023 2022
£ £
Salaries and other short term employee benefits. 121,250 118,750

20. Controlling party

Parent Company:

Cadogan Settled Estates Holdings Limited
5 Fleet Place
London
EC4M 7RD
United Kingdom

The parent entity of the smallest group preparing consolidated financial statements is Cadogan Settled Estates Holdings Limited. These financial statements are available upon request from Companies House.