The directors present the strategic report for the year ended 31 March 2026.
Throughout the whole period the Group provided investment management services to the Otus Smaller Companies Fund Limited ("OSCF"), the Otus Smaller Companies UCITS Fund ("OSCUF"), two managed account clients within the smaller companies strategy, the Maga Micro Cap Fund ("MMCF"), and one further managed account client within the micro cap strategy. In addition, one new managed account client was onboarded during the second half of the financial year (within the smaller companies strategy) and one managed account client exited during the second half of the financial year (within the micro cap strategy). On a stock selection basis, these accounts are managed pari-passu with the funds in their respective strategies.
During the year, in the Group’s core smaller companies strategy, the Euro A shares of OSCF increased by 0.9%, OSCUF’s Euro shares increased by 0.5%. In the micro-cap strategy, MMCF Euro shares fell by -8.4%.
The Group's assets under management decreased during the period from £400.8m to £293.4m, a decrease of -26.8%.
At the end of the period, assets under management in the OSCF amounted to 33.4% of total assets under management (31 March 2025: 24.4%), OSCUF 20.8% (31 March 2025: 17.0%), and MMCF 18.2% (31 March 2025: 18.0%). The remaining 27.6% of assets under management was split between the micro cap strategy managed accounts (15.0%), and the smaller companies strategy managed accounts (12.5%).
Future Developments
After a difficult year, the directors believe that the downturn in overall performance of the business has now stabilised and are confident that assets under management will recover from the lows seen during the Financial Year 25-26. This confidence is based on the Group’s assets under management increasing significantly post year end, after the launch of a new managed account in the smaller companies space. Furthermore, a new strategy is being launched by the Group post year end, and a new fund is planned for the second half of 2026.
Changes to the regulatory framework in the UK and the EU continue to be monitored closely and adapted to, as and when required. Global macro events – including the ongoing wars in Iran and Ukraine – are continually monitored by the Group's board of directors.
Being a relatively small business, the principal risks are still largely key man related. There are also risks pertaining to the diversity of each fund’s investor base, the asset cycle for smaller and micro-cap companies and specific risks associated with the individual stocks held by each fund. As at 31 March 2026, the OSCF had 24 investors, the largest of which represented 56.3% (31 March 2025: 57.1%) of OSCF net assets. The OSCUF had 26 investors as at 31 March 2026, the largest of which represented 50.9% of net assets (31 March 2025: 46.1%). The risks outlined above are managed on a real time basis through our sophisticated in-house developed portfolio and risk management system.
The key theme of the Financial Year was one of geopolitical instability and market uncertainty. The Financial Year began with the announcement of a tariff war, launched by President Trump, which led to significant market disruption. This period brought with it elevated uncertainty for many companies within the European smaller companies and micro cap universes, particularly those with a strong export focus. However, within this uncertainty lay also the seeds of opportunity as American foreign and domestic policy, not necessarily by design, has become a powerful driver of European change. The EU had been showing signs of being more adaptable when accommodating national interest, a significant structural shift in Europe. However, this shift has been overshadowed by the recurring structural issues which have long blighted Europe, in particular its high energy prices, which have reared their head in light of the geopolitical developments in the Middle East.
These geopolitical developments culminated in the war in Iran in the last quarter of the Financial Year. This elevated certain pre-existing risks and uncertainties about the macroeconomic conditions within Europe. In particular, the effects of higher energy prices resulting from a sustained oil and inflationary shock, as well as credit becoming both more expensive and less available as volatility spiked, are both key risks and uncertainties for companies within our universes.
The directors continue to monitor the situation and, while aware of the challenges presented by current market conditions, have conviction that the Group remains well positioned to take advantage of the opportunities within European smaller and micro companies.
| 2026 | 2025 |
Operating Profit Margin | 33% | 49% |
Assets under management | £293.4m | £400.8m |
Management fees earned | £4.2m | £5.6m |
Performance fees earned | £0.7m | £1.2m |
Non-discretionary expenses | £2.6m | £2.7m |
The directors’ business strategy is focused on achieving success for Otus Capital Management (“OCM”) in the long-term. In setting this strategy, the board takes into account the impact of relevant risk factors and stakeholder interests on the Group’s performance.
The board promotes a culture of upholding the highest standards of probity and business conduct. It recognises that a sound framework of risk oversight, risk management and internal controls is fundamental to and consistent with robust and effective corporate governance. The Group’s approach to risk management is predicated on the need to manage the full range of risks facing the firm. The directors understand the need to have in place governance arrangements, policies, processes, and controls that are proportionate to the Group’s size and yet allow OCM to remain confident that it serves its clients’ best interests and is compliant with its regulatory requirements.
The directors regularly discuss issues concerning employees, clients, service providers, community and environment, regulators, and shareholders, which they consider in their decision-making processes.
The board seeks to behave in a responsible manner towards its shareholders, communicating relevant information such as financial reporting and any business developments that may be significant to the Group.
We believe that our team is our greatest asset and so building the strongest team possible, and ensuring their on-going development, allows us to best serve our clients. In addition to being a responsible employer in its approach to pay and benefits, the Group encourages a positive working culture and promotes a healthy working environment. We work hard to retain our talent, and the directors are pleased that many staff have long careers at OCM.
Clients are at the core of our business. We have built long-standing relationships with our existing clients, maintaining good communication and ensuring that we meet their service requirements, and we seek to do the same for new and potential clients. The directors have implemented a robust governance framework for the oversight of the provision of the Group’s products and services in the best interests of our clients.
Our business may be small in terms of numbers and environmental footprint, but this in no way takes from our responsibilities to each other, to clients, other stakeholders and to society at large.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2026.
The results for the year are set out on page 9.
The group profit for the period, after taxation and before appropriations to other members of the subsidiary undertaking amounted to £1,654,069 (2025: £3,525,425). The directors do not recommend the payment of a dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group assesses its exposure to liquidity risk as part of its ICARA process and maintains regulatory capital to cover the assessed risk of adverse changes in the value of the group's assets, of which the majority is held as cash.
Where necessary the group may from time to time enter into forward FX transactions in order to mitigate the effect of adverse exchange rate movements on future expected earnings which are denominated in Euros and USDs. There were no such contracts in place at 31 March 2026.
Details of the firm's remuneration policy and practices can be found on the firm's website at: https://www.otuscapital.com/
Future developments of the group are discussed in the strategic report.
In accordance with the company's articles, a resolution proposing that Beavis Morgan Audit Limited be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Otus Capital Management Limited (the 'parent company') and its subsidiary (the 'group') for the year ended 31 March 2026 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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 group's and parent 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
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our 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.
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, company law as applicable to limited partnerships and tax and pensions legislation.
Those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include Financial Conduct Authority regulations, health and safety legislation and employment law.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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 parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £4,861 (2025: £3,237).
Otus Capital Management Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 29 Queen Anne's Gate, London, SW1H 9BU.
The group consists of Otus Capital Management Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The principal accounting policies adopted are set out below.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £4,861 (2025: £3,237).
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
Under Companies Act 2006, s454, on a voluntary basis, the directors can amend these financial statements if they subsequently prove to be defective.
The consolidated financial statements incorporate those of Otus Capital Management Limited and its subsidiary (i.e. an entity that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). All financial statements are made up to 31 March 2026. Where necessary, adjustments are made to the financial statements of the subsidiary to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
The Otus Capital Management Limited Partnership ("the partnership") is a qualifying partnership within the meaning of The Partnerships (Accounts) Regulations 2008. The results of the partnership are consolidated in the group accounts. In accordance with Section 7.1 of those regulations, the company has taken advantage of the exemption from the requirement of Sections 4 to 6 of those regulations.
At the time of approving the financial statements, the directors have a reasonable expectation that the group and parent company have adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The consolidated turnover for the period has been derived from the principal activity wholly undertaken in the United Kingdom.
Turnover represents performance and management fees receivable for investment management services provided. Management fees are recognised as the service is provided. Performance fees are recognised when earned in accordance with the group's contractual entitlement.
All turnover in the period arose from the supply of services to the Americas and Europe.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax. The taxation payable on the partnership profits is solely the personal liability of the individual members consequently neither partnership taxation nor related deferred taxation arising in respect of the partnership are accounted for in these financial statements.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date. The tax on the LP profits is payable by the members and save as relates to the company’s share of profits or losses does not form part of the corporation tax charge.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The Group operates a defined contribution scheme for the benefit of its employees. Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount 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 period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Estimation is required in determining the useful lives of such assets and their residual values.
The company makes an estimate of the recoverable value of trade and other debtors. When assessing any provision against trade and other debtors, management considers factors including the ageing profile of debtors and management's historical experience.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
In the opinion of the directors, the aggregate value of the company's investment in subsidiary undertakings is not less than the amount included in the balance sheet.
The subsidiary undertaking is Otus Capital Management Limited Partnership, registered in England and Wales. The company is the general partner of Otus Capital Management Limited Partnership and has made capital contributions to the Partnership. Otus Capital Management Limited Partnership's business is the provision of fund management services.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
A non-controlling interest in the company is held by a shareholder who also committed to make investment in funds under management. As part of the arrangements, the Company is party to an option contract that could possibly involve the company in being obliged to purchase this shareholding at a future date. It is not believed probable that such a purchase will be required and it is judged that such an event is unlikely. The value of the shareholding involved at 28 May 2021 was £300,000. It is impracticable to reasonably estimate the likelihood of such an event, the timing and cash outflow (if any).
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Company
During the year the company received reimbursed costs of £3,066,821 (2025: £3,350,933) incurred on behalf of Otus Capital Management Limited Partnership, a partnership in which all directors are limited partners. At the balance sheet date the company was owed £161,806 (2025: £120,987) by the partnership.
Group
During the year the partnership declared distributions to partners of £1,649,208 (2025: £3,522,188).
Included within other creditors is £403,896 (2025: £1,300,462) owed to the directors of the company, and £411,398 (2025: £1,121,686) owed to the limited partners of Otus Capital Management Limited Partnership who are not directors of the company.
Key management personnel
Key management personnel of the company are considered to be the directors of Otus Capital Management Limited, the total compensation paid to these individuals, including distributions, by the group was £928,389 (2025: £1,787,460).
In addition, all other limited partners in Otus Capital Management Limited Partnership, who are not directors, are also considered to be group key management personnel. The total compensation paid to these individuals by the group, including distributions, was £1,621,263 (2025: £2,414,983).
Note 20 refers to an option arrangement and a party to that contract is a director and vendor of the options shares. The director may also assume a right or obligation to acquire the option shares in certain circumstances.