Odyssean Inves. Regulatory News (OIT)

ODYSSEAN INVESTMENT TRUST PLC

(the "Company", the "Trust" or "OIT")

LEI: 213800RWVAQJKXYHSZ74

Annual Report and Financial Statements for the Period from 21 December 2017 (Date of Incorporation) to 31 March 2019

The full Annual Report and Financial Statements and the Notice of the AGM can be accessed via the Company's website at www.oitplc.com or by contacting the Company Secretary on 01392 477500.

Highlights

· Successful launch and IPO in May 2018, raising gross proceeds of £87.5m from a high-quality list of shareholders.

· Portfolio Manager has built a portfolio of 15 investments (representing 78.6% of NAV) in line with the Company's investment strategy and objective.

· NAV performance ahead of comparator index since IPO. NAV per share declined 2.1% in the period from IPO to the end of March 2019, ahead of a 9.0% decline in the NSCI ex IT plus AIM Index. The Board and Portfolio Manager are of the opinion that significant further value potential exists in the current portfolio.

· Share price trading at 3.1% premium to NAV at the period end. The Board is keen to see a sustainable increase in the size of the Company over time.

Financial Summary

* Based on the weighted average number of shares in issue during the period.

* Source: Bloomberg.

* See glossary below.

Past performance is not a guide to future performance.

Investment objective and policy

The full text of the Company's investment objective and policy is set out in the full Annual Report and Financial Statements.

Strategic Report

Chairman's Statement

Introduction

I am pleased to present the first Annual Report and Financial Statements for Odyssean Investment Trust PLC ("OIT") which covers the period from its incorporation on 21 December 2017 to 31 March 2019.

OIT was successfully launched in May 2018, raising gross proceeds of £87.5m. This demonstrated strong investor appetite for its concentrated, long-term, smaller company focused strategy. As I said in the interim results, we are extremely proud of the list of shareholders who have backed the Company and on behalf of the Board, thank them all for their continued support.

Performance

Since the launch of the Company, the Portfolio Manager has built a portfolio which matches the Company's investment strategy and objectives. The team has worked hard to review a large number of opportunities, completing over 130 meetings with more than 75 companies, and carrying out detailed due diligence to identify the most attractive investments.

This thoughtful, measured process has led the Portfolio Manager to deploy capital progressively over the year. At the end of the period, the Company was 78.6% invested in 15 quality quoted smaller companies, all apart from one being quoted in the UK. This rate of deployment is broadly in line with expectations at the time of launch. The Portfolio Manager remains focused on finding the best opportunities and will maintain adequate cash balances to allow flexibility to exploit them.

In the period from IPO to the end of March 2019, the Company has seen the NAV per ordinary share decline by 2.1%, a creditable performance through a challenging period for UK smaller companies which saw the comparator index, the NSCI ex IT plus AIM, decline by 9.0%. Data contained in the Portfolio Manager's review indicates that the approach and its execution has added value over and above maintaining a cash balance in challenging markets.

Discount and premium management

The share price has remained resilient since IPO and at the period end was trading at a 3.1% premium to NAV, compared to a sector discount of 4.4%. The Board has been mindful of premium management and has issued a further 800,000 shares since the IPO to satisfy market demand. The Board, supported by the views of our shareholders, is keen to see a progressive and sustainable increase in the size of the Company over time.

The Board

We have an excellent Board of independent non-executive Directors. They have demonstrated their commitment to the investment strategy by undertaking to reinvest their Directors' fees (net of applicable taxes) into the Company, thus aligning their interests with its shareholders.

The Portfolio Manager signifies its long-term commitment to its shareholders by reinvesting 50.0% of any performance fee due, on top of its team's considerable investment at IPO. 26.0% of the Company is currently held internally, which demonstrates the Portfolio Manager's commitment to the strategy.

Portfolio Manager update

We announced on 26 March 2019 that Stuart Widdowson would be taking three months' compassionate leave from Odyssean Capital LLP. Ian Armitage, Chairman of the Portfolio Manager, has been and will continue to provide additional support during this period. The Board is confident that the measures put in place, based on the foundations and processes that the Portfolio Manager built prior to the Company's IPO, will ensure that the portfolio will be managed in accordance with the same principles and investment strategy.

Outlook

Uncertainty in markets and geopolitics is ever with us. Nevertheless, the best long-term returns in equities tend to be delivered by smaller companies. The quoted smaller company investment market is much less perfect than for larger companies. A properly executed investment strategy at a point where valuations are not stretched, augurs well for shareholders. Indeed, often the most rewarding long-term investments are made when there is uncertainty and a lack of broad market confidence.

The Portfolio Manager uses a well-defined, highly selective investment process, detailed due diligence and ongoing monitoring as tools to add value to shareholders. The concentrated nature of the portfolio gives sufficient time to conduct an in-depth analysis and consideration of each new investment and to monitor those investments on an ongoing basis. With the portfolio close to being fully invested, the Portfolio Manager is likely to devote more time towards engagement. This has the potential to deliver non-market driven returns over the medium term.

The initial portfolio includes a number of interesting companies with seemingly good opportunities, where returns can be improved through management actions. A conservative balance sheet offers shareholders some protection against extreme market volatility, as demonstrated in late 2018, as well as resources to invest with agility in what can be an illiquid asset class.

Whilst the well-honed investment approach will never guarantee that every investment performs to plan, there is a good likelihood of the investment approach delivering attractive and differentiated long-term returns to patient shareholders.

Jane Tufnell

Chairman

23 May 2019

Portfolio Manager's Report

The investment approach

Our investment approach was formed following more than 30 years' combined experience investing in quoted and unquoted smaller companies. This experience has allowed us to see the strengths and benefits of both the disciplines and develop our own approach, applying the core elements of the private equity investment philosophy - highly focused, long-term, engaged 'ownership' style investment - to public markets. We believe that well executed, this approach can offer attractive, differentiated, risk-adjusted returns.

Our differentiated investment approach creates a portfolio unlike that of many typical public equity funds and one closer in nature to a private equity portfolio. We believe that the key differences in our approach to other public equity funds are:

- Highly concentrated portfolio: We look to build a highly concentrated portfolio of no more than 25 investee companies. Similar to a private equity fund, we carry out intensive diligence on every opportunity and then only invest behind our highest conviction ideas. We believe that great investment opportunities are rare, take time and effort to identify and quality not quantity is the key to sustainable, superior long-term returns.

- Narrow focus: Firstly, we are focused on smaller companies typically too small for inclusion in the FTSE 250 index. Smaller companies offer significant opportunities to public market investors due to poorer market coverage driving opportunities for mis-pricing. More fundamental than this however is the stage of life cycle of many companies in our core size range. It is here that you can find proven, profitable businesses of a size which can attract high quality management teams, but which are nimble enough to deliver rapid growth.

Secondly, within our focused size range, we will make the majority of investments in a small number of industry sectors which we and our advisors, know well (TMT, Services, Industrials and Healthcare). We believe the best investment decisions are made from a base of knowledge and experience, that allows better pricing of risks and opportunities. Fundamentally, we prefer to be narrow and deep rather than broad and shallow in our focus.

- Targeting long-term holding periods: We will evaluate each investment opportunity over a three to five-year investment horizon and would expect to hold positions for this period, or longer, where the prospect for future returns exceeds our target threshold. We have structured our business to reflect this belief and do not intend to run any capital which is redeemable over short time periods. We see opportunity in managing long-term capital which leaves us able to exploit irrational behaviour by other investors in the market more exposed to 'hot' money flows. We believe we should invest your capital as if we were long-term 'owners' of our investee businesses.

- Building influencing stakes: Our investment approach is focused on an engaged investment style. We particularly like investing in companies which, whilst good, are underperforming their potential. We see the opportunity for constructive corporate engagement to be used to help focus investee companies on this improvement potential and unlock enhanced returns for all stakeholders. In order to effect this approach, we will typically look to build larger stakes in our investee companies and build relationships with management teams by being well informed and supportive shareholders.

The Company's investment objective is to deliver long-term capital growth, rather than to outperform a specific index. Our differentiated investment approach, the concentrated nature of the portfolio and our narrower sector focus, is likely to lead to periods of NAV per share performance materially different to those of the broader peer group and comparator indices. We fully anticipate this potential short-term performance variance and will focus on comparative investment performance over a rolling three-year basis.

The absolute return mentality of the strategy, allied with the desire to avoid being a forced seller, may lead to net cash balances being held over the long term. We anticipate a core range of 8.0-12.0% over the long term. Net cash balances will not be used as an attempt to market time, but to enable us to invest where blocks of stock are available rather than being required to sell a less liquid holding on short notice.

Implementing the investment strategy

There are three key factors we look for when we analyse a potential investment: i) a valuation opportunity; ii) in a higher quality company; and iii) with improvement potential. Our view is that buying at a fair price and supporting improved performance generates capital growth, while our quality filters mitigate losses in the event of unexpected headwinds.

Valuation

We look for two factors in every investment. Firstly, what we refer to as "static value" - does the company trade at a discount to its current value? This is not only judged by traditional public market ratios, we also seek to model every company through the lens of a private equity buyer. In addition, we evaluate whether an asset is attractive to a trade buyer and what price they would be prepared to pay to control it. This analysis includes valuing companies on a break up/sum of parts basis.

Secondly, we are looking for companies which can grow their value over time - "dynamic value". We particularly look for situations where there are as many as possible of the following drivers of value growth present, specifically i) organic growth; ii) margin growth driven by specific management action, not merely operational gearing; iii) free cash generation and dividends; and iv) increased rating. We believe seeking multiple value drivers makes an investment case more secure and less exposed to single areas of uncertainty or misjudgement. As a result, very few highly rated growth/momentum investments pass our criteria. We have a strong preference for reasonably priced growth, recovery and self-help situations.

Quality

We assess every potential investment against qualitative and quantitative criteria, as well as providing a "Litmus test" of whether we would be happy owning the whole company for the mid to longer term. The quality assessment is important to mitigate the risk of permanent capital destruction from investments which fail to achieve their value potential, or alternatively, experience a period of short-term earnings weakness or under-management. In our experience, if changes are required at board level, it is far easier to attract high calibre individuals and teams to an underperforming high-quality business, than an averagely performing poor quality company.

Improvement potential and engagement

We particularly like companies which are in some way underperforming relative to their potential and where the current valuation does not price in improvement potential. Once invested with a meaningful stake, constructive corporate engagement can help to unlock value, prevent it from being destroyed and recover it if it is temporarily diminished. Our mantra is to buy into good businesses and sell excellent businesses. The spectrum of areas which can be improved is broad and includes operating performance, asset utilisation, overly complex business structures or organisations, strategic direction, poor M&A, investor relations and lastly, governance and pay.

Finally, one of the benefits of having a fixed amount of capital to manage is that we, like many of our portfolio companies, are capital constrained. This means that once an investment no longer looks as attractive as it used to on a risk/reward basis, or alternatively, to the rest of the portfolio or other investments, we move it on. The downside of this is the risk of taking profits too early. The upside can be having the discipline to exit whilst there is still liquidity and "something in it for the next investor".

Market background since launch

The period from IPO on 1 May 2018 until the end of March 2019 has witnessed considerable global and domestic political uncertainty. This uncertainty has led to market volatility through the period and increased investor wariness, especially of UK equities. This coincided with what we perceive to be a gradual further decline of the quality of sell-side research for smaller quoted companies, as we anticipated at the time of IPO. Whilst markets were ebullient at the time of the Company's IPO, ratings have fallen considerably, bottoming out at the end of December 2018 at levels not seen since 2012.

Progress since launch

These changing market conditions have suited our investment approach well. We had always anticipated deploying capital progressively, rather than quickly. Our selective investment style, and the high levels of research we do on each company, would typically lead to four to six new investments being made per annum. As a result, we are pleased to have built an initial portfolio with 15 holdings, representing 78.6% of NAV, all of which fulfil our investment criteria.

Capital deployment into these holdings has been mostly in small blocks, driven by liquidity and individual stock pricing, rather than any attempts to market time. The increased market and stock specific volatility throughout the period has meant that the timings of some purchases have ended up being extremely opportune, and others perhaps less so in the short term. However overall, the data suggests that our approach has added value over and above just buying the market.

Performance review

Since IPO, the NAV of the Company decreased by 2.1%. This return is stated after all costs, including the costs of purchasing the holdings, and administration charges, such as the portfolio management fee. In comparison, the NSCI ex IT plus AIM Index, which we use as a comparator but not a benchmark, fell by 9.0%. The portfolio was on average 44.8% invested over the period.

Our calculations suggest that had we bought the market on the same days and deployed the same amount of capital as we have spent purchasing investee companies, the NAV would have declined 5.6% since IPO. As a result, whilst it is disappointing to end the first period with a NAV slightly below launch, we believe that the investment strategy and its execution have added value.

The investment process has continued to be developed, reflecting the decisions of the investment team which also draws on opinions and experiences of the Panel of Advisors and the Portfolio Manager's own non-executive directors. We had continued meeting with existing and potential portfolio companies. As at the end of March 2019, we have undertaken over 130 meetings with over 75 companies, including one-on-one meetings with executives, non-executives, site visits and capital markets days since December 2017.

As well as the invested portfolio, we have also built up a qualified watchlist of new potential investments, which for any number of reasons we do not judge to be appropriate to invest in today.

Portfolio

At the end of the period under review, the portfolio comprised 15 companies operating in the TMT, Business Services, Industrials, Healthcare and Consumer sectors. We typically focus more on the first three sectors and these account for c.68% of the NAV.

Our largest positions are SDL, Equiniti, NCC and Chemring. The backgrounds of all except NCC were detailed in the 2018 Interim Report.

From an operating perspective, SDL and Equiniti are performing in line with expectations. SDL's shares have performed well over the period and the investment is sitting at a reasonable premium to cost. We continue to believe that good absolute and relative upside exists. Equiniti remains very lowly rated, reflecting concerns over short-term integration issues with its recent US acquisition. The fundamental trading performance of the business has been solid and we believe that further profit improvement opportunities identified by management support good further potential value growth in the medium to long term.

Chemring's operational performance has continued in line with the guidance given following the site accident detailed in the Company's 2018 Interim Report. However, the shares have been de-rated as the market became more sceptical of a rapid recovery in earnings. This has been disappointing and the most material drag on the NAV across the period. If the company can deliver the earnings recovery, from a very depressed level, and growth from recently secured US contracts, the shares should perform well over the medium to long term. Further, the company has announced the exit of the lower quality elements of its energetics division. Once completed, we believe that the company is priced extremely attractively relative to recent multiples paid for very similar assets.

The largest new position built during the period was in NCC, a leading providing of cyber security and software escrow services. The cyber security division provides technical expertise to support corporates in building, testing and rectifying breaches in IT security. This is a fast-growing market with structural tail-winds. We believe NCC has built a leading portfolio of expertise and is one of the few independent players of scale, with global footprint and capability, in a market which continues to consolidate. The escrow business effectively provides an 'insurance' service for customers of software vendors, storing and verifying source code to ensure critical software systems are supportable should a vendor fail. NCC created and dominates the mature UK market for these services and has a fast-growing position in the more highly fragmented US market.

NCC was built through M&A with cash generated in the highly profitable, software escrow business recycled into the faster growing cyber security division. Poor M&A integration led to a challenging period in 2016/17 and a new executive team has now been installed with the aim of driving operational improvement and much better cashflow conversion. We see significant self-help opportunity for the group via better integration of legacy M&A, roll-out of group wide back office systems, a more sophisticated approach to sales, and focus on cashflow management. Management have targeted a 200bps margin improvement in the next three years and we see ultimate potential significantly above these levels.

We built our initial stake of c.4% of NAV through November 2018 following meetings with management and the new Chairman. The interim results in February 2019 saw very small earnings downgrades and a temporary decline in cash conversion, which led to what we perceived to be a disproportionate and swift de-rating. Having carried out further due diligence in short order, we felt that this was a great opportunity to increase the stake at very depressed levels and almost tripled the existing holding.

We have made six mid-sized investments in Volution, Wilmington, Devro, Flowtech Fluid Power, Benchmark and Hill & Smith Holdings.

The backgrounds to Volution, Wilmington, Devro and Benchmark were detailed in the 2018 Interim Report. All have performed as expected operationally to date, with varying short-term responses from their share prices. Volution and Wilmington have management change underway, with a new CFO and CEO, respectively, being sought. One of our investment theses with Devro was that it was under-broked to investors and as a result, the shares were trading at a material discount to their fair value. We introduced a third-party investor relations professional to the company in late 2018 who has been working to help increase the profile of the company, with some initial success. We believe that this, combined with clear intent and actions by the management team to improve returns, augurs well for future performance.

Benchmark's shares have been volatile over the period. We believe that the underlying assets of the business are worth considerably more than the current market valuation. However, the journey to sustainable cash generation is taking longer than most shareholders have the patience for and this has led to limited institutional interest in investing. A new Chief Scientific Officer should help improve the efficacy of R&D. We welcome the appointment of representatives from FERD, the largest shareholder with 19.0%, to the board to represent the voice of the shareholder. With appropriate management execution and changed investor sentiment, it could offer some of the best potential long-term upside of all of the portfolio companies.

Flowtech is a niche value added distributor of fluid power components and products. The company is the leading player in the UK, acting as a master distributor sitting between the large global manufacturers and the fragmented base of small local distributors. Its broad stock range, high service level and unique market position allow it to generate attractive margins, and its weighting towards MRO parts reduces its cyclical exposure. Shares in the company de-rated sharply following a poorly handled set of interim results in Autumn 2018 and a surprise CEO transition, dropping the market cap below £100m. We saw the de-rating as an attractive entry point. The company retains some challenges, but the business model is attractive, there are significant self-help opportunities in the cost base and working capital, due to the business being built through un-integrated M&A. Whilst some cyclical risk exists, the shares trade on a very low rating and it operates in a consolidating sector.

Hill & Smith Holdings is a diversified industrial group, manufacturing metal infrastructure and road products and providing galvanising services. We built our position following a share price decline through the summer of 2018 as an unsustainable rating unwound on the back of a disappointing interim trading update. We viewed the issues identified in the trading update as temporary in nature and the subsequent sell-off an overreaction with shares offering material value when we built our position.

The group is a leader in galvanising in the UK, US and Europe and generates highly attractive margins (especially in the highly structured US market). Demand for galvanising, although cyclical, is exposed to structural growth in the US where it is increasingly replacing painting as the preferred form of corrosion protection. In its manufacturing operations, the group has a leading position in the production of crash barriers and other road furniture in the UK, a sector exposed to positive midterm trends in road investment, and in the broader infrastructure manufacturing operations we see significant opportunity to improve margins. In the UK, it also owns and operates a fleet of own-manufactured temporary crash barriers, which generates c.12% of group profits and has highly attractive unit economics. The management team have a strong track record of delivering attractive ROCE and accretive M&A and we believe they are well placed to continue to do so. The shares have re-rated more quickly than anticipated and this has tempered our enthusiasm to add to the position.

The remaining five investments represent between c.2% and 3.0% of NAV. None are especially cyclical. Two operate in the trust and corporate services sector, a part of the market well known to one member of the Panel of Advisors. All five investments offer considerable scope to scale, subject to further due diligence and pricing remaining attractive.

Portfolio valuation metrics ex Benchmark Holdings1

1 As at 31 March 2019. Source: Factset consensus data and estimates. Portfolio data prepared on a weighted average basis. Benchmark Holdings (BMK) excluded as transitioning from loss making and data skews averages materially. Past performance is no guarantee of future performance and the value of investments can go up and down.

As demonstrated by the table above, we believe that the portfolio valuation metrics appear attractive in absolute terms given what we perceive to be the quality of the portfolio holdings, as well as their growth potential. A PEG ratio of c.1x indicates, in our view, good value. In addition, the portfolio in aggregate is modestly geared and forecast to pay down debt through free cashflow.

We have continued to focus on companies which have improvement potential in their profit margins and cashflow generation, where this improvement can be delivered by management action, and is not reliant on end markets improving. As a result, provided end markets remain benign, we believe that there is significant earnings potential from the portfolio. If end markets become more challenging, there are more "levers" for management teams to pull to defend current earnings levels. If end markets surprise on the upside some of the investments could deliver exciting profit growth.

As at the end of the period, trailing operating margins, excluding Benchmark, were c.15%, and forecast to rise to 16.0% by March 2020. We believe that the underlying operating margin potential of the portfolio is 18.0-20.0%, indicating substantial earnings upside. In the case of Benchmark, we believe that their two profitable divisions have significant further margin upside and the loss-making healthcare division should be moved into profitability soon.

83.6% of the invested portfolio is invested in companies within the core market capitalisation range of £150-£750m. 41.6% of the portfolio's aggregate sales are derived from the UK. The most important overseas market is the US (23.4%). Europe ex UK (18.6%) and the Rest of World (16.4%) are relatively similar. We believe that FTSE small cap index has a much higher exposure to UK sales. As a result, domestic challenges and Sterling weakness is relatively positive for the portfolio asset value, and vice-versa.

Outlook

At the time of writing, markets appear benign with ratings having rallied almost 10.0% from the depressed levels at the beginning of 2019. However, UK equities appear to be relatively cheap in absolute terms compared to other international equity markets. It seems that they are shunned by international investors, despite many UK Companies having very international earnings.

It seems that the current domestic and international political conditions are making investors extremely uncertain about the prospects for markets and the underlying companies. Allied to this uncertainty, the spectres of an ever-lengthening period of economic growth and increasing debt levels seem to continue to temper investor risk appetite.

In some situations, and with some companies, this cautious approach is probably well founded. However, we strongly believe that the market turmoil is presenting attractively priced medium to long-term investment opportunities within our target market. Where these quoted companies have significant self-help potential to improve margins, regardless of the state of demand in their end markets, and are rated modestly, we become very excited. These situations tend to offer a very good risk/reward ratio for patient investors.

There is no doubt in our minds that, properly executed, selective constructive corporate engagement can aid or accelerate some of this self-help. We believe that plenty of scope for engagement exists amongst our portfolio holdings and look forward to spending more time in this area now that the initial portfolio is largely complete.

We anticipate some further capital deployment and then managing the portfolio with a cash balance of between 5% and 15%, to enable opportunistic purchases of blocks of stock, without being forced sellers. Whilst this balance sheet approach is more conservative than the broader peer group with highly diversified portfolios, we believe that over the long term it suits our selective and differentiated investment approach well.

Odyssean Capital LLP

Portfolio Manager

23 May 2019

Portfolio of Investments

As at 31 March 2019

* Sum of equity investments in companies where the investment in each company is less than 3.0% of its net assets.

The Company has not disclosed the names of any investment where the holding is below 3.0% of its net assets on the grounds that the Company is continuing to build positions in these portfolio companies, disclosure of which is deemed to be commercially sensitive information. 

Distribution of Investments

as at 31 March 2019 (% of net assets)

Portfolio holdings

% holding by sector

Geographical revenue exposure

(% of invested capital)

Market capitalisation

(% of invested capital)

At as 31 March 2019, the net assets of the Company were £85.0m.

Strategic Overview

Business and status of the Company

The Company was incorporated on 21 December 2017 and the IPO took place on 1 May 2018. It is registered in England and Wales as a public limited company and is an investment company within the terms of section 833 of the Act. The principal activity of the Company is to carry on business as an investment trust. The Company has been approved by HM Revenue & Customs as an authorised investment trust under sections 1158 and 1159 of the CTA, subject to there being no subsequent serious breaches of regulations. In the opinion of the Directors, the Company is directing its affairs so as to enable it to continue to qualify for such approval.

The Company's shares have a listing on the premium segment of the Official List of the FCA and trade on the LSE's main market for listed securities.

The Company is a member of the AIC, a trade body which promotes investment companies and also develops best practice for its members.

Investment objective

The investment objective of the Company is to achieve attractive total returns per share principally through capital growth over a long-term period.

Investment policy

The Company's full investment policy is set out in the full Annual Report and Financial Statements and contains information on the policies which the Company follows, including in relation to borrowings, derivatives and hedging. The Company invests primarily in smaller company equities quoted on markets operated by the LSE, where the Portfolio Manager believes the securities are trading below intrinsic value and where this value can be increased through strategic, operational, management and/or financial initiatives.

Any material change to the Company's investment policy would require the approval of shareholders by way of an ordinary resolution at a general meeting and the approval of the FCA. Non-material changes to the investment policy may be approved by the Board.

Portfolio analysis

A detailed review of how the Company's assets have been invested is contained in the Chairman's Statement and the Portfolio Manager's Report above. A list of all the Company's investments is contained in the Portfolio of Investments above.

Key performance indicators

At each Board meeting, the Directors consider several performance measures to assess the Company's success in achieving its investment objective. The key performance indicators used to measure the progress and performance of the Company over time are established industry measures. These are as follows:

Net asset value

The NAV at 31 March 2019 was 96.3p per ordinary share, compared to 98.3p per ordinary share at launch, a decrease of 2.0%.

A full description of the Company's performance for the period ended 31 March 2019 can be found in the Portfolio Manager's Report above.

Share price

The Company's share price at launch was 101.5p and decreased to 99.3p as at 31 March 2019, resulting in a negative return of 2.2% during the period.

Share price premium to NAV

The share price premium to NAV narrowed from 3.2% at launch to 3.1% as at 31 March 2019. During the period ended 31 March 2019, the shares traded at an average premium to NAV of 5.0%.

Revenue return per ordinary share

Revenue return per ordinary share in the period ended 31 March 2019 was -0.6p.

Ongoing charges

The Company's annualised ongoing charges ratio as at 31 March 2019 was 1.6%.

Management arrangements

The Company is an internally managed investment company for the purposes of the Alternative Investment Fund Managers Directive and is its own alternative investment fund manager. The Board is therefore responsible for the portfolio management and risk management functions of the Company.

Pursuant to the terms of the Portfolio Management Agreement, the Board has delegated responsibility for discretionary portfolio management functions to Odyssean Capital LLP as the Company's Portfolio Manager, subject always to the overall supervision and control of the Board.

The Portfolio Manager is entitled to receive an annual management fee equal to the lower of: (i) 1.0% of the NAV (calculated before deduction of any accrued but unpaid management fee and any performance fee) per annum; or (ii) 1.0% per annum of the Company's market capitalisation. The annual management fee is calculated and accrues daily and is payable quarterly in arrears.

In addition, the Portfolio Manager is entitled to a performance fee in certain circumstances. Further details can be found in note 4 to the financial statements.

The Portfolio Manager is also entitled to reimbursement for all costs and expenses properly incurred by it in the performance of its duties under the Portfolio Management Agreement.

The initial term of the Portfolio Management Agreement is three years commencing on the date of the Company's launch (the "Initial Term"). The Company may terminate the Portfolio Management Agreement by giving the Portfolio Manager not less than six months' prior written notice, such notice not to be served prior to the end of the Initial Term. The Portfolio Manager may terminate the Portfolio Management Agreement by giving the Company not less than six months' prior written notice, such notice not to be served prior to the end of the Initial Term.

Continuing appointment of the Portfolio Manager

The Board keeps the ongoing performance of the Portfolio Manager under continual review and the Management Engagement Committee conducts an annual appraisal of the Portfolio Manager's performance and makes a recommendation to the Board about the continuing appointment of the Portfolio Manager.

The Management Engagement Committee has reviewed Odyssean's performance, with respect to their provision of portfolio management and other services. Due consideration was given to the quality and continuity of its personnel, succession planning and investment processes. Alongside the performance review, the Committee completed an appraisal of the terms of the Portfolio Management Agreement to ensure that the terms remained competitive and in the interest of the Company. The Portfolio Manager has executed the investment strategy according to the Board's expectations and it is the opinion of the Directors that the continuing appointment of the Portfolio Manager on the terms agreed is in the interests of shareholders as a whole.

Employees, human rights, social and community issues

The Board recognises the requirement under the Act to detail information about human rights, employees and community issues, including information about any policies it has in relation to these matters and the effectiveness of these policies. These requirements do not apply to the Company as it has no employees, all the Directors are non-executive and it has outsourced all its functions to third party service providers. The Company has therefore not reported further in respect of these provisions.

Board diversity

As at 31 March 2019, the Board of Directors of the Company comprised two male and two female Directors. The Board acknowledges the benefits of diversity, including gender diversity, and remains committed to ensuring that the Company's Directors bring a wide range of skills, knowledge, experience, backgrounds and perspectives. Further details of the Company's diversity policy are set out in the full Annual Report and Financial Statements.

Environmental, social and governance Issues

The Company has no employees, property or activities other than investments, so its direct environmental impact is minimal. In carrying out its activities and in its relationships with service providers, the Company aims to conduct itself responsibly, ethically and fairly.

The Board is comprised entirely of non-executive Directors and the day-to-day management of the Company's business is delegated to the Portfolio Manager. The Portfolio Manager aims to be a responsible investor and believes it is important to invest in companies that act responsibly in respect of environmental, ethical and social issues. The Directors believe that proxy voting is an important part of the corporate governance process. It is the policy of the Company to vote at all shareholder meetings of investee companies. The Company follows relevant regulatory requirements with an aim to make voting decisions which will best support growth in shareholder value and will commonly take into account corporate governance, board composition, remuneration and ESG issues. The Portfolio Manager also provides the Directors with a six-monthly update regarding the voting decisions made in respect of the investee companies.

Modern slavery

The Company is not within the scope of the Modern Slavery Act 2015 because it has insufficient turnover and therefore, no further disclosure is required in this regard.

Risk Management

Role of the Board

The Directors have overall responsibility for risk management and internal control within the Company. They recognise that risk is inherent in the Company's operation and that effective risk management is an important element in the success of the organisation. The Directors have delegated responsibility for the assurance of the risk management process and the review of mitigating controls to the Audit Committee. The Directors, when setting the risk management strategy, also determine the nature and extent of the significant risks and its risk appetite in implementing this strategy.

The principal risks and uncertainties which the Company faces are set out below.

Internal control review

The Board is responsible for the internal controls relating to the Company, including the reliability of the financial reporting process, and for reviewing their effectiveness.

An ongoing process, in accordance with the FRC Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, has been established for identifying, evaluating and managing the principal risks faced by the Company. This process, which is regularly reviewed, together with key procedures established with a view to providing effective financial control, has been in place throughout the period ended 31 March 2019 and up to the date of this Report. The internal control systems are designed to ensure that proper accounting records are maintained, that the financial information on which business decisions are made and which are issued for publication is reliable and that the assets of the Company are safeguarded.

The risk management process and systems of internal control are designed to manage rather than eliminate the risk of failure to achieve the Company's investment objective. It should be recognised that such systems can only provide reasonable, not absolute, assurance against material misstatement or loss.

The Directors have carried out a review of the effectiveness of the Company's risk management and internal control systems as they have operated over the period and up to the date of approval of this Report. There were no matters arising from this review that required further investigation and no significant failings or weaknesses were identified.

Internal control assessment process

Robust risk assessments and reviews of internal controls are undertaken regularly in the context of the Company's overall investment objective. The Board, through the Audit Committee, has categorised risk management controls under the following key headings: corporate strategy; published information, compliance with laws and regulations; relationships with service providers; and investment and business activities. In arriving at its judgement of what risks the Company faces, the Board has considered the Company's operations in the light of the following factors:

- the nature and extent of risks which it regards as acceptable for the Company to bear within its overall business objective;

- the threat of such risks becoming reality;

- the Company's ability to reduce the incidence and impact of risk on its performance;

- the cost to the Company and benefits related to the review of risk and associated controls of the Company; and

- the extent to which the third parties operate the relevant controls.

A risk matrix has been produced so that the risks identified and the controls in place to mitigate those risks can be monitored. The risks are assessed on the basis of the likelihood of them happening, the impact on the business if they were to occur and the effectiveness of the controls in place to mitigate them. This risk register is reviewed by the Audit Committee.

Most of the day-to-day management functions of the Company are sub-contracted, and the Directors therefore obtain regular assurances and information from key third party suppliers regarding the internal systems and controls operating in their organisations. In addition, each of the third parties is requested to provide a copy of its report on internal controls each year, which is reviewed by the Audit Committee.

Principal risks and uncertainties

The Company is exposed to a variety of risks and uncertainties that could cause its asset price or the income from the investment portfolio to reduce, possibly by a sizeable percentage in the most adverse circumstances. The Board, through delegation to the Audit Committee, has undertaken a robust assessment and review of the principal risks facing the Company, together with a review of any new risks which may have arisen during the year, including those that would threaten its business model, future performance, solvency or liquidity. These risks are formalised within the Company's risk matrix.

The principal financial risks and the Company's policies for managing these risks and the policy and practice with regard to financial instruments are summarised in note 15 to the financial statements.

The Board has also identified the following additional risks and uncertainties:

Going concern

The Directors assessed the going concern of the Company in light of its current trading performance. The Directors looked at the forecasts for the coming year and applied stress tests for adverse scenarios. As a result, it was determined that the Company has sufficient liquidity to cover all anticipated payments during that period. The Directors also considered the regulatory capital of the Company and determined that, based on the latest approved forecasts, the Company will have sufficient regulatory capital for the same period. At the time of approving the Financial Statements, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.

Viability statement

The Board has assessed the prospects of the Company over a three-year period. This assessment period has been chosen as the Board believes it represents an appropriate period given the long-term investment horizons of the Company.

As part of its assessment of the viability of the Company, the Board has considered the principal risks and uncertainties (as set out above), specifically key man risk, and the impact on the Company's portfolio of a significant fall in the UK markets. The Directors do not expect there to be any significant change in the current principal risks and adequacy of the mitigating factors in place over the period of this assessment and therefore, believe the going concern and viability period assessment remains appropriate.

The effect on the Company and the portfolio from Brexit has been considered. Whilst it is challenging to quantify any impact that should arise from a change in the UK's relationship with the EU, it is not believed that there will be a fundamental bearing on the business. Any change arising from Brexit will likely bring investment opportunities as well as headwinds and the Company's investment strategy will remain appropriate in such an environment.

The Board has also considered the Company's financial position and its ability to liquidate its portfolio to meet expenses or other liabilities as they fall due. In considering this, the Board notes that:

- the Company primarily invests in companies listed and traded on stock exchanges. These are actively traded and, whilst perhaps less liquid than larger quoted companies, the portfolio is well diversified;

- the Company's portfolio currently includes a large position in cash. Cash balances can be varied due to changes in market conditions, but positive cash levels are expected to be maintained over the period; and

- the expenses of the Company are predictable and modest in comparison to the assets in the portfolio. There are no commitments that would change that position.

Based on this assessment, the Directors are confident that the Company's investment approach, portfolio management and balance sheet approach will ensure that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three years.

Approval

This Strategic Report has been approved by the Board of Directors and signed on its behalf by:

Jane Tufnell

Chairman

23 May 2019

Extracts from the Directors' Report

Directors

The Directors in office during the period and at the date of this report are:

Jane Tufnell (Chairman)

Arabella Cecil (Senior Independent Director)

Peter Hewitt (Chairman of the Management Engagement Committee)

Richard King (Chairman of the Audit Committee)

Share capital

The Company was incorporated on 21 December 2017 with 1 ordinary share of £0.01, held by Harwood Capital Management Limited. On 7 February 2018, the Company issued 50,000 management shares of £1.00 each, which were also held by Harwood Capital Management Limited.

Share issues

At a general meeting of the Company held on 21 March 2018, the Directors were granted the authority to allot and to disapply pre-emption rights in respect of up to 200 million shares in aggregate, being either ordinary shares of £0.01 each or C shares of £0.10 each, or any combination of ordinary shares and C shares, such authority to expire on 20 March 2019.

On 1 May 2018, 87,457,210 ordinary shares of £0.01 each (with an aggregate nominal value of £874,572.10) were issued under this authority at a price of £1.00 per share under the placing and offer for subscription (including an intermediaries offer) by the Company. The Company commenced business on 1 May 2018 when the ordinary shares were listed on the premium segment of the Official List of the FCA and admitted to trading on the premium segment of the LSE's main market for listed securities. The 50,000 management shares were simultaneously redeemed and cancelled.

At a general meeting of the Company held on 21 March 2018, the Directors were also granted the authority to allot and to disapply pre-emption rights in respect of up to an additional 17,491,442 ordinary shares, being 20.0% of the ordinary shares in issue at the time of admission of the ordinary shares to the LSE, such authority to expire at the conclusion of the 2019 AGM.

On 20 June 2018, the Company was granted a block listing of 5.0 million ordinary shares to be listed to the premium segment of the Official List of the FCA and admitted to trading on the premium segment of the LSE's main market. During the period ended 31 March 2019, a total of 800,000 ordinary shares (with a nominal value of £8,000) were issued under this block listing for a total consideration of £828,175; these shares were issued to satisfy market demand for the shares and to manage the premium to NAV at which the shares were trading at the time of issuance. All shares were issued at a premium to NAV and at an average price of 103.5 pence.

As at the date of this report, a further 4.2 million shares remain under the block listing.

Proposals for the renewal of the Directors' authority to issue shares are set out in the full Annual Report and Financial Statements.

Cancellation of share premium

On 8 August 2018, the Company's share premium account of £85,475,000 was cancelled in order to create distributable reserves.

Purchase of own shares

At a general meeting held on 21 March 2018, the Directors were granted the authority to buy back up to 13,109,835 ordinary shares, being 14.99% of the ordinary shares in issue at the time of admission of the ordinary shares to the LSE. No ordinary shares have been bought back under this authority. The authority will expire at the conclusion of the first AGM of the Company in 2019, when a resolution for its renewal will be proposed (see the full Annual Report and Financial Statements for further information).

Current share capital

As at 31 March 2019, and as at the date of this report, there are 88,257,211 ordinary shares in issue, none of which are held in treasury. At general meetings of the Company, shareholders are entitled to one vote on a show of hands and, on a poll, to one vote for every share held. The total voting rights of the Company as at 31 March 2019 were 88,257,211.

There are no restrictions concerning the transfer of securities in the Company or on voting rights; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; and no agreements which the Company is party to that might affect its control following a successful takeover bid.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial period. Accordingly, the Directors have prepared the Financial Statements in accordance with IFRS as adopted by the EU. Under company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing the Financial Statements, the Directors are required to:

- select suitable accounting policies in accordance with IAS 8: "Accounting Policies, Changes in Accounting Estimates and Errors" and then apply them consistently;

- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

- provide additional disclosures when compliance with specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance;

- state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the Financial Statements;

- make judgements and accounting estimates that are reasonable and prudent; and

- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Act and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the FCA.

The Financial Statements are published on the Company's website, www.oitplc.com, which is maintained on behalf of the Company by the Portfolio Manager. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the Financial Statements since they were initially presented on the website.

Under the Portfolio Management Agreement, the Portfolio Manager is responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

We confirm that to the best of our knowledge:

- the Financial Statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Company; and

- the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

Jane Tufnell

Chairman

23 May 2019

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the period ended 31 March 2019 but is derived from those accounts. Statutory accounts for the period ended 31 March 2019 will be delivered to the Registrar of Companies in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's report can be found in the Company's full Annual Report and Financial Statements on the Company's website at www.oitplc.com.

Statement of Comprehensive Income

for the period from 21 December 2017 (date of incorporation) to 31 March 2019

The total column of the statement is the Statement of Comprehensive Income of the Company prepared in accordance with IFRS as endorsed by the EU. The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice ("SORP") issued by the AIC.

All items in the above Statement derive from continuing operations. No operations were acquired or discontinued during the period.

There is no other comprehensive income and therefore, the return for the period is also the total comprehensive income.

The notes below form part of these Financial Statements. 

Statement of Changes in Equity

for the period from 21 December 2017 (date of incorporation) to 31 March 2019

* The special distributable and revenue reserves can be distributed in the form of dividends.

The notes below form part of these Financial Statements. 

Balance Sheet

as at 31 March 2019

The Financial Statements of Odyssean Investment Trust PLC were approved by the Board of Directors on 23 May 2019 and signed on its behalf by:

Jane Tufnell

Chairman

Company Registered Number: 11121934

The notes below form part of these Financial Statements.

Cash Flow Statement

for the period from 21 December 2017 (date of incorporation) to 31 March 2019

The notes below form part of these Financial Statements.

Notes to the Financial Statements

for the period from 21 December 2017 (date of incorporation) to 31 March 2019

1. General information

Odyssean Investment Trust PLC is a listed public limited company incorporated in England and Wales. The registered office of the Company is Beaufort House, 51 New North Road, Exeter, EX4 4EP.

2. Accounting Policies

a) Basis of preparation/statement of compliance

The Company's annual Financial Statements for the period from incorporation on 21 December 2017 to 31 March 2019 have been prepared in conformity with IFRS as adopted by the EU, which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and as applied in accordance with the SORP for financial statements of investment trust companies and venture capital trusts, except to any extent where it is not consistent with the requirements of IFRS. As this is the first reporting period since the Company was incorporated, no comparative figures have been shown.

This is the first set of the Company's Financial Statements and IFRS 15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments' have been applied.

b) Functional and presentation currency

The Financial Statements are presented in GBP Sterling, which is the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

c) Measurement basis

The Financial Statements have been prepared on a going concern basis under the historical cost convention, except for the measurement at fair value of investments classified at fair value through profit or loss.

d) Significant accounting policies and application of new and revised IFRSs

The IASB have issued and endorsed the following standards and interpretations, applicable to the Company, which are not yet effective for the period ended 31 March 2019 and have therefore not been applied in preparing these Financial Statements.

Amendment to IFRS 9 'Financial Instruments' - relates to prepayment features with negative compensation and modifications of financial liabilities, and is effective for reporting periods on or after 1 January 2019.

The Directors do not expect that the adoption of the standards and interpretations will have a material impact on the Financial Statements.

Other future development includes the IASB undertaking a comprehensive review of existing IFRSs. The Company plans to apply these standards and amendments in the reporting period in which they become effective.

e) Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business.

f) Investments at fair value through profit or loss

All investments held by the Company are classified as "fair value through profit or loss". As the Company's business is investing in financial assets with a view to profiting from their return in the form of interest, dividends or increase in fair value. Listed equities, unquoted equities and fixed income securities are classified as fair value through profit or loss on initial recognition. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy. Investments are initially recognised at cost, being the fair value of the consideration.

After initial recognition, investments are measured at fair value, with movements in fair value of investments and impairment of investments recognised in the Statement of Comprehensive Income and allocated to the capital column. For quoted equity shares, fair value is generally determined by reference to quoted market bid prices or closing prices for SETS (LSE's electronic trading service) stocks.

Unquoted investments are valued in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines. Their valuation incorporates all factors that market participants would consider in setting a price. The primary valuation techniques employed to value the unquoted investments are earnings multiples, recent transactions and the net asset basis.

g) Trade date accounting

All "regular way" purchases and sales of financial assets are recognised on the "trade date" i.e, the day that the Company commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of the asset within a time frame generally established by regulation or convention in the market place.

h) Dividends paid to shareholders

Dividends to shareholders are recognised as a liability in the period which they are paid or approved at general meetings and are taken to the Statement of Changes in Equity. Dividends declared and approved after the Balance Sheet date are not recognised as a liability of the Company at that date.

i) Income

Dividends receivable on quoted equity shares are taken into account on the ex-dividend date. Where no ex-dividend date is quoted, they are brought into account when the Company's right to receive payment is established. Other investment income and interest receivable are included in the Financial Statements on an accruals basis. Dividends receivable from UK and overseas registered companies are accounted for on a gross basis.

j) Expenses

All expenses are accounted for on an accruals basis and are allocated wholly to revenue with the exception of performance fees which are allocated wholly to capital, as the fee is payable by reference to the capital performance of the Company, and transaction costs which are also allocated to capital.

k) Trade and other receivables

Trade and other receivables do not carry any interest and are stated at their fair value as reduced by appropriate allowances for estimated irrecoverable amounts.

l) Cash and cash equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash in hand and at banks and short-term deposits which are held to maturity are carried at cost.

m) Trade and other payables

Trade and other payables do not carry any interest and are measured at fair value through profit and loss.

n) Taxation

Tax on the profit or loss for the period comprises current and deferred tax. Corporation tax is recognised in the Statement of Comprehensive Income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the Balance Sheet date and any adjustment to tax payable in respect of previous years. The tax effect of different items of expenditure is allocated between revenue and capital on the same basis as the particular item to which it relates, using the Company's marginal method of tax, as applied to those items allocated to revenue, for the accounting period.

Deferred tax is provided, using the liability method, on all temporary differences at the Balance Sheet date between the tax basis of assets and liabilities and their carrying amount for financial reporting purposes. Deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the Balance Sheet date.

o) Share capital and reserves

The share capital represents the nominal value of equity shares.

The share premium account represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

The special distributable reserve was created on 7 August 2018 to create a distributable reserve that shall be capable of being applied in any manner in which the Company's profits available for distribution (as determined in accordance with the Act) are able lawfully to be applied.

The capital reserve represents realised and unrealised capital and exchange gains and losses on the disposal and revaluation of investments and of foreign currency items. In addition, performance fee costs are allocated to the capital reserve. The realised capital reserve can be used for the repurchase of shares.

The revenue reserve represents retained profits from the income derived from holding investment assets less the costs associated with running the Company. This reserve can be distributed.

p) Use of estimates and judgements

The preparation of these Financial Statements in conformity with IFRS requires the Directors to make judgements, estimates and assumptions that affect the application of accounting policies and therefore, the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

In particular, judgements are made when determining any deferred performance fee, this may be affected by future changes in the Company's portfolio and other assets and liabilities. Any deferred performance fee is calculated in accordance with note 4 below and is recognised in accordance with note 2(f) above.

These judgements and estimates are reviewed on an ongoing basis. Revisions to judgements and estimates are reviewed on an ongoing basis. Revisions are recognised prospectively.

In particular, information about significant areas of estimation uncertainty in applying accounting policies that have the most effect on the amounts recognised in the Financial Statements relates to the determination of fair value of financial instruments with significant unobservable inputs. These are valued in accordance with note 2(d) above.

3. Income

4. Portfolio management fee

The Company is liable to pay a performance fee depending on the performance of the Company over a three-year period and thereafter a rolling three-year period as set out in the Company's prospectus dated 26 March 2018. Based on the performance of the Company to 31 March 2019, no performance fee has been accrued in the NAV. As at 23 May 2019, being the latest date prior to release, due to the impact of market movements since the period end, the Company has no performance fee provision included in the NAV.

Pursuant to the terms of the Portfolio Management Agreement, the Portfolio Manager is entitled, with effect from IPO on 1 May 2018, to receive an annual management fee equal to the lower of: (i) 1.0% of the NAV (calculated before deduction of any accrued but unpaid Management fee and any performance fee) per annum; or (ii) 1.0% per annum of the Company's market capitalisation. The annual management fee is calculated and accrues daily and is payable quarterly in arrears.

In addition, the Portfolio Manager will be entitled to a performance fee (the "Performance Fee") in certain circumstances.

The Company's performance is measured over rolling three-year periods ending on 31 March each year (each a "Performance Period"), by comparing the NAV total return per ordinary share over a Performance Period against the total return performance of the NSCI ex IT plus AIM Index (the "Comparator Index"). The first Performance Period will run from IPO to 31 March 2021.

A Performance Fee is payable if the NAV per ordinary share at the end of the relevant Performance Period (as adjusted to: (i) add back the aggregate value of any dividends per ordinary share paid (or accounted as paid for the purposes of calculating the NAV) to shareholders during the relevant Performance Period; and (ii) exclude any accrual for unpaid Performance Fee accrued in relation to the relevant Performance Period) (the "NAV Total Return per Share") exceeds both:

(i) (a) the NAV per ordinary share IPO, in relation to the first Performance Period; and (b) thereafter the NAV per ordinary share on the first business day of a Performance Period; in each case as adjusted by the aggregate amount of (i) the total return on the Comparator Index (expressed as a percentage); and (ii) 1.0% per annum over the relevant Performance Period (the "Target NAV per Share");

(ii) the highest previously recorded NAV per ordinary share as at the end of the relevant Performance Period in respect of which a Performance Fee was last paid (or the NAV per ordinary share as at IPO, if no Performance Fee has been paid) (the "High Watermark"); and

(iii) with any resulting excess amount being known as the "Excess Amount".

The Portfolio Manager will be entitled to 10.0% of the Excess Amount multiplied by the time weighted average number of ordinary shares in issue during the relevant Performance Period to which the calculation date relates. The Performance Fee will accrue daily.

Payment of a Performance Fee that has been earned will be deferred to the extent that the amount payable exceeds 1.75% per annum of the NAV at the end of the relevant Performance Period (amounts deferred will be payable when, and to the extent that, following any later Performance Period(s) with respect to which a Performance Fee is payable, it is possible to pay the deferred amounts without causing that cap to be exceeded or the relevant NAV total return per share to fall below both the relevant target NAV per share and the relevant High Watermark for such Performance Period, with any amount not paid being retained and carried forward).

Subject at all times to compliance with relevant regulatory and tax requirements, any Performance Fee paid or payable shall:

- where as at the relevant calculation date, the ordinary shares are trading at, or at a premium to, the latest published NAV per ordinary share, be satisfied as to 50.0% of its value by the issuance of new ordinary shares by the Company to the Portfolio Manager (rounded down to the nearest whole number of ordinary shares) (including the reissue of treasury shares) issued at the latest published NAV per ordinary share applicable at the date of issuance;

- where as at the relevant calculation date, the ordinary shares are trading at a discount to the latest published NAV per ordinary share, be satisfied as to 100.0% of its value in cash and the Portfolio Manager shall, as soon as reasonably practicable following receipt of such payment, use 50.0% of such Performance Fee payment to make market purchases of ordinary shares (rounded down to the nearest whole number of ordinary shares) within four months of the date of receipt of such Performance Fee payment.

(in each case "Restricted Shares").

Each such tranche of Restricted Shares issued to, or acquired by, the Portfolio Manager will be subject to a lock-up undertaking for a period of three years post issuance or acquisition (subject to customary exceptions).

At no time shall the Portfolio Manager (and/or any persons deemed to be acting in concert with it for the purposes of the Takeover Code) be obliged, in the absence of a relevant whitewash resolution having been passed in accordance with the Takeover Code, to receive, or acquire, further ordinary shares where to do so would trigger a requirement to make a mandatory offer pursuant to Rule 9 of the Takeover Code. Where any restriction exists on the issuance of further ordinary shares to the Portfolio Manager, the relevant amount of the Performance Fee may be paid in cash.

In addition, the Portfolio Manager is entitled to reimbursement for all costs and expenses properly incurred by it in the performance of its duties under the Portfolio Management Agreement.

The initial term of the Portfolio Management Agreement is three years commencing on the date of IPO (the "Initial Term"). The Company may terminate the Portfolio Management Agreement by giving the Portfolio Manager not less than six months' prior written notice, such notice not to be served prior to the end of the Initial Term. The Portfolio Manager may terminate the Portfolio Management Agreement by giving the Company not less than six months' prior written notice, such notice not to be served prior to the end of the Initial Term.

5. Other expenses

* Peter Hewitt is not receiving a Director fee in respect of his services to the Company. Each of the Directors has agreed to use their applicable Directors' fees (net of applicable taxes) to acquire ordinary shares in the secondary market, subject to regulatory requirements. In relation to any dealings, the Directors will comply with the share dealing code adopted by the Company in accordance with the Market Abuse Regulation. The Board will be responsible for taking all proper and reasonable steps to ensure compliance with the share dealing code by the Directors.

** As detailed in the Audit Committee report in the full Annual Report and Financial Statements, a further £30,000 was paid to the Auditor relating to accounting services for the prospectus at launch, recognised in the share premium account.

6. Taxation

The current taxation charge for the period is different from the standard rate of corporation tax in the UK of 19.0%, the effective tax rate was 0%. The differences are explained below.

* The theoretical tax rate is calculated using a blended tax rate over the period.

At 31 March 2019, the Company had no unprovided deferred tax liabilities. At that date, based on current estimates and including the accumulation of net allowable losses, the Company had unrelieved losses of £1,189,484 that are available to offset future taxable revenue. A deferred tax asset of £202,212 has not been recognised because the Company is not expected to generate sufficient taxable income in future periods in excess of the available deductible expenses and accordingly, the Company is unlikely to be able to reduce future tax liabilities through the use of existing surplus losses.

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Trust meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an Investment Trust company.

7. Earnings per ordinary share

* The Company's weighted average number of ordinary shares for the period has been calculated from 1 May 2018, being the date the initial shares were listed for trading.

8. Net asset value per ordinary share

The basic NAV per ordinary share is based on net assets of £85,007,000 and on 88,257,211 ordinary shares, being the number of ordinary shares in issue at the period end.

There is no dilution effect and therefore no difference between the diluted total net assets per ordinary share and the basic total net assets per ordinary share.

9. Investments at fair value through profit or loss

The Company is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following three levels:

- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

An active market is a market in which transactions for the asset or liability occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place between market participants at the measurement date. Quoted prices provided by external pricing services, brokers and vendors are included in Level 1, if they reflect actual and regularly occurring market transactions on an arms length basis.

- Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

- Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data from investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices at the close of business on the Balance Sheet date, without adjustment for transaction costs necessary to realise the asset.

There were no transfers between levels during the period.

10. Trade and other receivables

11. Trade and other payables

12. Share capital

The Company was incorporated with 1 ordinary share and 50,000 management shares. The management shares were cancelled on 1 May 2018. As at 31 March 2019, the Company held no management shares.

The initial placing of 87,457,210 ordinary shares took place on 1 May 2018, raising gross proceeds of £87,457,210. The Company commenced business on 1 May 2018 when the initial ordinary shares were listed on the premium segment of the Official List of the FCA and admitted to trading on the premium segment of the LSE's main market for listed securities.

Following approval of the Court on 8 August 2018, the share premium account cancellation was effective. The share premium account of £85,495,000 at 7 August 2018 was transferred to a special distributable reserve. The issue costs of £1,451,000 relating to the initial and subsequent listings prior to cancellation were offset against the share premium account. At 31 March 2019, the special distributable reserve was £85,475,000 after costs of £20,000 relating to the cancellation.

13. Reconciliation of total return before taxation to cash expended from operations

14. Analysis of net cash and net debt

15. Financial instruments

The Company's financial instruments include its investment portfolio, cash balances, trade receivables and trade payables that arise directly from its operations. Adherence to the Company's investment policy is key to managing risk.

The Portfolio Manager monitors the financial risks affecting the Company on an ongoing basis and the Directors regularly receive financial information, which is used to identify and monitor risk. All risks are actively reviewed and monitored by the Board.

The main risks arising from the Company's financial instruments are:

i) market risk, including market price risk, currency risk and interest rate risk;

ii) liquidity risk; and

iii) credit risk.

(i) Market risk

Market risk is the risk of loss arising from movements in observable market variables. The fair value of future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices.

Market price risk

The Company is exposed to price risk arising from its investments whose future prices are uncertain. The Company's exposure to market price risk comprises movements in the value of the Company's investments. Detail of its investments can be found in note 9 above and details on how the investments are valued is given in note 2(f) above. A 10.0% increase in the market value of the Company's investments as at 31 March 2019 would have increased net assets by £6,681,000. An equal change in the opposite direction would have decreased the net assets by an equal and opposite amount.

The Portfolio Manager manages this risk by following the investment objective as set out in the prospectus. The Portfolio Manager assesses the exposure to market price risk when making each investment decision and monitors the overall level of market price risk on the whole investment portfolio on an ongoing basis. The Portfolio Manager maintains a net cash position and intends to maintain this for the foreseeable future.

Currency risk

Currency risk is the risk that fair values of future cash flows of a financial instrument fluctuate because of changes in foreign exchange rates. The Company does not have any exposure to foreign currency cash balances. It has only one investment value impacted by foreign exchange rates. A 10.0% increase in the exchange rate as at 31 March 2019 would have decreased net assets by £187,000, whilst a 10.0% decrease would have increased the net assets by an equal and opposite amount. Whilst the majority of the investments are UK quoted, many of these investments generate significant income from other currencies. The Portfolio Manager does not hedge underlying portfolio companies.

Interest rate risk

Interest rate risk is the risk that fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate movements may potentially affect future cash flows from the level of income receivable on cash deposits.

The Company's bank balances are subject to a variable rate of interest, it does not generate significant income from interest and the Portfolio Manager does not hedge against this. The Company has no gearing and therefore there is limited downside risk from increasing interest costs on borrowings.

(ii) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. At 31 March 2019, the Company had cash and cash equivalents of £18,219,000.

The Portfolio Manager maintains a net cash position and intends to maintain this for the foreseeable future. The Portfolio Manager will manage the portfolio to maintain sufficient cash balances to meet its obligations or liabilities.

(iii) Credit risk

This is the risk a counterparty of the Company will not meet their obligations to the Company.

The Company does not have any significant exposure to credit risk arising from one individual party. Credit risk is spread across a number of counterparties, each having an immaterial effect on the Company's cash flows, should a default happen. The Company accesses creditworthiness of its debtors from time to time to ensure they are neither past due or impaired.

All the assets of the Company which are traded on a recognised exchange are held by the Company's custodian, RBC Investor Services Trust ("RBC"). All the Company's cash is also held by RBC.

16. Related party transactions

The amounts incurred in respect of Portfolio Management fees during the period to 31 March 2019 was £784,000, of which £208,000 was outstanding at 31 March 2019. The amount accrued in relation to the Performance Fee provision as at 31 March 2019 was £nil.

17. Subsequent events

There were no subsequent events of significance up until the signing of this report.

Glossary

Act

Companies Act 2006

AGM

Annual General Meeting

AIC

Association of Investment Companies

CTA

Corporation Tax Act 2010

Discount/premium

If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. If the share price is higher than the NAV per share, the shares are said to be trading at a premium. The size of the discount/premium is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share.

DPS

Dividends per share

EBITA

Earnings before interest, tax and amortisation

EBITDA

Earnings before interest, tax, depreciation and amortisation

EPS

Earnings per share

ESG

Environmental, social and governance

EU

European Union

EV

Enterprise value

FCA

Financial Conduct Authority

IFRS

International Financial Reporting Standards

IPO

Initial public offering

LSE

London Stock Exchange

M&A

Mergers and acquisitions

MRO

Maintenance, repairs and operations

NAV

NAV stands for net asset value and represents shareholders' funds. Shareholders' funds are the total value of a company's assets at current market value less its liabilities.

NAV total return

NAV total return is the closing NAV per share including any cumulative dividends paid as a percentage over the opening NAV.

NSCI ex IT plus AIM

Numis Smaller Companies ex-Investment Trusts plus AIM Index

Ongoing charges

Ongoing charges are the Company's annualised expenses (excluding finance costs and certain non-recurring items) expressed as a percentage of the average monthly net assets of the Company during the year.

P/E

Price earnings ratio

PEG ratio

Price earnings ratio/earnings growth

R&D

Research and development

ROCE

Return on capital employed

TMT

Technology, media and telecom

Total assets

Total assets are the sum of both fixed and current assets with no deductions.

Total return per ordinary share

Total return per ordinary share is the total return for the period expressed as an amount per weighted average ordinary share.

ANNUAL GENERAL MEETING

The Company's AGM will be held at the offices of Odyssean Capital LLP, 6 Stratton Street, Mayfair, London W1J 8LD at 10.30 am on Thursday, 27 June 2019.

The notice of this meeting will be circulated to shareholders with the full Annual Report and Financial Statements and will also be available on the Company's website at www.oitplc.com.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Financial Statements and notice of AGM will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at www.morningstar.co.uk/uk/NSM.

ENDS

Neither the contents of Odyssean Investment Trust PLC's website nor the contents of any website accessible from hyperlinks on the website (or any website) is incorporated into, or forms part of, this announcement.