2. Basis of preparation

The Consolidated Financial Statements of the Company have been prepared on a going concern basis and under the historical cost convention, except for financial instruments at fair value through profit and loss, which are measured at fair value.

The Directors are cautious of the state of the global economy and the local trading environments of its investments, but are confident the Company has sufficient cash reserves to meet all liabilities as they fall due for the foreseeable future.

The Board of Directors has assessed if it is appropriate to adopt the going concern basis of accounting in preparing these Consolidated Financial Statements. As part of this assessment, the Board of Directors has considered a wide range of information relating to the present and future conditions, as well as the impact on investment and sale expectations for each of the Funds, cash flow projections and the longer-term strategy of the Company.

As part of the assessment, the Board of Directors:

  • Assessed liquidity, solvency and capital management. The Company considered liquidity risk as the risk that the Company may encounter difficulty in meeting obligations arising from its financial liabilities that are settled by delivering cash or another financial asset, or that such obligations would have to be settled in a manner disadvantageous to the Company. Unfunded commitments to the Funds are irrevocable and can exceed cash and cash equivalents available to the Company. Based on current cash flow projections and barring unforeseen events, the Company expects to be able to meet its obligations as they fall due.

As at 31 December 2023, cash and cash equivalents of the Company amount to £207 million. The Company has total unfunded capital commitments of £1,015 million relating to the Funds that are expected to be called over the next five years. Under the Company’s bye-laws, the Company is permitted to borrow up to 25% of total shareholders’ equity, which would amount to approximately £302 million as at 31 December 2023. During the year, the Company drew down £100 million on the multi-currency revolving credit facility ('RCF') and repaid in full. OCI extended the RCF for a further two years and increased commitments from lenders to £175 million. There is an option to increase the commitments by a further £50 million subject to agreement by all parties. The credit facility remains undrawn as at 31 December 2023. The Directors consider the Company to have sufficient resources and liquidity and can continue to operate for a period of at least 12 months.

  • Considered the estimates inherent to the valuations of the Funds and the unquoted direct investments. The Company’s approach to valuations was consistent with the prior year’s approach. In addition, key assumptions and estimates relating to the valuation of the unquoted direct investments were considered.
  • Assessed the operational resilience of the Company’s critical functions, which includes monitoring the performance of the Company’s key service providers.

The Board of Directors considers it appropriate to prepare the Consolidated Financial Statements of the Company on the going concern basis.

The judgements, assumptions and estimates involved in the Company’s accounting policies that are considered by the Board of Directors to be the most important to the Company’s results and financial condition are the fair valuation of its investments and the assessment that the Company meets the definition of an investment entity and are detailed further in Notes 3.2 and 4.

2.1 Basis for compliance

IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

2.2 Functional and presentation currency

The Consolidated Financial Statements are presented in British Pounds (‘Pounds’), which is the Company’s functional currency.