Lancaster Investment Management LLP
MIFIDPRU Public Disclosure Document
For the period 01.04.22 to 31.03.23
1. Overview and summary
Lancaster Investment Management LLP (“Lancaster”) is regulated by the Financial Conduct Authority (“FCA”) as a Markets in Financial Instruments (“MiFID”) firm and subject to the rules and requirements of the FCA’s Prudential Sourcebook for MiFID Investments Firms (“MIFIDPRU”) handbook.
For the purposes of MIFIDPRU, the Firm has been classified as a small non-interconnected (“SNI”) firm.
The Firm has produced this Public Disclosure Document in line with the rules and requirements of MIFIDPRU 8, as applicable to SNI firms.
This Public Disclosure Document has been prepared based on the audited financials as at 31st March 2023, covering the financial period 1st April 2022 to 31st March 2023.
The Firm’s main business activity is to provide investment management services. As at the end of March 2023, Lancaster advised two offshore master feeder funds and is the sub-investment advisor on a further two onshore European funds. Lancaster pursues a valuation-based investment approach to assess listed European equities.
2. Risk management objectives and policies
The Firm has implemented and embedded risk management framework, policies and procedures across all relevant risk areas of the Firm. The Operating Group (“OG”) comprised of Richard Lamplough, James Roycroft and Matthew Wood sets the business strategy and risk appetite statement of the Firm, which flows through to the risk management framework of the Firm.
In line with the Firm’s business strategy, risk appetite and risk management framework the Firm identifies and further assesses key risks within the Firm’s Internal Capital and Risk Assessment (“ICARA”) process.
The Firm maintains a risk register, which includes risk assessment and rating methodologies in accordance with its risk appetite statement. Key risks are reported to the OG at each meeting.
2.1 Own funds requirements - MIFIDPRU 4
As an SNI firm without permissions for dealing as principle or holding client money or client assets, the Firm is subject to a Permanent Minimum Requirement of £75,000.
The Firm calculates its own funds requirements based on the Fixed Overhead Requirement (“FOR”) calculation and is not subject to any K-factor requirements.
The Firm has further assessed any risks facing its business operations within its ICARA and quantified additional own funds and liquidity, where required.
2.2 Concentration risk - MIFIDPRU 5
The Firm does not conduct any trading on own account and does not have regulatory permissions for dealing as principal. The Firm therefore does not have any concentration risks on or off balance sheet and does not operate a trading book.
2.3 Liquidity - MIFIDPRU 6
The Firm maintains minimum liquidity at all times, in compliance with the Basic Liquid Asset Requirement (BLAR), being at least 1/3 of its FOR.
The Firm does not provide any client guarantees and therefore its entire liquidity requirement is driven by its expenses, as captured by the FOR.
As part of the ICARA, the Firm also maintains liquidity to satisfy its net wind-down costs and any additional liquidity requirements which the ICARA identified for supporting the ongoing business activities of the Firm.
3. Own funds
3.1 Own funds resources
In line with MIFIDPRU 8.4 the Firm has prepared the reconciliation of own funds in line with MIFIDPRU 8 Annex 1 as follows:
| Composition of regulatory own funds | ||
|---|---|---|
| Item | Amount (GBP 000s) | Source |
| OWN FUNDS | 1,638 | |
| TIER 1 CAPITAL | 1,638 | |
| COMMON EQUITY TIER 1 CAPITAL | 1,638 | |
| Fully paid up capital instruments | 1,737 | Permanent Share Capital (LIS) |
| Share premium | 0 | |
| Retained earnings | 0 | |
| Accumulated other comprehensive income | 0 | |
| Other reserves | (99) | |
| Adjustments to CET1 due to prudential filters | 0 | |
| Other funds | 0 | |
| (-) TOTAL DEDUCTIONS FROM COMMON EQUITY TIER 1 | 0 | |
| CET1: Other capital elements, deductions and adjustments | 0 | |
| ADDITIONAL TIER 1 CAPITAL | 0 | |
| Fully paid up, directly issued capital instruments | 0 | |
| Share premium | 0 | |
| (-) TOTAL DEDUCTIONS FROM ADDITIONAL TIER 1 | 0 | |
| Additional Tier 1: Other capital elements, deductions and adjustments | 0 | |
| TIER 2 CAPITAL | 0 | |
| Fully paid up, directly issued capital instruments | 0 | |
| Share premium | 0 | |
| (-) TOTAL DEDUCTION FROM TIER 2 | 0 | |
| Tier 2: Other capital elements, deductions and adjustments | 0 |
| Own funds: main features of own instruments issued by firm |
|---|
| N/A - Members' capital only |
3.2 Own funds requirements
The Firm calculates its own funds requirements as an SNI firm in line with the rules and requirements in MIFIDPRU 4.3 for SNI firms (data shown in ‘000s).
Total Expenses £2,192.00
FOR £548.00
In addition, the Firm has completed its ICARA and analysis to determine its net wind-down requirements and any additional own fund requirements to fund its on-going operations.
The Firm’s risk appetite statement and assessment of risks through its risk management framework and risk register form the basis of its ICARA and assessment of the overall financial adequacy rule in line with MIFIDPRU 7.4.7.
The OG reviews, challenges and approves the ICARA and conclusions of own funds requirements.
4. Remuneration arrangements
The Firm is making use of the transitional provisions in MIFIDPRU TP 12.9 whereby it is not required to disclose remuneration information as the period of this Public Disclosure Document falls before 1st January 2022 and ends before 1st January 2023.