Introduction

This disclosure is in relation to Trinity Street Asset Management LLP (“TSAM”), a privately owned limited liability partnership, incorporated in the United Kingdom, authorised and regulated by the Financial Conduct Authority and registered as an investment advisor with the US Securities and Exchange Commission.

As a Non-SNI MIFIDPRU investment firm, TSAM is required to conduct an Internal Capital Adequacy and Risk Assessment (“ICARA”) in accordance with section 7.7-7.9 of the MIFIDPRU Sourcebook in the Financial Conduct Authority Handbook.

The ICARA process is the collective term for the internal systems and controls which a firm must operate to identify and manage potential harms which may arise from the operation of a firm’s business, and to ensure that its business can be wound down in an orderly manner.

The provisions for public disclosure are set out in MIFIDPRU 8 and this document has been produced in order to meet the disclosure obligations of TSAM.

The ICARA is completed annually by the TSAM Chief Financial Officer (“CFO”), Chief Operating Officer and Head of Risk and Chief Compliance Officer (“CCO”). A full risk assessment of the business is conducted identifying material risks to TSAM to ensure that the capital and liquidity held is both comprehensive and proportionate to the nature, scale and complexity of TSAM. The ICARA is reviewed following any significant business change (including changes to strategy or operational environment).

MIFIDPRU 7.1.4 (Risk, remuneration and nomination committees) does not apply to TSAM; the value of TSAM’s on and off-balance sheet items over the preceding 4-year period is a rolling average below £100 million and TSAM has no trading book assets.

This disclosure has been approved by the Managing Board of TSAM.

Governance

The Managing Board of TSAM is composed of the TSAM Chief Executive Officer (“CEO”) and Chief Investment Officer (“CIO”), Richard Bruce and Deputy Chief Executive Officer (“DCEO”), Charles Bell and is responsible for strategy and policy setting.

The TSAM Management Committee (the “Committee”) is composed of the CEO, Deputy CEO, Chief Operating Officer and Head of Risk, CCO, CFO and Portfolio Manager, Nicholas Mayor. It holds formal quarterly meetings which have an agenda and are minuted. The Committee receives reports on investment, finance, operations, legal, compliance and risk matters. In addition, the Committee meets as and when needed to consider matters between the regular quarterly meeting.

In addition, TSAM has a Best Execution Committee and Research Committee which provide regular reports to the Committee.

Due to the relatively simple nature of TSAM’s business, this governance framework is considered sufficient.

Directorships held by Managing Board

Managing Board member	Directorships Held – as defined in MIFIDPRU 8.3
Richard Jeremy Bruce	0
Charles Henry Edward Bell	0

Risk Management

TSAMs Managing Board determines its business strategy and the level of risk acceptable to TSAM. In conjunction with the Head of Risk, they have designed and implemented a risk management framework that recognises the risks that the business faces and how those risks may be monitored and mitigated and assessed on an ongoing basis.

TSAM has in place controls and procedures necessary to manage those risks. The Chief Operating Officer and Head of Risk will convey information on risks and risk management to the CCO and present a summary at the quarterly Management Committee meeting.

TSAM believes the risks to which it is exposed to are minimal due to the limited product offering, predominantly institutional client base, no proprietary trading book and TSAM does not provide any form of credit lending facilities.

Liquidity Controls

TSAM has in place systems and controls that enable it to monitor liquidity risk and maintain on an ongoing basis the amounts, types, concentration risk of TSAM’s cash deposits and distribution of liquidity resources that it considers adequate to cover:

The nature and level of the liquidity risk to which it is or might be exposed; and

– The risk that liabilities cannot be met as they fall due.

The TSAM Finance department monitors its liquidity position on a monthly basis including its cash position, net assets and level of aged receivables.

Financial results are reported to the Management Committee on a quarterly basis.

The Managing Board understands that changes in the business might trigger the liquidity assessment to be revised and updated.

TSAM believes the risks to which it is exposed to are limited as TSAM does not trade using its own funds, there are no margin or collateral calls due and TSAM does not fund client positions with its own cash. The CFO believes that robust strategies, policies, processes and systems have been implemented to enable TSAM to identify, measure, manage and monitor liquidity risk.

Own Funds & Own Funds Requirements

As a component of the ICARA, TSAM conducts an internal analysis assessing own fund requirements and potential harms.

The main activity TSAM exposes its client to is K-AUM.

K-AUM aims to capture the scale of potential harms an investment firm may cause clients from incorrectly managing client portfolios, including poor execution. It aims to address the amount of capital that an investment firm can use to absorb losses from operational events, including the cost of putting things right for clients, and so helps to provide some continuity of service where a firm comes under stress.

Own Funds Requirements

This disclosure has been made in accordance with the MIFIDPRU 8.5 requirements. The information contained within this section is as of 31st March 2023.

Requirement	£’000
Highest of:
(A) Permanent minimum requirement	75
(B) Fixed overhead requirement (“FOR”)	1,745
(C) K-factor requirement	798
Own fund requirement (B)	1,745
Own funds	9,861
Own funds surplus	8,116

Own Funds

This disclosure has been made in accordance with the MIFIDPRU 8.4 requirements. The information contained within this section is as of 31st March 2023.

	Item	Amount (GBP thousands)	Source based on reference numbers of the balance sheet in the audited financial statements
1	OWN FUNDS	9,861
2	TIER 1 CAPITAL	9,861
3	COMMON EQUITY TIER 1 CAPITAL
4	Fully paid-up capital instruments	40	Note 14
5	Share premium
6	Retained earnings	9,821	Note 14
7	Accumulated other comprehensive income
8	Other reserves
9	Adjustments to CET1 due to prudential filters
10	Other funds
11	(-) TOTAL DEDUCTIONS FROM COMMON EQUITY TIER 1
19	CET1: Other capital elements, deductions and adjustments
20	ADDITIONAL TIER 1 CAPITAL
21	Fully paid up, directly issued capital instruments
22	Share premium
23	(-) TOTAL DEDUCTIONS FROM ADDITIONAL TIER 1
24	Additional Tier 1: Other capital elements, deductions and adjustments
25	TIER 2 CAPITAL
26	Fully paid up, directly issued capital instruments
27	Share premium
28	(-) TOTAL DEDUCTIONS FROM TIER 2
29	Tier 2: Other capital elements, deductions and adjustments

Own Funds: Reconciliation of regulatory own funds to balance sheet in the audited financial statements

Balance sheet as in published/audited financial statements	Cross-reference to Own Funds
As at period end	Amount (GBP thousands)

Assets – Breakdown by asset classes according to the balance sheet in the audited financial statements

1	Tangible assets	36
2	Investments	167
3	Debtors	8,954
4	Cash at bank and in hand	1,985
	Total Assets	11,142

Liabilities – Breakdown by liability classes according to the balance sheet in the audited financial statements

1	Creditors: Amounts falling due within one year	1,281
2	Creditors: amounts falling due after more than one year	0
	Total Liabilities	1,281

Shareholders’ Equity

1	Members’ capital classified as equity	40	Box 4
2	Audited reserves	9,821	Box 6
	Total Shareholders’ equity	9,821

Remuneration

TSAM ensures that its Remuneration Policy satisfies all relevant U.K. remuneration and disclosure rules as are appropriate to its legal structure, size, internal organisation and the nature, scope and complexity of its activities. TSAM’s remuneration policy is updated annually and subject to annual compliance testing.

MIFDIPRU’s Material Risk Takers (“MRTs”) include members of senior management and persons with managerial responsibility for managing investments, control functions, information technology and money laundering.

Staff are provided with written notification of their status as MRTs and informed how their remuneration will be structured.

Remuneration Framework

Members

Members are advanced an equal, fixed level of drawings and receive a share of net profits based on overall profitability and a discretionary award based on individual contribution.

Employees

Investment team employees receive a salary (capped at the level of Member’s drawings) and, as a general principle, a discretionary bonus based on their contribution to investment performance and core competencies.

Non-investment employees receive a salary and discretionary bonus which are subject to the same salary caps as the investment team employees. The overall bonus pool for non-Investment employees is dependent on TSAM’s annual results and core competencies.

TSAM runs an annual appraisal process to assess all staff’s individual performance and contribution to TSAM.

Balance of Fixed and Variable Components of Remuneration

The fixed and variable components of total remuneration are appropriately balanced with the fixed element being sufficiently high to enable the operation of a fully flexible policy on variable remuneration. Appropriate maximum fixed to variable remuneration ratios are set for MRTs.

Risk and Performance Adjustments

TSAM’s policies comply with specific rules regarding risk and performance adjustments for MRTs as appropriate. Such adjustments can be applied at the time an award is made, when deferred remuneration vests (malus) and post payment (clawback). Adjustments can be applied individually or collectively.

Non-standard Forms of Variable Remuneration and Pension Schemes

Guarantees, buyouts and retention bonuses are only made on an exceptional basis. Guarantees for bonuses may only be offered in the initial year of joining and limited to the first 12 months of service. TSAM operates a defined contribution pension scheme which is available to all employees.

Trinity Street Asset Management LLP
as at 31st March 2023