First Sentier Investors (UK)IM Limited and First Sentier
Investors International IM
LimitedRisk, Prudential andRemuneration Disclosures
Under MIFIDPRU 8
For the period ended 31 December 2023

Contents
1.

Introduction..........................................................................................................................................................42.

Risk management ................................................................................................................................................4
2.1 Overview ....................................................................................................................................................4
2.2 Risk management strategy.......................................................................................................................4
2.3 Risk appetite ..............................................................................................................................................5
2.4 Risk governance........................................................................................................................................5
2.5 Risk management structure and operations ..........................................................................................6
2.6 Risk Management Framework..................................................................................................................7
2.7 Risk identification and assessment ........................................................................................................7
2.8 Key harms identification and assessment ..............................................................................................8
2.9 Concentration risk.................................................................................................................................. 11
2.10 Liquidity risk ........................................................................................................................................... 11

3.

Own Funds ........................................................................................................................................................ 11
3.1 Composition of Own Funds (Table 3.1)................................................................................................ 12
3.2 Reconciliation of Own Funds to balance sheet in the audited financial statements (Table 3.2) ... 13
3.3 Main features of own instruments issued by the Companies (Table 3.3) ......................................... 14

4.

Own Funds requirements ................................................................................................................................ 15
4.1 Own Funds requirements (Table 4.1) ................................................................................................... 15
4.2 Own Funds assessment ........................................................................................................................ 15
4.3 Liquid assets assessment ..................................................................................................................... 16

5.

Governance arrangements .............................................................................................................................. 16

6.

Remuneration – qualitative disclosures ......................................................................................................... 18
6.1 Remuneration governance .................................................................................................................... 18
6.2 Remuneration policy and practice........................................................................................................ 19
6.3 Remuneration composition ................................................................................................................... 19
6.4 Severance pay ........................................................................................................................................ 20
6.5 Control function remuneration ............................................................................................................. 20
6.6 Risk adjustment...................................................................................................................................... 20
6.7 MRTs ....................................................................................................................................................... 21

7.

Remuneration – quantitative disclosures ....................................................................................................... 21
Total amount of remuneration awarded to MRTs and other staff ............................................................. 21
Guaranteed awards and severance pay....................................................................................................... 22

FIRST SENTIER INVESTORS
Risk, Prudential and Remuneration Disclosures
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Page ii

1.

Introduction

At First Sentier Investors (“FSI” and “FSI Group”), our vision is to be a provider of world-leading investment
expertise and client solutions, led by our responsible investment principles. Our purpose is to deliver sustainable
investment success for the benefit of our clients, employees, society and the shareholder. As of 31 December
2023, we are stewards of AU$ 237.6 billion / US$ 162.1 billion assets under management*, on behalf ofinstitutional investors, pension funds, wholesale distributors and platforms, financial advisers and their clients.
We work together across multiple global markets, with over 1,000 employees collaborating to achieve our vision.
Following the completion of FSI’s entry into a strategic partnership with AlbaCore Capital Group, our
independently branded investment teams include:Igneo Infrastructure Partners;



FSSA Investment Managers;Stewart Investors;



RealIndex Investments; andAlbaCore Capital Group.

*Assets under Management (AuM) includes all assets managed by FSI’s investment teams and affiliates as at
31December 2023.
FSI is required to disclose the information contained in this document, in line with prudential rules issued by the
Financial Conduct Authority (the “FCA”).
This disclosure relates to First Sentier Investors (UK) IM Limited (“FSI UKIM”) and First Sentier Investors
International IM Limited (“FSI IIM”), which are both private limited companies incorporated in Scotland (together,
the “Companies" and each a “Company”). Each of FSI UKIM and FSI IIM is authorised and regulated by the
FCA, and is subject to the FCA’s Investment Firms Prudential Regime (“IFPR”).
The Companies are wholly owned subsidiaries of the FSI Group, which is in turn wholly owned by Mitsubishi
UFJ Trust and Banking Corporation (“MUTB”), and ultimately wholly owned by Mitsubishi UFJ Financial Group(“MUFG”).
This document sets out the Companies’ public disclosures as at 31 December 2023, being their financial year
end.

2.

Risk management

2.1

Overview

2.2

To minimise the risk of harm to the Companies, their clients and the markets, FSI implements
and maintains appropriate risk management policies and procedures, including effective
procedures for risk assessment. These identify risks relating to the Companies and thewider FSI Group’s activities, processes, and systems.



The Companies also adopt effective arrangements, controls and mechanisms to manage
the risk relating to their activities, processes and systems, considering the level of risk
tolerance.



These arrangements are described in the Group’s Risk Management Strategy, Risk
Management Framework and Risk Appetite Statement (“RAS”) as summarised below.

Risk management strategy
The purpose of the Group Risk Management Strategy (“RMS”) is to:articulate how risk is to be effectively managed within FSI

outline the key components supporting risk management in FSI; andFIRST SENTIER INVESTORS
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2.3



clarify responsibilities and accountabilities in relation to the identification, management,
monitoring and reporting of risks.



The RMS applies to all business units within the FSI Group and to all employees.

The management body of each of the Companies (each a “Board” and together, the“Boards”), and FSI’s senior management and employees are expected to be risk-aware,
understand FSI’s risk appetite, and understand their role in managing risk and the valuethat effective risk management adds to the organisation.

Risk appetite



FSI’s Strategy, Business Plan and Vision states what FSI wants to achieve as a business,
why it wants to achieve it and how. The RAS outlines the degree of risk that the Companies
and the wider FSI Group are willing to take, and the risks they are not willing to take toachieve the Vision, Strategic and Business objectives.

The development of the RAS plays a key role in promoting risk culture by:

providing the Boards and FSI’s employees with a clear understanding of the key risks forthe business, the tolerance for those risks and parameters for the management of thoserisks.



establishing key risk indicators (“KRIs”) which set limits and tolerances for certain risk
types. These are used to measure and track risk within defined boundaries, to determine
if further action is required to remain within tolerance and if escalation to senior
management is required;scheduling periodic review of KRIs and tolerances for ongoing suitability and for any
material changes to FSI Group’s risk profile; and

defining governance processes and disciplines to ensure adherence to all boundaries andunderlying limits.

The RAS sets out the Companies’ risk appetite for each of the material risk categories identified
and contains qualitative statements of risk appetite and tolerances.
One of the material risk categories relates to Strategic Risk, where a balanced and informed
approach to risk-taking is adopted.
Another material risk category is Financial, of which Regulatory Capital and Liquidity are twocore sections. Liquidity and Regulatory Capital are managed by FSI’s Finance team and arereviewed by the Boards. Each Company holds sufficient liquid assets to fund its operations andcapital to protect itself against unexpected risk outcomes and meet all regulatory capital
adequacy, cash flow and internal target surplus requirements.

2.4

Risk governanceEach Board has approved and adopted the RAS issued by the board of directors of First
Sentier Investors Holdings Pty Limited (the “FSIH Board”). The FSIH Board is responsible
for reviewing, ratifying and monitoring the Companies’ risk management, legal, complianceand internal controls systems.



The FSIH Board has established an Audit and Risk Committee (“ARC”) and a People andRemuneration Committee (“PRC”)
FSI’s Chief Executive Officer (the “Group CEO”) has established the following
management committees & forums:–

Executive Leadership Team–

Global Investment Committee–

Strategic Product Forum–

Global Responsible Investment Executive Committee–

Global Risk Committee

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2.5

Day to day management is overseen by the FSI Executive Leadership Team and isaugmented by these key governance committees, which hold responsibilities to monitor
and manage specific risks and obligations. For example, the Global Risk Committee is
responsible for overseeing and monitoring the risk environment, and the Global Investment
Committee is responsible for oversight of investment risk.

Risk management structure and operations
FSI’s Risk Management team is an independent function reporting directly to the Group Chief Risk
Officer (the “Group CRO”). Risk Management supports the business to design and implement
appropriate risk management processes and provide assurance to key stakeholders as to theintegrity of the risk framework and its outputs.
Responsibilities for managing risk are reflected in our “Three Lines of Defence” model:
Line 1 – First line functions (including FSI’s Investment, Distribution, Marketing andOperations teams):
Responsible for identifying and managing risk, and ensuring activities are compliant with legal,
regulatory, and organisational requirements.
Line 2 – Support functions (FSI’s Risk Management, Compliance and Investment Assurance
teams):
Support the business in managing risk and achieving compliance, monitoring risk and compliancelevels in the business, and reporting on risk and compliance matters to management andgovernance forums.
Line 3 – Internal and External Audit:
Provide independent and objective assurance over risk management, control and governanceprocesses.
Within FSI the following functions form the second and third lines of defence. Internal Audit as thethird line of defence has an independent reporting line to the chair of the ARC as well as, for dayto-day matters, to the Group CRO.

The first and second lines of defence use the established Risk Management Framework toassess and monitor the Companies’ respective risk and control environments.

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2.6

2.7

Risk Management Framework

The Risk Management Framework (“RMF”) covers the totality of systems, structures,
policies, processes, and people within FSI that identify, measure, evaluate, monitor, reportand control or mitigate all internal and external sources of material risk.



The RMF is founded on the RMS, RAS and FSI’s Strategy/Business plan.



The RMF implemented by FSI brings together the various component parts of theindividual risk category frameworks.



The RMF is supported by a framework of policies, which define how various aspects of thebusiness are to be managed, and articulate managerial responsibilities and requirementsfor policy review. Compliance with the policies is monitored periodically by FSI’s Risk
Management, Compliance and Internal Audit teams, and by the external auditor.



The RMF is supported by the practical or operational application of FSI’s strategies, policies
and controls. Senior management seeks to establish a sound system of internal controls
around key business processes, thereby avoiding or minimising the occurrence and/or
impact of adverse risk events.

When incidents do occur, the business is committed to responding in an appropriate andtimely manner, ensuring that clients are not disadvantaged, and learning from these events
to prevent reoccurrence. A rigorous incident management process facilitates this, which
includes root cause analysis and the implementation of remedial and preventative actions.



The tone set by senior management, which is supported by FSI’s staff performancemechanisms (such as key performance indicators), is conducive to openness andtransparency, to encourage the reporting of incidents.

Risk identification and assessment
Within the RMF, the following process is followed for the identification, assessment, management
and assurance of risk relevant to the Companies:
Identification:
Potential risk events that could affect the business’s ability to successfully implement its strategies
and achieve its objectives, and/or its ability to comply with its associated obligations, are captured
and regularly reviewed.
Assessment:
Risk assessment allows the business to consider the extent to which potential events might havean impact on the achievement of its objectives. Risk exposures are quantified, taking into accountthe likely consequences (impact) and probability (frequency) of their occurrence. This is quantified
both on an inherent (pre-controls) and residual (post-controls) risk basis. Where the residual risk
is assessed to be outside the risk appetite / tolerance levels outlined in the RAS, additional risktreatment is required, to reduce the level of risk to an acceptable level. Alternatively, the level ofresidual risk must be formally accepted by the business. Scenario (or ‘harms’) analysis is anotherform of risk assessment performed to assess the internal capital allocation required (see section
2.8 for more detail).
Risk Profile:
Each business unit is required to maintain a Risk Profile, reflecting the business risks it faces in
its day-to-day operations and the control framework that is in place to mitigate them. Risks arereviewed annually via the Risk and Control Self-Assessment process.
Management:
In addition to the establishment of an effective controls framework to mitigate the risks, FSI
recognises that the capture and analysis of risk data provides valuable information, which can beused to drive action to better manage risk and minimise losses due to control failures. This isaccomplished through a combination of techniques, including risk profile maintenance, issue andincident management, and the production of management information and key risk indicators.

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Page 7Assurance:
Assurance is provided via testing of the business’s risk profile and associated risks, obligations
and controls. This may be achieved through one or a combination of several, self, peer or
independent tests / assessments. A comprehensive Controls Assurance Program is in place, toensure all risk-based key controls are independently tested on a rolling basis.

2.8

Key harms identification and assessment



Existing and emerging risks facing the Companies are identified and assessed continually
via the RMF as outlined above. These are used as the basis for the internal capital andrisk assessment (“ICARA”) process.

Part of the ICARA process requires an internal assessment of risk (including in respect ofeach Company) to be carried out at least annually. Once the key risks are identified, they
are evaluated and used as the basis for assessing the internal capital adequacy
requirement for each Company. This assessment involves discussion between FSI’s Risk
Management, senior managers and business subject matter experts (“SMEs”).



Under the ICARA, the residual risk remaining, post-controls, is assessed to determine
potential harm to clients, potential harm to the firm (in this instance, the Companies) andpotential harm to markets. Where appropriate, the capital and liquidity requirements ofeach Company are increased, to reflect such residual risk. Further information on thecalculations can be found in section 4.



The Companies are expected to hold adequate Regulatory Own Funds (“Own Funds”)(see section 3) to ensure they remain financially viable and can be wound down, if
necessary, in an orderly manner.



An analysis of potential material harms is undertaken, which considers the level of Own
Funds necessary for the ongoing operation of the Companies.



The principal harms identified are shown in the table below and the form the basis forthe capital adequacy assessment:

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Risk Event

RAS Material Risk
Category

RAS Tier 1 Key Risks

Harm toClientHarm toFirm

Harm toMarketCapitalHeld

Major operational disruption
at critical outsourced service
provider ("OSP")

Business
Operations

External SupplierManagement

The risk that FSI suffers loss and harm as a result of its
Major operational disruption
contractors and supply chains failing to carry out
which results in significant client
agreed services in accordance with appropriate
service disruption.
contractual terms and SLAs.

Y

Y

N

Y

Significant client data loss

Business
Operations

External SupplierManagement

The risk that FSI is exposed to significant harm and loss
Significant client data loss which
due to a failure to protect, manage and utilise available
results in client harm whichdata in accordance with the organisation’s internal
would require be made good by
and/or external data management principles andFSI.
requirements.

Y

Y

N

Y

Y

Y

N

Y

Major cyber incident affects key
system availability (such as
dealing platform) resulting in
extended operational disruption.

Y

Y

N

Y

The risk that FSI, its senior managers or employees
engage in activities and decisions which could threaten FSI staff complete an act of grossregulatory and community trust or inhibit market
misconduct which causes
integrity e.g. insider dealing, conflicts of interest,
detriment to our Firm and/or
product design or sales through inappropriate incentive Client.
schemes.

Y

Y

N

Y

Y

Y

N

Y

The risk of financial or reputational harm to FSI from
Potential for employee to make
Employee Wellbeing /failing to maintain effective legal frameworks or relying a successful litigation claim in
Legalon inappropriate or inaccurate legal advice.
current climate.

N

Y

N

Y

The risk that FSI fails to deliverstated investment objectives,
thereby losing investor
The risk that FSI fails to deliver stated investment
confidence, affecting the viability
objectives, thereby not meeting investor expectations.
of an FSI fund and requiring
liquidity control measures to beundertaken.

Y

Y

N

Y

The risk that FSI’s investment teams do not comply
with the Principles for Responsible Investment due to a
Potential misselling of ESG
failure to incorporate responsible investment
Responsible Investment
products leading to loss of clients
considerations and the expectations of clients into its
and revenues and regulatory fineresponsible investment statements, practices andportfolio construction.

Y

Y

N

Y

Risk Definition

Rationale

Material operational error
impacting trade/corporate
action execution

Business
Operations

Investment & Fund
Operations

Material operational error in
The risk that an operational error, inaccuracy, poor
executing client trade orders
timeliness, or misstatement in the course of managing
and/or corporate actions results
FSI’s investment and fund activities, causes financial
in significant impact which would
loss to FSI or its clients, and/ or reputational damage torequire be made good by FSI.
FSI.

Major information security
related breach

InfoSec, IT & Data

Information Security

The risk that FSI is exposed to significant internal
and/or external harm or loss as a result of insufficient
information security processes, safeguards andcontrols.

Staff market misconduct

Legal & ComplianceSignificant regulatory breach Legal & Compliance

Employee relations claim

FSI investment fund is not
executed in accordance with
its stated strategy

FSI marketed funds areaccused of greenwashing

People & Culture
Risk/Legal &Compliance

Investment
Management

Investment
Management

Conduct

Regulatory

Investment
Performance andManagement

The risk that FSI is non-compliant with regulations in
any of the jurisdictions it operates or invests in.

Significant regulatory breachwith consideration of existingobligations as it relates tofinancial crime, CASS andemerging obligations such as
consumer duty.

continued

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Risk Event

RAS Material Risk
Category

RAS Tier 1 Key Risks

Inadequately designed fundproduct leads to poor
investment outcome toclientInvestment
Management Risk

Product Design andExecution

External distribution
platforms are unwilling toaccept FSI fund for
distribution

Business
Operations

Distribution & Client
RelationshipManagement Risk

Harm toClientHarm toFirm

Harm toMarketCapitalHeld

Potential residual risk of a fundThe risk that FSI fails to design and deliver products and launch with potential futureservices that are appropriate for its intended client
liquidity issues. Included into
segments, competitive, saleable, and profitable.
fund invested outside ofstrategy.

Y

Y

N

N

FSI funds are not attractive to its key distributers,
leading to inability to sell to investors

Based current distribution
activity not considered amaterial risk which requires own
fund allocation.

N

Y

N

N

On going FSI based investment
on business continuity andoperational resilience capability
represents a lower assessed
residual risk not requiring own
funds.

N

N

N

N

Risk Definition

Rationale

Major operational disruption
at FSI

Business
Operations

Business Continuity
Management

Greater dependency on availability on OSPs to delivercritical business services such as fund valuation andinvestor servicing rather than FSI internal based
processes.

Organisationaltransformation impacts FSI's
ability to service clients

People & Culture
Risk

Strategic Workforce
Planning

Organisational transformation results in loss ofoperational process and/or corporate knowledge
leading to inadequate decision making, weakened
oversight and project resource.

Low level operational risk event
reporting following recent
organisational change notconsidered a material risk which
requires own fund allocation.

N

Y

N

N

The risk that FSI is not compliant with Financial Crime
Regulation and/or facilitates financial crime throughacts or omissions by FSI, FSI’s employees, suppliers or
third- parties.

Controls sufficient to mitigate
the financial & regulatory risk to
FSI

N

N

N

N

Fraud successfully completed
Legal & Complianceon FSI / FSI investor

Inaccurate client and fundrelated documentation

Business
Operations /InfoSec, IT & Data

Lack of critical system
availability

InfoSec, IT & Data

Funds overly concentrated ininvestment strategy and/or
regional exposure

Investment
Management /Strategic

Unexpected departure ofinvestment staff

Investment
Management

Financial Crime

Distribution & Client
RelationshipManagement / Data

The risk that FSI is exposed to significant harm and loss
due to a failure to protect, manage and utilise available Residual risk low due todata in accordance with the organisation’s internal
enhanced control processes in
and/or external data management principles andplace.
requirements.

N

N

N

N

IT Disaster Recovery

The risk that FSI’s IT Disaster Recovery PlanningHigh level of system resilience
processes and procedures are insufficient and theand DR arrangements
organisation is unable to respond and recover from the demonstrated by cloud service
occurrence of significant systems and/or network
providers represents a lower
outages in accordance with the operational
assessed residual risk notrequirements of the organisation.
requiring own funds.

N

N

N

N

Product Design andExecution

The risk that FSI’s funds fail to meet investor liquidity
expectations or breach regulatory requirements,
resulting in reputational impact

No immediate risk noted, withover sight processes to review
new fund product and on goingfund liquidity monitoring . Not
considered a material risk which
requires own fund allocation.

N

N

N

N

N

N

N

N

The risk of FSI losing investment mandates or is unable
to attract new mandates, conduct core investment
Historically we have had some
Key Person Dependency processes or deliver on an investment strategy, due to departures but fund outflow
the unexpected departure of / inability to access key
stabilised over time.
investment staff

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2.9

2.10

3.

Concentration risk

Concentration risk is concerned with the possible lack of diversification of clients or
distributors, leading to the amplification of various other risk effects.



The largest asset strategies are the Asia Pacific Leaders strategies managed within the
Companies and these are complemented by infrastructure and a range of other equity
strategies.



FSI has a wide client base across its products, ranging from private investors, which invest
directly or through fund platforms and other intermediaries, to large institutional clients. The
client base is also geographically diverse. The Boards do not believe there is any significant
concentration risk to the Companies associated with the location or type of their clients.



The Companies also benefit from the FSI Group’s relationships with a large number of
distributors, intermediaries and asset consultants, mitigating concentration risk in the
Companies’ earnings. .



The Companies carry credit concentration risk in respect of the cash that they hold with
their main pan-European banking service provider, Barclays Bank plc. This risk is actively
managed through cash flow forecasts and daily monitoring of all balances. In addition, thecreditworthiness of Barclays Bank plc is monitored by regular review of its credit ratings.

Liquidity risk

Liquidity risk is the risk that the Companies will not have access to sufficient liquid assets(in the form of cash or readily tradeable financial instruments) to fund their liabilities as theyfall due.



Liquidity risk management takes place through the active monitoring and control of liquidity
risk exposures and funding needs of the Companies, taking into account limitations to thetransferability of liquidity across the FSI Group. The primary goal of these processes is toensure that the Companies maintain sufficient cash and liquid assets to meet their current
and future financial obligations at all times.

Liquidity is managed across the FSI Group using a number of cash flow forecasting andtargeting tools and techniques. Cash flow forecasting and targeting is conducted at the legal
entity level and involves actively managing operational cash flow requirements.



FSI has a very low tolerance for liquidity risk. The liquidity risk management framework inplace aims to ensure that the Companies maintain sufficient buffers above regulatory
requirements in the event of reasonably foreseeable stress scenarios.

Own FundsThe Own Funds of a firm are defined as the sum of its common equity tier 1 capital,
additional tier 1 capital, and tier 2 capital, as further specified in chapter 3 of the FCA’s
Prudential Sourcebook for the MiFID Investment Firms (“MIFIDPRU”), in the FCA’s
Handbook.



FSI calculates Own Funds under the IFPR at both an individual firm level in respect of each
Company, and on a prudential consolidation basis.

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Page 11

3.1



To ensure uniformity and granularity across the industry, this IFPR disclosure is required tobe made on an individual company basis.



The Own Funds of the Companies consist of common equity tier 1 capital only. As of 31
December 2023, each Company complied with all the relevant capital and liquidity
requirements stipulated in the IFPR.

MIFIDPRU, section 8.4.1R places further requirements on investment firms to make certain
disclosures. These have been provided below. Refer to Tables 3.1, 3.2 and 3.3 for ananalysis of the composition of Own Funds, a reconciliation of the Own Funds to the balance
sheet included in the audited financial statements of each Company, and a description of
the Own Funds instruments issued as of 31 December 2023.

Composition of Own Funds (Table 3.1)

This table provides a breakdown of how the Own Funds of the Companies is calculated. It also provides areference for how the components of Own Funds can be traced to the audited financial statements.
Composition of Own Funds

Item
1

OWN FUNDS

2TIER 1 CAPITAL

3COMMON EQUITY TIER 1 CAPITAL

4

Fully paid up capital instruments

5

Share premium

6

Retained earnings

7

Accumulated other comprehensive income

8
9
10
11

FSI UKIM

Audited FS

GBP'000

Ref *105,664

GBP'000

Audited FS
Ref *77,049105,664

77,04977,049105,664
74,759FSI IIM

Note 11

28,192

Note 1030,905Note 1248,857--

Other reserves--

Adjustments to CET1 due to prudential filters--

Other funds--(-)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 andadjustments

-

-

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--

Note 11* These Note references are to the audited financial statements of the Company
Notes 10, 11 and 12 are references to the audited financial statements of each Company.

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3.2

Reconciliation of Own Funds to balance sheet in the audited financial
statements (Table 3.2)

This table shows how the Own Funds reconcile to the audited balance sheets of each Company while crossreferenced through Column C to Table 3.1 (Composition of Own Funds).
Own Funds: reconciliation of own
funds to balance sheet in theaudited financial statements

FSI UKIM

FSI IIM

A

B

C

A

B

C

Balance sheet asinpublished/audited
financialstatements

Underregulatory
scope ofconsolidation

Crossreference totemplate OF1Balance sheet asinpublished/audited
financialstatements

Underregulatory
scope ofconsolidation

Crossreference totemplate OF1

Amounts in GBP'000
As at 31/12/23

As at 31/12/23

As at 31/12/23

As at 31/12/23

Assets - Breakdown by asset
classes according to thebalance sheet in the audited
financial statements
1

Investments

28,192-

2

Debtors

45,256

100,5793

Cash at bank and in hand

41,23577,070Total Assets

114,683

177,649

Creditors: amounts falling due
within one year

-9,019-100,600

Total Liabilities-9,019-100,600

Liabilities - Breakdown by
liability classes according to thebalance sheet in the audited
financial statements
1

Shareholders' Equity
1

Called up share capital

74,759Item 428,192Item 4

2

Retained earnings

30,905Item 648,857Item 6

Total Shareholders' equity

105,664

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77,049Page 13

3.3

Main features of own instruments issued by the Companies (Table 3.3)

The table below shows the principal characteristics of the capital instruments issued by each of theCompanies.
Own funds: main features of own instruments issued by the Companies
Issuer
1

Public or private placement

2

Instrument type3

FSI UKIM

FSI IIM

PrivatePrivateOrdinary share

Ordinary share

Amount recognised in regulatory capital(GBP thousands, as of most recent reporting date)

74,75928,192

4

Nominal amount of instrument (in Thousands)

74,75928,192

5

Issue price in GBP

1

1

6

Redemption price

N/A

N/A

7

Accounting classification

Called up share capital

Called up share capital

8

Original date of issuance

03/07/1970

10/06/1982

9

Perpetual or dated

Perpetual

Perpetual

10

Maturity date

N/A

N/A

11

Issuer call subject to prior supervisory approval

N/A

N/A

12

Optional call date, contingent call dates and redemption amount

N/A

N/A

13

Subsequent call dates, if applicable

N/A

N/A

14

Coupons/dividends

N/A

N/A

15

Fixed or floating dividend/coupon

N/A

N/A

16

Coupon rate and any related index

N/A

N/A

17

Existence of a dividend stopper

N/A

N/A

18

Convertible or non-convertible

N/A

N/A

19

Write-down features

N/A

N/A

20

Link to the terms and conditions of the instrument

N/A

N/A

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Page 14

4.

Own Funds requirements

MIFIDPRU 4.3 requires each of the Companies to disclose its compliance with the Own Funds requirements i.e. that each Company must always maintain Own Funds (Row 1 of Table 3.1) that are at least equal to its Own
Funds requirements (Row 2 of Table 4.1). FSI calculates its Own Funds requirements as presented in the tablebelow.

4.1

Own Funds requirements (Table 4.1)

Highest of 1, 2, or 3
FSI UKIM£’000
1Permanent minimum capital requirement

2
3

FSI IIM
£’000

£’000

£’000

75

75

Fixed overheads requirement

18,12536,295

K-Factor requirement

1,049

945

Of which:
K-AUM plus K-CMH plus K-ASA
K-COH K-DTF
K-NPR K-CMG K-TCD K-CON

405

920

644

25

0

0

In addition to ensuring that Own Funds held are at least equal to the Own Funds requirements (detailed above),each Company is also required to disclose its compliance with the overall financial adequacy rule (“OFAR”).
The OFAR is contained in MIFIDPRU 7.4.7R and states that firms must always hold Own Funds and liquid
assets that are adequate in amount and quality to ensure:that the firm can remain financially viable throughout the economic cycle – being able to addressmaterial potential harm that may result from on-going activities, andthat the firm’s business can be wound down in an orderly manner, minimising harm to consumers
or to other market participants.

FSI uses the ICARA process to identify, monitor and, if proportionate, reduce all material potential harms that
may result from the ongoing, or winding down, activities of each Company. The ICARA process is carried out
on an IFPR consolidated group basis. FSI also uses this process to assess whether the Companies should
hold additional Own Funds and / or liquid assets to address material potential harms.

4.2

Own Funds assessment

For every material residual key risk of harm that is identified and assessed, FSI determines the level of Own
Funds each Company needs to hold to cover it. This is achieved through scenario modelling that consumes
input data from multiple sources, such as historical precedents, observable market data and management
judgement. The expected loss amount that could result from these residual key risks of harm are consideredalongside the total K-Factor requirements to arrive at Assessment A: Own Funds requirements for on-going
operations. K-Factors are defined within the Own Funds requirements calculated in accordance withMIFIDPRU 4.6. to ensure that the business can be wound down in an orderly manner, FSI has developed awind down plan for each Company by collating inputs from FSI’s Risk Management team, senior managers andSMEs. From the wind down plan, FSI is able to estimate the level of capital required to liquidate the relevant
Company’s business, while making an allowance for revenues that could be generated during the wind down
process. The output of the wind down process is compared to the fixed overhead requirement, and the higher
amount is determined to be Assessment B: Own Funds requirements for wind down operations.
The highest of Assessment A, Assessment B and the Permanent Minimum Requirement is the Own Funds
Threshold Requirement (“OFTR”) needed to comply with OFAR.
FSI ensures that the Own Funds held by the Companies always exceed the relevant OFTR.

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4.3

Liquid assets assessment

The amount of liquid assets required to support the OFAR is termed the Liquid Assets Threshold
Requirement (“LATR”).
The LATR is calculated over 2 measures:

1. the basic liquid asset requirement being the sum of one third of the fixed overhead requirement and1.6% of any client guarantees (MIFIDPRU 6.2), plus
2. the higher of the amounts determined by the following assessments:
Assessment A – the maximum amount of liquid assets required to fund ongoing operations,or

Assessment B – the total amount of liquid assets required to meet funding needs as part of
the wind down process

Liquid assets required to fund ongoing operations (Assessment A)Liquid assets required to fund ongoing operations for each Company are determined by
preparing liquid assets forecasts for at least 12 months from the reporting date. This
forecast is then divided into quarters and the quarter requiring the greatest amount of liquid
assets is taken as the amount for Assessment A.

Liquid assets required to meet funding needs for wind down (Assessment B)

5.

Liquid assets required to meet the funding needs for an orderly wind down are determinedby SMEs (as outlined above). This amount is then compared to the basic liquid assets
requirement explained in 1. above (referencing MIFIDPRU 6.2), and any additional liquid
assets required become the amount for Assessment B.



FSI ensures that the amount of liquid assets held by the Companies always exceeds therelevant LATR.

Governance arrangements

FSI has established a governance structure which aims to ensure independent oversight and challenge andoversees the management of the Companies’ business operations, in line with the systems and controls inplace, in order to ensure that such operations are undertaken in accordance with relevant regulatory
requirements and the expectations of each of:the Boardsthe FSIH Board, the ARC and the PRC



the Group CEO and committees / forums established (see section 2.4)the committees established by FSI’s Managing Director, Europe, Middle East and Africa(the “MD”), which include an operational committee on remuneration (see section 6.1).

Each Board retains overall responsibility for the relevant Company’s operations and has
not established any committees.

Each Board has delegated overall responsibility for the management of the Companies tothe MD, who holds senior management function (“SMF”) 1 and is supported by a leadership
team.



The governance and oversight frameworks in place aim to ensure that each Board has
defined, oversees and is accountable for the implementation of processes to support theeffective and prudent management of the relevant Company, including the management ofconflicts of interest and relevant arrangements to ensure the appropriate segregation of

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Page 16duties to the SMFs in accordance with the FCA’s Senior Managers and Certification
Regime (“SMCR”).



Each Board has adopted a Conflicts of Interest Policy, which aims to prevent and manage
any potential and actual conflicts, should they arise in the course of the directors’ individual
appointments and their responsibilities as members of the Boards.



The Board of each Company currently comprises the same three executive directors (theMD, the Group CEO, and the Group CRO) and the same two independent, non-executive
directors. The permanent chair of each Board (the “Chair”) is the MD.



The composition and performance of each Board is reviewed on at least an annual basis.

Proposals to appoint additional directors to the Boards are subject to an internal review
process involving the Group CEO, MUTB and, where appropriate, the PRC. The process
takes into account a skills matrix and also covers matters of experience and diversity. The
FCA’s approval of each proposal is sought, and all directors are registered and listed on the
FCA’s register.

All directors undergo induction training upon their appointment and periodic training on
relevant matters, as the need arises. The Chair ensures that the directors have theappropriate knowledge, skill and experience to understand the relevant Company’s
activities and risks on both an individual and collective basis.



The table below sets out the directors of each Company, their role within FSI and their SMF
where applicable, and the number of directorships each held as of 31 December 2023. Notethat directorships within the FSI Group have been aggregated as a single directorship in
accordance with MIFIDPRU 8.3.2R(2). Members of the FSIH Board are marked with *.
Director

Role at
FSI UKIM and FSI IIM

SMFAppointments
held at
31 December
2023

Gary CottonMD

SMF 1 – Chief Executive
SMF 3 – Executive Director
SMF 9 – Chair of the Governing Body

1

Christine Johnson

Independent NonExecutive Directorn/a6

Vicky Kubitscheck

Independent NonExecutive Directorn/a6Mark Steinberg *Group CEOSMF 3 – Executive Director

1

Jane DanielGroup CROSMF 3 – Executive Director1Each Board approves the ICARA document and the ICARA process, which is updated toreflect any changes to the Companies’ business profile and in any case at least annually.

Each Board meets at least once a quarter.

Each Board is committed to fostering an equitable and inclusive culture, in which diversity can thrive andbelieves that this will deliver better outcomes for FSI’s people, clients and society, and that this is the right thing
to do.

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Page 17

In line with FSI’s overall approach to diversity, equity and inclusion, each Company is committed to ensuringthat all nomination processes to its Board are fair and equitable. This includes applying an appropriate diversity
lens to its composition.
In accordance with the Diversity, Equity & Inclusion Policy adopted by the Boards:

the Chair leads a selection process for the appointment of independent non-executive
directors, by sourcing and developing a shortlist of qualified candidates, together with FSI’s
People and Culture team, and where appropriate, the PRC. A similar process is followed
for the appointment of executive directors. Proposals detailing the process undertaken arethen put to the relevant Board; andeach Board intends to ensure that its composition comprises a minimum of 40% women.

Each Board currently comprises three women and two men. As a result, each of the Companies is currently
exceeding its diversity target.

6.

Remuneration – qualitative disclosures

This remuneration disclosure has been prepared in order to satisfy the requirements of the FCA’s Handbook,and specifically MIFIDPRU 8.6 Remuneration Policy and Practices.
FSI is subject to the ‘standard’ remuneration requirements of the MIFIDPRU Remuneration Code and therefore
this disclosure has been undertaken in line with the provisions for small and non-interconnected FCA investment
firms.

6.1

Remuneration governance

The FSIH Board has an established Remuneration Policy (the “Remuneration Policy”) to ensure that an
appropriate remuneration framework exists to support its vision, purpose and strategy. The Remuneration Policy
has been adopted by each of the Companies.
The FSIH Board holds ultimate responsibility for oversight, approval and decision-making regarding its
Remuneration Policy and practices. The PRC assists the FSIH Board in fulfilling its responsibilities in relation topeople policies, the Remuneration Policy and succession planning processes.
The PRC reviews the Remuneration Policy annually to ensure that it continues to promote sound and effective
risk management and does not encourage risk taking in excess of levels of tolerated risk in line with FSI’s risk
appetite statements.
Annual awards are subject to receipt by the PRC of a report from FSI’s Chief People and Culture Officer.
The PRC receives input from an operational committee established by FSI in the Europe, Middle East and Africa
region (“EMEA”), which assists in the decision-making process in respect of remuneration arrangements formaterial risk takers (“MRTs”). This operational committee reports to the PRC on any decisions taken during theyear in respect of individuals falling under its remit.
The Boards are comprised of independent non-executive and executive directors, who review the application of
the Remuneration Policy, and approve any supplemental practices for staff within the scope of remuneration
laws and regulations across EMEA.
The operations of the PRC and operational committee in accordance with their terms of reference and their
engagement with the Boards ensure that there is appropriate independent oversight of FSI’s compliance with
the Remuneration Policy by the Companies and of any conflicts of interest that may arise from the FSI Group’s
remuneration practices.

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Page 18

6.2

Remuneration policy and practice

The Remuneration Policy is applicable to all employees across FSI and is built around key principles designed
to ensure that remuneration is fair, recognises performance, is competitive within our market, and rewards
appropriately against risk appetite, promoting the right culture, values and behaviours, including a strong focus
on our customers and sound risk management. The remuneration principles aim to strengthen the link between
reward, exceptional performance, and balanced risk-taking, as well as to emphasise the importance ofcollaboration for the benefit of the Companies’ clients, employees, society and FSI’s shareholder.

6.3



The Remuneration Policy is designed to ensure that employees are rewarded for role modelling
FSI’s values and desired behaviours. It enhances FSI’s focus on talent management anddevelopment, whereby people feel valued and supported to succeed and to uphold a culture thataligns with the interests of FSI’s clients, FSI’s shareholder and society.



FSI’s Remuneration Policy and framework aim to motivate a diverse and inclusive workforce toachieve individual and corporate performance outcomes that deliver long-term sustainable results
within risk appetite. A number of regulatory regimes impact FSI, all of which are taken into accountin the Remuneration Policy. In particular, the Remuneration Policy is consistent with the way that
FSI integrates risks, including sustainability risks under applicable regulation and, wherever
possible, seeks to avoid or manage conflicts of interest.



The approach used to determine remuneration also takes into account the availability of talent,competitor practices, and talent succession requirements, whilst recognising FSI’s overallbusiness performance and the available pools for distribution, which are set by the FSIH Board.

Remuneration arrangements reflect the measurable value of performance, with a clear link
between performance and reward for all employees. At the core of FSI’s approach to pay, is theaim to provide market competitive pay for employees, ensuring outstanding performance isrecognised in a fair and equitable manner.
Remuneration composition

Compensation at FSI includes fixed remuneration, comprising base salary which is set at market competitive
levels, and employer pension contributions. Compensation also includes variable remuneration, which isdifferentiated in line with performance. FSI provides variable remuneration - short term incentives (“STIs”) andlong term incentives (“LTIs”), depending on the role and level of seniority of the employee. STIs are typically paidin cash and some plans defer part of the award for up to three years based on the role level or award value.
LTIs are deferred over three years and-/-or earned as a share of long-term performance fees paid by managed
funds. For some plans, awards are deferred as cash or as instruments. All LTI awards once vested are settled
and paid as cash. Employees also receive a range of other variable benefits, including income protection and life
assurance. Employees can also self-select a range of other benefits, which include purchased leave above
normal entitlements and private medical insurance.
FSI operates a fully flexible policy on variable remuneration, which would enable it to award no variable
remuneration should an individual, business unit/team and/or FSI performance warrant this (by reference toboth financial and non-financial performance, including risk management, controls and conduct).
When setting and reviewing variable remuneration, consideration is given to the following financial and nonfinancial criteria: the responsibilities of the role and individual competencies required; the individual contribution
to business performance, sound and effective risk management (including the monitoring and management ofsustainability risks for investment professionals and compliance with the requirements of the UK Consumer
Duty); other internal relativities, including behaviours and impact on risk; external competitiveness; and businessaffordability.
All staff receive a base remuneration, which reflects the responsibilities of their role and individual competencies
required, and their individual contribution to business performance and sound and effective risk management.

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Page 19Base remuneration is set at market competitive levels, while variable remuneration outcomes are differentiatedin line with performance.
FSI provides various forms of variable remuneration, depending on the role and seniority level of staff. Variable
remuneration arrangements are governed by the respective plan rules. These plan rules provide details of thepractical application of the arrangements. All permanent and fixed term contract employees in the United
Kingdom (“UK”) are eligible to receive variable remuneration. Independent non-executive directors are noteligible to receive variable remuneration.
Senior leaders, as well as employees in support functions, participate in a discretionary STI plan, reflecting
individual performance during the year, and where appropriate, an LTI scheme, which is deferred over a threeyear period.
The purpose of deferral is to promote the sustainable long-term performance of FSI, to align the interests of oursenior management with our clients and shareholder, and to comply with applicable regulatory requirements.
For investment professionals, variable remuneration is provided, to ensure both the short term and long term
stability of the investment team and performance. The STI structure for investment professionals is based on
performance benchmarks over 1, 3 and 5 year performance, achieving broader corporate objectives andindividual performance, including demonstrating FSI’s values and meeting the risk requirements of the role.
The LTI for most of FSI’s investment professionals is structured through co-investment instruments aligned tothe underlying funds managed by the relevant team. This arrangement encourages long-term alignment withclients’ interests. It also incentivises investment professionals to reinforce the team’s investment philosophiesand processes, which include assessing the sustainability risks (ESG-related) that may affect investment
performance.
Guaranteed variable remuneration is only offered in exceptional circumstances, typically where a prospective
hire would forfeit an award by leaving their current firm. The value and payment schedule typically matches thatof the forfeited amount, although payment may be delayed until after the successful completion of a probation
period, or until after six months from joining. Conditions are applied to the payment of the award, such as nothaving given notice of termination and performance conditions having been met.
In line with FCA requirements, ratios of fixed to variable pay have been approved and are in place for all staff
identified as MRTs.

6.4

Severance pay

FSI has a number of redundancy policies across regions. The policy that operates for employees in the UK isbased upon a multiplier relating to age, years of service and salary, and enhances the statutory redundancy
payment. Typically, where an employee has left FSI under the redundancy policy, any deferred variable
remuneration will vest in line with the usual schedule.
Where employment has been terminated for a cause, all unvested awards will lapse.

6.5

Control function remuneration

Staff engaged in control functions are remunerated in accordance with the achievement of the objectives linked
to their functions, independent of the relevant business area they control. The remuneration of senior officers
in the Risk Management, Internal Audit and Compliance functions is directly overseen by the remuneration
assurance committee which governs the decision-making process,

6.6

Risk adjustment

FSI retains the ultimate discretion to reduce unvested variable remuneration (malus) and to clawback vested
variable remuneration (clawback) in specific circumstances without limit. The circumstances include but are notlimited to conduct that resulted in significant loss, the performance or financial outcomes upon which the award
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Page 20

was determined not being realised, FSI becoming aware of a material error in assessing an employee’s
performance against the relevant performance conditions at the time that the award was made, a material
downturn in the financial performance of FSI or the relevant business unit, or a material failure of risk
management.

6.7

MRTs

MRTs are individuals carrying out roles that can materially affect the risk profile of the Companies or theirrespective AUM.
The MRT population is identified in accordance with the MIFIDPRU Remuneration Code (SYSC 19G.5.3R ofthe FCA Handbook) which establishes qualitative criteria to identify categories of staff whose professional
activities have a material impact on a firm’s risk profile and/or AUM. These categories broadly include therelevant Board, senior management, senior control function staff and other key risk takers.
In addition, FSI takes into account additional factors when identifying MRTs, such as consideration of heads of
key areas in respect of portfolio management, whether an individual heads a business line that is accountable fora material portion of annual revenue, whether an individual has specific authority to carry out decisions, including
any limits placed on that authority; and the employee’s status under SMCR.
The RAC approves the identification and remuneration outcomes of MRTs on at least an annual basis.

7.

Remuneration – quantitative disclosures

The quantitative disclosures in this section are given on a consolidated basis. MRTs can be based in the UK or,
depending on an individual’s role and responsibilities, can be based in one of FSI’s global offices.
In aggregate, the Companies have identified 52 individuals as MRTs in accordance with SYSC 19G.5 in respectof the 2023 performance year.
Total amount of remuneration awarded to MRTs and other staff (rounded to nearest £0.1m)
FSI UKIM and FSI IIM

SeniorManagement(£m)

Other MRTs(£m)

Other Staff (£m)

Total (All Staff)(£m)

Fixed Remuneration

3.7

8.8

32.3

44.8

Variable Remuneration

25.1

85.1

35.7

145.9

Total Remuneration

28.8

93.9

68.0

190.7

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Page 21

Guaranteed awards and severance pay
FSI UKIM and FSI IIM

Senior Management (£m)

Other MRTs (£m)

Total (£m)

Guaranteed variable remuneration awards
made during financial year – number of
MRTs

1

0

1

Guaranteed variable remuneration awards
made during financial year – total amount
(£m)

0.7

0

0.7

Severance payments awarded during thefinancial year – number of MRTs

0

4

4

Severance payments awarded during thefinancial year – total amount (£m)

0

0.35

0.35

The amount of the highest severance
payment awarded to an individual MRT
(£m)

0

0.1

0.1

Guaranteed variable remuneration
awardsSeverance payments

The remuneration disclosed above includes:

fees paid to independent non-executive director in respect of 2023;

annual base salaries as at 31 December 2023 (or at the date of leaving employment);

allowances including pension and benefits paid in 2023;

discretionary variable remuneration awards relating to the 2023 performance year; andseverance amounts paid to leavers in 2023.

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Page 22

Important Information
This document is intended to be for information purposes only and it is not intended as promotional material in
any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax
advice, or investment recommendations.
FSI entities referred to in this document are part of FSI a member of MUFG, a global financial group. FSI includes
a number of entities in different jurisdictions. MUFG and its subsidiaries do not guarantee the performance of
any investment or entity referred to in this document or the repayment of capital. Any investments referred to
are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk including lossof income and capital.

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