SIGNET UCITS Funds PLC (An Investment Company with Variable Capital)

Transcription

1 Annual Report and Audited Financial Statements of SIGNET UCITS Funds PLC (An Investment Company with Variable Capital) Sub-Funds: Asian Bond Portfolio US High Income Bond Portfolio Signet High Income Portfolio (Closed) European High Yield Bond Portfolio For the Financial year ended 31 December 2016

2 Financial Statements For the financial year ended 31 December 2016 Directors and Other Information 3 Investment Manager s Report 4-5 Directors Report 6-9 Statement of Directors Responsibilities 10 Report of the Depositary to the Shareholders 11 Independent Auditors' Report to the Shareholders Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares Statement of Cash Flows Notes to Financial Statements Schedule of Investments Unaudited Supplementary Information Page

3 Directors and Other Information Directors Corporate Manager and Research Consultant Mr. Robert Burke (independent non-executive director) Signet Research & Advisory S.A. Mr. John Mills (independent non-executive director) Rue du Grand-Chene 8 Mr. Philip Boylan (non-executive director) CH-1003 Lausanne Switzerland Company Secretary Promoter, Investment Manager and Distributor Matsack Trust Limited Signet Capital Management Limited 70 Sir John Rogerson s Quay 1 Primrose Street Dublin 2 London EC2A 2EX Ireland United Kingdom Auditors Deloitte Chartered Accountants & Statutory Audit Firm Earlsfort Terrace Dublin 2, Ireland Depositary and Banker HSBC Institutional Trust Services (Ireland) DAC 1 Grand Canal Square Grand Canal Harbour Dublin 2, Ireland Administrator, Registrar and Transfer Agent SS&C Financial Services (Ireland) Limited (formerly known as GlobeOp Financial Services (Ireland) Limited) First Floor La Touche House IFSC Dublin 1, Ireland Legal Advisers in Ireland McCann Fitzgerald Riverside One Sir John Rogerson s Quay Dublin 2, Ireland Bankers Royal Bank of Scotland International Limited Royal Bank House 2 Victoria Street Douglas Isle of Man IM99 1NJ Credit Suisse International 5 Canada Sq Canary Wharf London E14 5AQ United Kingdom Sub-Investment Managers Sub-Investment Managers Asian Bond Portfolio and Signet High Income Portfolio Signet High Income Portfolio and US High Income Income Partners Asset Management (HK) Ltd. Bond Portfolio Suite Two International Finance Centre New Star Capital, LLC 8 Finance Street One Exeter Plaza Central 669 Boylston Street Hong Kong SAR 3rd Floor Hong Kong Boston, MA United States of America Listing Sponsor McCann FitzGerald Listing Services Limited Riverside One Sir John Rogerson s Quay Dublin 2, Ireland European High Yield Bond Portfolio Butler Investment Managers Limited 11 Hanover Street London W1S 1YQ United Kingdom 3

4 INVESTMENT MANAGER S REPORT Asian Bond Portfolio, % in 2016 In 2016, the Asian Bond Portfolio posted a return of %, outperforming the JACI High Yield Index, which returned %. The year was quite eventful, from the sell-off in risk markets in the beginning of 2016, to Brexit in June, and the US presidential election in November. Despite the above, Asian credit has been resilient due to stronger fundamentals, shorter duration and more supportive local demand. New issuance for 2016 totaled USD176 billion, compared to USD144 billion in 2015, with HY supply increased to USD35 billion from USD25 billion. As of end of December, the portfolio yield (YTM) was 6.8% and current yield was 5.6%. Portfolio duration remained conservative at 3.9 years. More recently the Board of Directors, on the advice of the Investment Manager of the Fund has decided to close the Sub-Fund, which process is expected to be completed in the coming weeks. US High Income Bond Portfolio, +9.73% in 2016 The US High Income Bond Portfolio returned +9.73% in 2016, while the BofA Merrill Lynch High Yield Index posted a return of +15.6%. The portfolio had a difficult start into the year as risk assets sold off sharply in January and the beginning of February as ongoing concerns over China, oil prices, emerging markets and the state of the US economy weighed on investor sentiment. Subsequently however, US credit markets had experienced a significant rally for most of the year, with the exception of November, when weakness was driven primarily by the substantial move in treasury rates following the surprising result of the US election (10yr +55bps). More recently the Board of Directors, on the advice of the Investment Manager of the Fund has decided to close the Sub-Fund, which process is expected to be completed in the coming weeks. European High Yield Bond Portfolio, +7.92% in 2016 The European High Yield Bond Portfolio generated a performance of +7.92% net (Dollar Accumulation Class A) in 2016, underperforming the iboxx Eur Liquid High Yield index by -0.22% over the full year. Overall 2016 turned out to be a good year for the European high yield asset class, with extremely supportive technicals (low default rates, ECB support among the factors contributing to this pattern) leading to impressive knee-jerk markets reaction after two unanticipated and potentially market unfriendly at first sight events: the Brexit outcome and the election of Donald Trump in the U.S. After having somewhat lagged our index during the first 9 months due to a cautious positioning which helped the portfolio materially outperform the Index in 2015 we retraced ground over 4Q16 thanks to our partial interest rates hedging exposure, a higher than average market exposure and the good performance of idiosyncratic stories among which the strong recovery of Dutch retailer Hema bonds, as the turnaround started to materialise. 4

5 Remuneration SIGNET UCITS Funds PLC INVESTMENT MANAGER S REPORT (continued) The Investment Manager has implemented a remuneration policy which is consistent with and promotes sound and effective risk management by having a business model which by its nature does not promote excessive risk taking that is inconsistent with the risk profile of the Fund. The Investment Manager s remuneration policy is consistent with the Company business strategies, objectives, values and interests and includes measures to avoid conflicts of interest. The policy has provisions in place in respect of the remuneration of identified staff and delegated investment management activity staff whose activities will impact risk. In line with the provisions of Directive 2014/91/EU, which may be amended from time to time, the Investment Manager applies its remuneration policy and practices in a manner which is proportionate to its size and that of the Company, its internal organisation and the nature, scope and complexity of its activities. Quantitative remuneration information will be included once the Investment Manager has completed its first annual performance period. 5

6 DIRECTORS REPORT The Directors present to the shareholders their report together with the audited financial statements for the financial year ended 31 December REVIEW OF THE DEVELOPMENT OF THE BUSINESS Signet UCITS Funds plc (the Company ) is an open-ended umbrella-type investment company with variable capital incorporated in Ireland on 17 May 2010 with limited liability, with the registered number The Company is authorised by the Central Bank as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011, and Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations, As at 31 December 2016, the Company consisted of three sub-funds, Asian Bond Portfolio ( ABP ), US High Income Bond Portfolio ( USHIP ) and European High Yield Bond Portfolio ( EHYP ). The Signet High Income Portfolio ( SHIP ) was closed with effect from 25 January INVESTMENT OBJECTIVE The investment objective of the Company is to achieve long term capital appreciation while seeking to minimise risk and volatility and generating positive returns with little or no correlation to traditional asset classes. RESULTS, ACTIVITIES AND FUTURE DEVELOPMENTS The results of the operations are set out on pages A detailed review of the activities is contained in the Investment Manager s Report on page 4-5. The net asset values per share are set out on page DIRECTORS The non-executive Directors who held office as at 31 December 2016 are detailed below. Each served as director for the full year ended 31 December Mr. Philip Boylan (non-executive) Mr. Robert Burke (Independent and non-executive) Mr. John Mills (Independent and non-executive) SECRETARY Matsack Trust Limited held the post of Company Secretary for the year. DIRECTORS AND SECRETARY S INTERESTS IN THE SHARE CAPITAL AND CONTRACTS The Directors and the Company secretary had no beneficial interests in the share capital of the Company at 31 December 2016, or during the year under review. DIVIDENDS The dividend charged in respect of the financial year ended 31 December 2016 was USD 163,468 (31 December 2015: nil). CONNECTED PARTIES The Central Bank of Ireland UCITS Regulations, 41 (1) Dealings by manager, trustee, investment adviser and group companies states in paragraph one that any transaction carried out with a UCITS by a manager, trustee, investment adviser and/or associated or group companies of these ( connected parties ) must be carried out as if negotiated at arm s length. Transactions must be in the best interests of the unit holders. The Board of Directors are satisfied that there are arrangements (evidenced by written procedures) in place, to ensure that the obligations set out in Regulation 41 (1) of the UCITS Regulations are applied to all transactions with connected parties; and the Board of Directors are satisfied that transactions with connected parties entered during the financial year complied with the obligations set out in this paragraph. POST STATEMENT OF FINANCIAL POSITION EVENTS During April 2017 it was proposed to close the ABP and USHIP Sub-Funds due to low capital levels and high operating costs. Both Sub-Funds are expected to close during May 2017 returning all capital to shareholders. There were no other material post Statement of Financial Position events affecting the Company. 6

7 DIRECTORS REPORT (continued) CORPORATE GOVERNANCE STATEMENT General Principles The Company is required to comply with the requirements of the Irish Companies Act 2014 (the "Companies Act"), the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011, and Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations, 2015 and the Central Bank of Ireland ( the Central Bank ) UCITS notices and Guidance Notes, as applied to the Company. The European Communities (Directive 2006/46/EC) Regulations (SI. No.450/2009 and SI No.83/2010) (the "Regulations") requires the inclusion of a corporate governance statement in the Directors Report. The aforementioned Regulations apply to the entities that are listed on the Irish Stock Exchange (the ISE ). The Company is subject to corporate governance practices imposed by; (i) (ii) (iii) (iv) The Companies Act, which is available for inspection at the registered office of the Company and may also, be obtained at The Articles of Association of the Company which are available for inspection at the office of the Company Secretary at 70 Sir John Rogerson s Quay, Dublin 2 Ireland and the Companies Registration Office in Ireland; The Central Bank of Ireland (the "Central Bank") in their UCITS notices and Guidance Notes which can be obtained from the Central Bank's website at: and are available for inspection at the registered office of the Company; and The Irish Stock Exchange (the ISE ) through the ISE Code of Listing Requirements and Procedures which can be obtained from the ISE website at: http// Internal Control and Risk Management Systems in Relation to Financial Reporting The Board is responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of error or fraud in achieving the Company's financial reporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has procedures in place to ensure that all relevant books of account are properly maintained and are readily available, including production of annual and half yearly financial statements. The Board has appointed SS&C Financial Services (Ireland) Limited (formerly known as GlobeOp Financial Services (Ireland) Limited) (the Administrator ) to maintain the books and records of the Company. The Administrator is authorised and Regulated by the Central Bank and must comply with the rules imposed by the Central Bank. From time to time, the Board of Directors examines and evaluates the Administrator s financial accounting and reporting routines. The annual financial statements of the Company are produced by the Administrator and reviewed by the Investment Manager. They are required to be approved by the Board and the annual and half yearly financial statements of the Company are required to be filed with the Central Bank and the ISE. During the period of these financial statements, the Board was responsible for the review and approval of the annual financial statements as set out in the Statement of Directors' Responsibilities on page 10. The statutory financial statements are required to be audited by independent auditors who report annually to the Board on their findings. The Board monitors and evaluates the independent auditor's performance, qualifications and independence. As part of its review procedures, the Board receives presentations from relevant parties including consideration of International accounting standards and their impact on the annual financial statements, and presentations and reports on the audit process. The Board evaluates and discusses significant accounting and reporting issues as the need arises. 7

8 DIRECTORS REPORT (continued) Dealings with Shareholders The convening and conduct of shareholders meetings are governed by the Articles of Association of the Company and the Companies Act. Although the Directors may convene an extraordinary general meeting of the Company at any time, the Directors are required to convene an annual general meeting of the Company within fifteen months of the date of the previous annual general meeting provided that an annual general meeting is held once in each year within six months of the end of each accounting period of the Company. At least twenty one clear days notice of every annual general meeting and any meeting convened for the passing of a special resolution must be given to shareholders and fourteen days notice must be given in the case of any other general meeting, unless the auditors of the Company and all the shareholders of the Company entitled to attend and vote agree to shorter notice. Two shareholders present either in person or by proxy constitutes a quorum at a general meeting. The share capital of the Company is divided into different classes of shares and the Companies Act and the Articles of Association provide that the quorum for a general meeting convened to consider any alteration to the rights attached to any class of shares, is two or more shareholders present in person or by proxy, holding or representing by proxy at least one third of the issued shares of the relevant class. Shareholders may resolve to sanction an ordinary resolution or special resolution at a shareholders' meeting. Alternatively, a resolution in writing signed by all of the participating shareholders and holders of nonparticipating shares for the time being entitled to attend and vote on such resolution at a general meeting of the Company, will be valid and effective for all purposes as if the resolution had been passed at a general meeting of the Company duly convened and held. An ordinary resolution of the Company (or of the shareholders of a particular fund or class of shares) requires a simple majority of the votes cast by the shareholders voting, in person or by proxy, at the meeting at which the resolution is proposed. A special resolution of the Company (or of the shareholders of a particular fund or class of shares) requires a majority of not less than 75% of shareholders present, in person or by proxy, and voting in general meeting in order to pass a special resolution including a resolution to amend the Articles of Association. Every holder of participating shares or non-participating shares present, in person or by proxy who votes on a show of hands is entitled to one vote. On a poll, every holder of participating shares present, in person or by proxy, is entitled to one vote in respect of each share held by the holder, and every holder of non-participating shares is entitled to one vote in respect of all non-participating shares held by the holder. At any general meeting, a resolution put to the vote at the meeting is decided on a show of hands unless, before or upon the declaration of the result of the show of hands, a poll is demanded by the chairman of the general meeting, or by at least two members or shareholders present, in person or by proxy, having the right to vote at such meeting, or any holder or holders of participating shares present, in person or by proxy, representing at least one tenth of the shares in issue having the right to vote at such meeting. Board Composition and Activities In accordance with Companies Act and the Articles of Association, unless otherwise determined by an ordinary resolution of the Company in general meeting the minimum number of Directors shall be two. Currently the Board is comprised of three Directors. Details of current Directors are set out above, under the heading Directors. The business of the Company shall be managed by the Directors, who may exercise all such powers of the Company, as are not by the Companies Act 2014 or by the Articles of Association of the Company, required to be exercised by the Company in general meeting. The Board is responsible for the Company s overall direction and strategy and to this end it reserves the decision making power on issues such as the determination of the medium and long term goals, review of managerial performance, organisational structure and capital needs and commitments to achieve the Company s strategic goals. To achieve these responsibilities, the Board meets on a quarterly basis to review the operations of the Company, address matters of strategic importance and to receive reports from the Administrator, Depositary and Investment Manager. However, a Director may, and the Company Secretary on the requisition of a Director will, at any time summon a meeting of the Directors and ad hoc meetings in addition to the four meetings are convened as required. Questions arising at any meeting of the Directors are determined by the Chairman. In the case of an equality of votes, the Chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a second or casting vote. The quorum necessary for the transaction of business at a meeting of Directors is two. 8

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14 SIGNET UCITS FUNDS PLC Statement of Financial Position As at 31 December 2016 Asian Bond Portfolio Asian Bond Portfolio as at 31 December 2016 as at 31 December 2015 Notes $ $ Assets Financial assets at fair value through profit or loss Investments in transferable securities 5/6 7,739,599 7,847,107 Cash and cash equivalents 3 762, ,336 Other receivables 144, ,710 Total assets 8,646,169 8,342,153 Liabilities Financial liabilities at fair value through profit or loss Financial derivative instruments 10 2,111 9,098 Financial liabilities at amortised cost Investment management fee payable 4 11,719 27,779 Accrued fee expenses 32,058 61,698 Other payables 1,820 2,668 Total liabilities (excluding net assets attributable to holders of redeemable participating shares) 47, ,243 Net assets attributable to holders of redeemable participating shares 8,598,461 8,240,910 See accompanying notes to the financial statements. 14

15 SIGNET UCITS FUNDS PLC Statement of Financial Position As at 31 December 2016 US High Income Bond Portfolio US High Income Bond Portfolio as at 31 December 2016 as at 31 December 2015 Notes $ $ Assets Financial assets at fair value through profit or loss Investments in transferable securities 5/6 10,318,977 7,127,748 Cash and cash equivalents 3 2,226, ,010 Other receivables 198, ,517 Total assets 12,744,108 7,527,275 Liabilities Financial liabilities at fair value through profit or loss Financial derivative instruments 10-2,029 Financial liabilities at amortised cost Bank overdraft 3 4,606 2,365 Investment management fee payable 4 17,048 36,914 Accrued fee expenses 32, ,884 Other payables 2,110 5,618 Total liabilities (excluding net assets attributable to holders of redeemable participating shares) 56, ,810 Net assets attributable to holders of redeemable participating shares 12,687,760 7,323,465 See accompanying notes to the financial statements. 15

16 SIGNET UCITS FUNDS PLC Statement of Financial Position As at 31 December 2016 Signet High Income Portfolio Signet High Income Portfolio as at 31 December 2016 as at 31 December 2015 Notes $ $ Assets Financial assets at fair value through profit or loss Investments in transferable securities 5/6-4,752,504 Cash and cash equivalents 3-933,423 Other receivables - 64,996 Total assets - 5,750,923 Liabilities Financial liabilities at amortised cost Investment management fee payable 4-16,920 Accrued fee expenses - 50,965 Other payables - 5,159 Total liabilities (excluding net assets attributable to holders of redeemable participating shares) - 73,044 Net assets attributable to holders of redeemable participating shares - 5,677,879 See accompanying notes to the financial statements. 16

17 SIGNET UCITS FUNDS PLC Statement of Financial Position As at 31 December 2016 European High Yield Bond Portfolio as at 31 December 2016 European High Yield Bond Portfolio as at 31 December 2015 Notes Assets Financial assets at fair value through profit or loss Investments in transferable securities 5/6 14,727,853 10,983,074 Financial derivative instruments 10 40,213 61,251 Cash and cash equivalents 3 1,553, ,207 Other receivables 176, ,042 Total assets 16,498,506 11,710,574 Liabilities Financial liabilities at fair value through profit or loss Financial derivative instruments 10 9,030 41,799 Financial liabilities at amortised cost Bank overdraft 3-30 Investment management fee payable 4 21,411 39,093 Accrued fee expenses 42,714 50,501 Other payables 3,268 3,950 Redemption Payable 21,368 - Total liabilities (excluding net assets attributable to holders of redeemable participating shares) 97, ,373 Net assets attributable to holders of redeemable participating shares 16,400,715 11,575,201 See accompanying notes to the financial statements. 17

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19 SIGNET UCITS FUNDS PLC Statement of Comprehensive Income For the financial year ended 31 December 2016 Asian Bond Portfolio Asian Bond Portfolio Year ended 31 December 2016 Year ended 31 December 2015 Notes $ $ Revenue Interest income 2(f) 465,746 1,428,951 Net gain/(loss) on financial instruments at fair value through profit or loss 467,525 (906,055) Net loss on foreign exchange (21,812) (1,161,311) Net investment gain/(loss) 911,459 (638,415) Operating expenses Investment management fees 4(a) 100, ,244 Administration fees 4(b) 90, ,567 Audit fees 17 10,237 10,244 Directors' fees 9 6,157 6,369 Depositary fees 4(d) 22,090 30,080 Trustee fees 4(d) 19,058 13,617 Establishment costs 4(e) 711 1,520 Other expenses 21,334 24,747 Operating expenses 271, ,388 Net gain/(loss) from operations 640,458 (1,127,803) Finance cost 2(h), 11 50,375 - Total comprehensive gain/(loss) for the year 590,083 (1,127,803) See accompanying notes to the financial statements. 19

20 SIGNET UCITS FUNDS PLC Statement of Comprehensive Income For the financial year ended 31 December 2016 US High Income Bond Portfolio Year ended 31 December 2016 US High Income Bond Portfolio Year ended 31 December 2015 Notes $ $ Revenue Interest income 2(f) 657,233 2,172,774 Net gain/(loss) on financial instruments at fair value through profit or loss 631,646 (2,769,864) Other Income - 23,300 Net gain on foreign exchange 13,558 (462,369) Net investment gain/(loss) 1,302,437 (1,036,159) Operating expenses Investment management fees 4(a) 154, ,450 Administration fees 4(b) 95, ,466 Audit fees 17 10,240 10,234 Directors' fees 9 6,142 10,436 Depositary fees 4(d) 23,126 33,310 Trustee fees 4(d) 19,179 13,320 Establishment costs 4(e) 1,002 2,415 Other expenses 49,303 58,189 Operating expenses 359, ,820 Net gain/(loss) from operations 943,073 (1,733,979) Finance cost 2(h), ,093 - Total comprehensive gain/(loss) for the year 829,980 (1,733,979) See accompanying notes to the financial statements. 20

21 SIGNET UCITS FUNDS PLC Statement of Comprehensive Income For the financial year ended 31 December 2016 *Signet High Income Portfolio *Signet High Income Portfolio Year ended Year ended 31 December December 2015 Notes $ $ Revenue Interest income 2(f) 11,653 1,035,407 Net loss on financial instruments at fair value through profit or loss (104,475) (983,984) Net loss on foreign exchange (3,709) (105,313) Net investment loss (96,531) (53,890) Operating expenses Investment management fees 4(a) 3, ,540 Administration fees 4(b) 12,241 88,040 Audit fees ,236 Directors' fees 9 (937) 6,392 Depositary fees 4(d) 2,506 25,150 Trustee fees 4(d) 1,058 13,317 Establishment costs 4(e) 176 2,139 Other expenses 41,204 49,175 Operating expenses 60, ,989 Net loss from operations (157,037) (475,879) Total comprehensive loss for the year (157,037) (475,879) * Signet High Income Portfolio closed on 25 January See accompanying notes to the financial statements. 21

22 SIGNET UCITS FUNDS PLC Statement of Comprehensive Income For the financial year ended 31 December 2016 *Russian High Income Bond Portfolio * Russian High Income Bond Portfolio Year ended Year ended 31 December December 2015 Notes $ $ Revenue Interest income 2(f) - 73,182 Net gain on financial instruments at fair value through profit or loss - 265,985 Net loss on foreign exchange - (4,353) Net investment gain - 334,814 Operating expenses Investment management fees 4(a) - 13,524 Administration fees 4(b) - 22,674 Audit fees 17-6,061 Directors' fees 9 - (89) Depositary fees 4(d) - 4,474 Trustee fees 4(d) - 3,320 Establishment costs 4(e) - (5,139) Other expenses - 77,281 Operating expenses - 122,106 Net gain from operations - 212,708 Total comprehensive gain for the year - 212,708 * Russian High Income Bond Portfolio closed on 8 April See accompanying notes to the financial statements. 22

23 SIGNET UCITS FUNDS PLC Statement of Comprehensive Income For the financial year ended 31 December 2016 European High Yield Bond Portfolio European High Yield Bond Portfolio Year ended Year ended 31 December December 2015 Notes Revenue Interest income 2(f) 622, ,212 Net gain on financial instruments at fair value through profit or loss 473, ,819 Other Income 12,377 18,062 Net gain on foreign exchange 587,721 1,426,828 Net investment gain 1,695,496 2,597,921 Operating expenses Investment management fees 4(a) 183, ,313 Administration fees 4(b) 89,318 85,180 Audit fees 17 9,257 9,471 Directors' fees 9 8,618 5,691 Depositary fees 4(d) 33,735 36,231 Trustee fees 4(d) 12,126 12,000 Establishment costs 4(e) - 1,205 Other expenses 44,241 19,753 Operating expenses 380, ,844 Net gain from operations 1,314,687 2,183,077 Total comprehensive gain for the year 1,314,687 2,183,077 See accompanying notes to the financial statements. 23

24 SIGNET UCITS FUNDS PLC Statement of Comprehensive Income For the financial year ended 31 December 2016 * Verno Russia Debt Fund * Verno Russia Debt Fund Period ended Period ended 31 December December 2015 Notes $ $ Revenue Net gain on foreign exchange - 4,861 Net investment gain - 4,861 Operating expenses Investment management fees 4(a) - (65) Administration fees 4(b) - (6,463) Audit fees 17 - (8,876) Directors' fees 9 - (1,347) Other expenses - 21,612 Operating expenses - 4,861 Net loss from operations - - Total comprehensive gain/(loss )for the year - - * Verno Russia Debt Fund was launched on 9 January 2014 and closed on 29 December See accompanying notes to the financial statements 24

25 SIGNET UCITS FUNDS PLC Statement of Comprehensive Income For the financial year ended 31 December 2016 Signet UCITS Funds PLC (Company total) Signet UCITS Funds PLC (Company total) Year ended Year ended 31 December December 2015 Notes Revenue Interest income 2(f) 1,682,444 5,076,541 Net gain/(loss) on financial instruments at fair value through profit or loss 1,418,132 (4,116,545) Other Income 12,377 38,359 Net gain/(loss) on foreign exchange 576,543 (78,293) Net investment gain 3,689, ,062 Operating expenses Investment management fees 4(a) 425,641 1,099,623 Administration fees 4(b) 274, ,168 Audit fees 17 28,877 32,631 Directors' fees 9 19,234 24,474 Depositary fees 4(d) 78, ,259 Trustee fees 4(d) 48,842 49,959 Establishment costs 4(e) 1,765 2,020 Other expenses 148, ,772 Operating expenses 1,026,333 1,927,906 Net gain/(loss) from operations 2,663,163 (1,007,844) Finance cost 2(h), ,738 - Total comprehensive gain/(loss) for the year 2,510,425 (1,007,844) See accompanying notes to the financial statements. 25

26 SIGNET UCITS FUNDS PLC Statement of changes in net assets attributable to holder of redeemable participating shares For the financial year ended 31 December 2016 Asian Bond Portfolio Year ended 31 December 2016 Asian Bond Portfolio Year ended 31 December 2015 US High Income Bond Portfolio Year ended 31 December 2016 US High Income Bond Portfolio Year ended 31 December 2015 *Signet High Income Portfolio Year ended 31 December 2016 *Signet High Income Portfolio Year ended 31 December 2015 $ $ $ $ $ $ Capital and reserves Balance at beginning of year 8,240,910 28,234,912 7,323,465 50,025,672 5,677,879 22,800,534 Issuance of redeemable participating shares 4,550,000 2,588,528 5,950,000 4,723, Redemption of redeemable participating shares (4,782,532) (21,454,727) (1,415,685) (45,692,032) (5,520,842) (16,646,776) Total comprehensive gain/(loss )for the year 590,083 (1,127,803) 829,980 (1,733,979) (157,037) (475,879) Effect of currency translation Balance at end of year 8,598,461 8,240,910 12,687,760 7,323,465-5,677,879 * Signet High Income Bond Portfolio closed on 25 January ** Refer Note

27 SIGNET UCITS FUNDS PLC Statement of changes in net assets attributable to holder of redeemable participating shares (continued) For the financial year ended 31 December 2016 *Russian High Income Bond Portfolio Year ended 31 December 2015 European High Yield Bond Portfolio Year ended 31 December 2016 European High Yield Bond Portfolio Year ended 31 December 2015 Signet UCITS Funds PLC (Company total) Year ended 31 December 2016 Signet UCITS Funds PLC (Company total) Year ended 31 December 2015 $ Capital and reserves Balance at beginning of year 3,293,498 11,575,201 14,724,274 29,317,956 96,950,297 Issuance of redeemable participating shares - 7,260,303 2,459,593 17,071,095 6,793,880 Redemption of redeemable participating shares (3,506,206) (3,749,476) (7,791,743) (12,895,792) (79,135,477) Total comprehensive gain/(loss )for the year 212,708 1,314,687 2,183,077 2,510,425 (1,007,844) Effect of currency translation ,196 5,717,100 Balance at end of year - 16,400,715 11,575,201 36,584,880 29,317,956 * Russian High Bond Portfolio closed on 8 April

28 SIGNET UCITS FUNDS PLC Statement of Cash Flows For the financial year ended 31 December 2016 Asian Bond Asian Bond Portfolio Portfolio Year ended Year ended 31 December December 2015 $ $ Cash flow from operating activities Change in net assets attributable to holders of redeemable participating shares for the year 590,083 (1,127,803) Adjustments for: Net gain on currency translation at fair value through profit or loss (6,987) - Net (gain)/loss on financial instruments at fair value through profit or loss (541,318) 823,468 Net change in operating assets and liabilities Net decrease in other receivables 13, ,403 Net (decrease)/increase in other payable (848) 2,668 Net increase in accrued fees and expenses (45,700) (37,318) Proceeds from sale of investments 6,220,426 26,078,183 Payments for purchase of investments (5,571,600) (10,704,647) Net cash flows generated from operating activities 657,461 15,521,954 Cash flow from financing activities Proceeds from issuance of redeemable participating shares 4,550,000 2,588,528 Payments on redemption of redeemable participating shares (4,782,532) (21,454,727) Net cash flows used in financing activities (232,532) (18,866,199) Net increase/(decrease) in cash and cash equivalents 424,929 (3,344,245) Cash and cash equivalents at the beginning of the year 337,336 3,681,581 Cash and cash equivalents at the end of the year 762, ,336 Supplemental information on cash flows from operating activities: Interest received 486,322 1,429,020 Interest paid

29 SIGNET UCITS FUNDS PLC Statement of Cash Flows For the financial year ended 31 December 2016 US High Income US High Income Bond Portfolio Bond Portfolio Year ended Year ended 31 December December 2015 $ $ Cash flow from operating activities Change in net assets attributable to holders of redeemable participating shares for the year 829,980 (1,733,979) Adjustments for: Net (gain)/loss on financial instruments at fair value through profit or loss (600,776) 2,740,215 Net change in operating assets and liabilities Net (increase)/decrease in other receivables (25,465) 846,118 Net decrease in receivables from investments redeemed - 516,250 Net increase/(decrease) in bank overdraft 2,241 (1,384) Net (decrease)/increase in other payable (3,508) 5,618 Net (decrease)/increase in accrued fees and expenses (144,166) 5,255 Proceeds from sale of investments 5,098,235 59,117,491 Payments for purchase of investments (7,690,717) (23,027,786) Net cash flows (used in)/ generated from operating activities (2,534,176) 38,467,798 Cash flow from financing activities Proceeds from issuance of redeemable participating shares 5,950,000 4,723,804 Payments on redemption of redeemable participating shares (1,415,685) (45,692,032) Net cash flows generated from/ (used in) financing activities 4,534,315 (40,968,228) Net increase/(decrease) in cash and cash equivalents 2,000,139 (2,500,430) Cash and cash equivalents at the beginning of the year 226,010 2,726,440 Cash and cash equivalents at the end of the year 2,226, ,010 Supplemental information on cash flows from operating activities: Interest received 631,767 2,172,774 Interest paid

30 SIGNET UCITS FUNDS PLC Statement of Cash Flows For the financial year ended 31 December 2016 *Signet High *Signet High Income Portfolio Income Portfolio Year ended Period ended 31 December December 2015 $ $ Cash flow from operating activities Change in net assets attributable to holders of redeemable participating shares for the year/period (157,037) (475,879) Adjustments for: Net gain on financial instruments at fair value through profit or loss 121, ,408 Net change in operating assets and liabilities Net decrease in other receivables 64, ,292 Net decrease in receivables from investments redeemed - 400,200 Net decrease in bank overdraft - (538,628) Net decrease in other payable (5,159) 5,159 Net decrease in accrued fees and expenses (67,885) (21,205) Proceeds from sale of investments 4,630,917 28,970,760 Payments for purchase of investments - (13,921,103) Net cash flows generated from operating activities 4,587,419 15,735,004 Cash flow from financing activities Proceeds from issuance of redeemable participating shares - - Payments on redemption of redeemable participating shares (5,520,842) (16,646,778) Net cash flows used in financing activities (5,520,842) (16,646,778) Net decrease in cash and cash equivalents (933,423) (911,774) Cash and cash equivalents at the beginning of the year 933,423 1,845,197 Cash and cash equivalents at the end of the year - 933,423 * Signet High Income Bond Portfolio closed on 25 January Supplemental information on cash flows from operating activities: Interest received 76,649 1,435,757 Interest paid

31 SIGNET UCITS FUNDS PLC Statement of Cash Flows For the financial year ended 31 December 2016 * Russian High Income Bond Portfolio Period ended * Russian High Income Bond Portfolio Year ended 31 December December 2015 $ $ Cash flow from operating activities Change in net assets attributable to holders of redeemable participating shares for the period - 212,708 Adjustments for: Net loss on financial instruments at fair value through profit or loss - (243,485) Net change in operating assets and liabilities Net decrease in other receivables - 79,512 Net decrease in bank overdraft - (36,205) Net decrease in accrued fees and expenses - (50,444) Net decrease in other payable - (10,384) Proceeds from sale of investments - 5,138,520 Payments for purchase of investments - (2,124,425) Net cash flows generated from operating activities - 2,965,797 Cash flow from financing activities Proceeds from issuance of redeemable participating shares - - Payments on redemption of redeemable participating shares - (3,506,207) Net cash flows used in financing activities - (3,506,207) Net decrease in cash and cash equivalents - (540,410) Cash and cash equivalents at the beginning of the period - 540,410 Cash and cash equivalents at the end of the period - - *Russian High Bond Portfolio closed on 8 April Supplemental information on cash flows from operating activities: Interest received - - Interest paid

32 SIGNET UCITS FUNDS PLC Statement of Cash Flows For the financial year ended 31 December 2016 European High European High Yield Bond Portfolio Yield Bond Portfolio Year ended Year ended 31 December December 2015 Cash flow from operating activities Change in net assets attributable to holders of redeemable participating shares for the year 1,314,687 2,183,077 Adjustments for: Net (gain)/loss on financial instruments at fair value through profit or loss (466,392) (126,951) Net change in operating assets and liabilities Net decrease in other receivables 7,575 45,629 Net (decrease)/increase in bank overdraft (30) 25 Net increase in redemption payable 21,368 - Net (decrease)/increase in other payable (682) 3,950 Net (decrease)/increase in accrued fees and expenses (25,469) 20,521 Proceeds from sale of investments 39,853,111 60,059,018 Payments for purchase of investments (43,143,229) (59,178,971) Net cash flows (used in)/generated from operating activities (2,439,061) 3,006,298 Cash flow from financing activities Proceeds from issuance of redeemable participating shares 7,260,303 2,459,593 Payments on redemption of redeemable participating shares (3,749,476) (7,791,743) Net cash flows generated from/(used in) financing activities 3,510,827 (5,332,150) Net increase/(decrease) in cash and cash equivalents 1,071,766 (2,325,852) Cash and cash equivalents at the beginning of the year 482,207 2,808,059 Cash and cash equivalents at the end of the year 1,553, ,207 Supplemental information on cash flows from operating activities: Interest received 629, ,503 Interest paid

33 SIGNET UCITS FUNDS PLC Statement of Cash Flows For the financial year ended 31 December 2016 * Verno Russia Debt * Verno Russia Fund Debt Fund Period ended Period ended 31 December December 2015 $ $ Cash flow from operating activities Change in net assets attributable to holders of redeemable participating shares for the period - - Adjustments for: Net loss on financial instruments at fair value through profit or loss - - Net change in operating assets and liabilities Net decrease in other payable - (12,618) Net decrease in accrued fees and expenses - (118,066) Proceeds from sale of investments - - Payment for purchase of investments - - Net cash flows used in operating activities - (130,684) Cash flow from financing activities Proceeds from issuance of redeemable participating shares - - Payments on redemption of redeemable participating shares - (708,601) Net cash flows used in financing activities - (708,601) Net decrease in cash and cash equivalents - (839,285) Cash and cash equivalents at the beginning of the period - 839,285 Cash and cash equivalents at the end of the period - - * Verno Russia Debt Fund was launched on 9 January 2014 and closed on 29 December Supplemental information on cash flows from operating activities: Interest received - - Interest paid

34 SIGNET UCITS FUNDS PLC Statement of Cash Flows For the financial year ended 31 December 2016 Signet UCITS Signet UCITS Funds PLC Funds PLC (Company total) (Company total) Year ended Year ended 31 December 31 December Cash flow from operating activities Change in net assets attributable to holders of redeemable participating shares for the year 2,510,425 (1,007,844) Adjustments for: Net (gain)/loss on financial instruments at fair value through profit or loss (1,449,680) 4,306,719 Net gain on Currency Translation (6,625) - Net change in operating assets and liabilities Net decrease in other receivables 57,770 1,651,048 Net decrease in receivables from investments redeemed - 843,954 Net increase/(decrease) in bank overdraft 2,094 (530,610) Net (decrease) in other payable (9,704) (4,851) Net increase in redemption payable 21,368 - Net decrease in accrued fees and expenses (269,875) (183,713) Proceeds from sale of investments 53,173, ,220,059 Payments for purchase of investments (55,718,914) (102,983,498) Net cash flows (used in)/ generated from operating activities (1,689,728) 67,311,264 Cash flow from financing activities Proceeds from issuance of redeemable participating shares 17,071,095 6,793,880 Payments on redemption of redeemable participating shares (12,895,792) (79,788,024) Net cash flows generated from/(used in) financing activities 4,175,303 (72,994,144) Net gain/(loss) on currency translation 41,518 (3,226,022) Net increase/(decrease) in cash and cash equivalents 2,527,093 (8,908,902) Cash and cash equivalents at the beginning of the year 1,860,574 10,769,476 Cash and cash equivalents at the end of the year 4,387,667 1,860,574 Supplemental information on cash flows from operating activities: Interest received 1,762,141 5,613,559 Interest paid

35 Notes to the Financial Statements For the financial year ended 31 December General information Signet UCITS Funds PLC (the Company or the Fund ) was incorporated as an umbrella type open ended Investment Company with variable capital under the laws of the Republic of Ireland on 17 May 2010 with registration number The Company was authorised by the Central Bank of Ireland as a UCITS pursuant to the European Communities (Undertakings for Collective Investments in Transferable Securities) Regulations 2011 and Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations, The Company and each sub-fund are subject to the investment and borrowing restrictions contained in the regulations and the UCITS notices. As at 31 December 2016, the Company had three active sub-funds, Asian Bond Portfolio ( ABP ), US High Income Bond Portfolio ( USHIP ) and European High Yield Bond Portfolio ( EHYP ). Signet High Income Portfolio ( SHIP ) closed on 25 January 2016, Russian High Income Bond Portfolio ( RHIP ) closed on 8 April 2015 and Verno Russia Debt Fund ( VRDF ) closed on 29 December ABP is an actively managed absolute return bond portfolio which provides exposure to predominantly PAN-Asian high income credit, including corporate and sovereign/quasi-sovereign issues. The fund will target high single-digit to double-digit returns derived mainly from coupon income and capital appreciation, while providing investors with some downside protection in adverse markets. Further return enhancement is generated via active management of the bond portfolio, local currency exposure as appropriate and rates. USHIP is an actively managed absolute return bond portfolio providing exposure to a highly differentiated portfolio of underfollowed US corporate credits. The program targets high single-digit to low double-digit net returns generated from coupon income and capital appreciation achieved through active management and trading of the bond portfolio, while providing investors with a measure of protection during adverse markets. The investment objective of EHYP is to seek investment returns through income and capital appreciation by primarily investing in high yield debt securities of European corporate entities, financial institutions and sovereigns. SHIP was an actively managed absolute return bond portfolio providing global and diversified exposure to high income bonds. The program targeted high single-digit to low double-digit net returns generated from coupon income and capital appreciation achieved by active management and trading of the bond portfolio, while providing investors with a measure of protection during adverse markets through superior risk management. All shareholders of the SHIP were redeemed as at 25 January Redeemable participating shares in Euro ( ), US Dollars ( $ ) and Pound Sterling ( ) can be issued in Classes A, B and C of the sub-funds. The Euro and US Dollar shares of ABP, USHIP and EHYP are listed on the Irish Stock Exchange. The Company may from time to time create additional sub-funds as the Directors may deem appropriate and with the prior approval of the Central Bank of Ireland. During March 2017 it was proposed by the Investment Manager and agreed by the Board of Directors to propose to Shareholders the closure of the ABP and USHIP Sub-Funds due to low net asset levels and the high costs involved in operating UCITS Sub-Funds. Subject to the outcome of a Shareholder EGM and vote on the proposed Sub-Fund closure it is intended to liquidate the Sub-Fund portfolios, repay all creditors and distribute remaining cash to all Shareholders during May The EHYP Sub-Fund is expected to continue to grow and to remain in operation for the foreseeable future. 35

36 Notes to the Financial Statements For the financial year ended 31 December 2016 (continued) 2. Significant accounting policies (a) Statement of compliance The financial statements have been prepared in accordance with the Companies Act 2014 and International Financial Reporting Standards ( IFRS ) as adopted by the European Union ( EU ). (b) Basis of preparation The financial statements have been prepared on a going concern basis. The financial statements have been prepared on a historical cost basis except for the revaluation of financial assets and liabilities to fair value. The accounting policies have been consistently applied by the Company throughout the period. The Company maintains separate accounting records for each of the sub-fund share classes. Accordingly, the financial position of each sub-fund share class is computed and reflected separately. (c) Functional and presentation currency The functional and presentation currency of EHYP is Euro and for ABP, USHIP and SHIP it is US Dollars. The presentation currency of the Company is Euro. All financial information presented has been rounded to the nearest Euro or US Dollar as appropriate. i) Translation gains and losses The Company maintains separate accounting records for each of the redeemable participating share classes in the currency of issue. For the purpose of producing the Company totals in the financial statements, the Statement of Financial Position figures for each sub-fund have been translated to Euro at the exchange rates ruling at the year end, while the Statement of Comprehensive Income for each sub-fund have been translated at the average exchange rates for the year. The capital and reserve amounts at the beginning and the end of periods presented in the Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares have been translated at exchange rates prevailing at the respective Statement of Financial Position dates and the transactions with shareholders have been translated at average exchange rates for the period. The foreign currency gains and losses arising on the translation to Euro have been presented in these financial statements. These do not affect the net asset value of any sub-fund. ii) Transactions in foreign currencies Transactions in foreign currencies are translated at the foreign exchange rate ruling at the end of the day during which that transaction occurred. Monetary assets and liabilities denominated in foreign currencies at the date of the financial statements are translated to the functional currency of the subfund at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation and realised gains and losses on disposal or settlement of monetary assets and liabilities are recognised in the Statement of Comprehensive Income. The Company may engage in foreign exchange transactions in order to hedge, in line with hedging strategies documented in the prospectus, all non-base currency exposure back to base currency of the respective share class. (d) Use of estimates The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the period. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to estimates are recognised in the period in which the estimate is revised and future accounting periods. 36