15 October 2021
GABELLI MERGER PLUS+ TRUST PLC - FINANCIAL RESULTS
GABELLI MERGER PLUS+ TRUST PLC
Annual Report and Accounts For the year ended 30 June 2021
FINANCIAL HIGHLIGHTS
|
| As at | As at |
| Net asset value per share (cum income) | $9.94 | $9.33 |
| Net asset value per share (ex income) | $10.27 | $9.52 |
| Dividends per share paid during the year* | $0.48 | $0.48 |
| Share price | $7.40 | $7.50 |
| Discount to Net Asset Value1,5 | 25.63% | 19.61% |
| | ========== | ========== |
|
| Year ended | Year ended |
| Net asset value per share2 | 12.12% | 0.98% |
| U.S. 3-month Treasury Bill Index | 0.09% | 0.16% |
| Share price3 | 5.46% | (7.69%) |
| | ========== | ========== |
|
| Year ended | Year ended |
| Revenue return per share | ($0.14) | ($0.08) |
| | ========== | ========== |
|
| Year ended | Year ended |
| Annualised ongoing charges | 1.66% | 1.74% |
| | ========== | ========== |
Source: Portfolio Manager (Gabelli Funds, LLC), verified by the Administrator (State Street Bank and Trust Company).
1 Figures are inclusive of income and dividends paid, in line with the Association of Investment Companies (the "AIC") guidance.
2 The net asset value ("NAV") total return for the year reflects the movement in the NAV, adjusted for the reinvestment of any dividends paid.
3 The total share price return for the year to 30 June 2021 reflects the movement in the share price during the year, adjusted to reflect the reinvestment of any dividends paid and market movements.
4 Ongoing charges are calculated as a percentage of shareholders' funds using the average net assets over the year and calculated in line with the AIC's recommended methodology. Annualised ongoing charges in 2020 include 25 bps attributable to the performance fee (2021: 0 bps).
5 These key performance indicators are alternative performance measures. Further information regarding the use of alternative performance measures can be found on page 13 and in the glossary on page 65.
* The dividends paid during the year ended 30 June 2021 included the fourth quarterly dividend for the year ended 30 June 2020.
CHAIRMAN'S STATEMENT
MARC GABELLI
Chairman
Our 2021 Annual Report encompasses the period from July 2020 through June 2021, the fourth year of operations for the Gabelli Merger Plus+ Trust Fund Plc. As noted in the Prospectus, the Company's primary objective is to seek to generate total return, consisting of capital appreciation and current income. The Company will seek a secondary objective of the protection of capital, uncorrelated to equity and fixed income markets. The Fund utilizes the Gabelli Private Market Value (PMV) with a CatalystTM investment methodology, and has built a diversified portfolio using catalyst event merger arbitrage strategies to create an optimal risk/reward profile. The investment programme is global, encompassing a broad spectrum of special situations and event driven opportunities, with an emphasis on announced merger transactions. The portfolio is a highly liquid, non-market correlated alternative to traditional equity and fixed income securities.
Merger returns are derived through the narrowing of deal spreads from time of announcement until their expected closure. The spread is a function of three primary elements: the risk free rate, the risk premium associated with the transaction fundamentals, and the time value of money. The dynamic interplay across these components is evaluated within every investment by the Manager. Position sizing will vary according to a probabilistic assessment of the risk. The inherent risk in all merger investing is a broken deal rather than the standard deviation or price variance of the market price movements over the deal timeline. Gabelli Funds LLC, the Portfolio Manager, employs an active approach to analysing the fundamentals of a merger investment and has a long history of implementing such a programme. At its core, this differentiated investment approach utilises the Gabelli PMV with a CatalystTM analytical methodology to manage risk amongst other inputs and factors. The full details of this investment programme were set out in the offering Prospectus and are found on the Company's web site: www.Gabelli.com/MergerPlus.
The Board is always receptive to feedback and is available should you have any questions or comments via the Portfolio Manager's Investor Relations group directly. We thank you, our shareholders, for your confidence entrusting a portion of your assets to our team.
THE DEAL ENVIRONMENT
The current investing environment is highly favorable for the Company's strategies. Despite the potential for inflation, the big question is whether it is simply a result of backups caused by COVID, or the beginning of a longer-term embedded cycle. Many of the price increases experienced during COVID have eased, but consumers continue to worry about the increases in food and energy prices. The New York Federal Reserve's Survey of Consumer Expectations shows that a median rate of 4.8% is expected for the next 12 months - the highest level since the survey began in 2013. The U.S. central bank position is that inflation will measure around 3% for 2021 and then settle to 2.1% in subsequent years. The cost of borrowing remains low, and the central banks of many countries maintain zero interest rates and continue to expand their balance sheets. Additionally, despite inflation worries, consumers are feeling the favorable effects of the strong stock market as well as substantial direct aid from the federal government. The market is flush with cash for potential deals, and we continue to see it deployed to acquire assets.
The bipartisan $3.5 trillion infrastructure deal is poised to have a positive effect both on the general economy and the Company's investing environment. We anticipate a general uplift in the economy, job creation, and more economic spend. From an M&A perspective, the low interest rate environment and cash available to deploy in many areas we focus on, including chemicals, aerospace, health care, manufacturing, and the all-important construction and engineering sector, bode well for the second half of the year and beyond.
PRINCIPAL DEVELOPMENTS ON INVESTMENTS DURING THE YEAR
Merger and acquisition (M&A) activity has continued to pick up momentum through the first half of 2021. As we wrote in our 2020 Annual Report, worldwide M&A activity totalled $3.9 trillion in the year 2019, followed by a total of $3.6 trillion in 2020, in a decline driven by COVID‑related shutdowns. However, the second half of 2020 saw M&A totaling $2.3 trillion, the strongest second half on record and an astounding 90% higher than the first half of the year. The first half of 2021 beat that record, coming in at $2.8 trillion, with announced deals up 29% year over year. All geographic areas saw strong performance, with 47% of activity in U.S.-based transactions, 39% in Europe, and an increase of 84% in the Asia-Pacific region to $562 billion. The sector breakout saw Technology leading the charge, followed by Financials and Energy. Deal making shows every sign of staying robust for the rest of the year, with private equity funds as well as public companies driving activity. Our Portfolio Management team views this an opportunity for continued strong returns and an opportunity to grow shareholder wealth going forward.
The Company's net asset value (NAV) plus dividends paid delivered a total return to shareholders during the year under review of 12.12% in U.S. dollars. This performance compared to the equivalent 13-week U.S. Treasury Bill which yielded 0.09% as of 30 June, and also relative to the MNA ETF, S&P Merger Arbitrage Index, and Credit Suisse Merger Arbitrage Liquid Index, which returned 8.71%, 10.25%, and 12.30%, respectively. The share price total return with dividends reinvested was 5.46%. The discount widened during the year, exacerbated by low trading volumes.
DIVIDEND
The Company's portfolio is largely focused on merger arbitrage, with other arbitrage strategies, such as share class arbitrage and holdco arbitrage, implemented from time to time. Holding periods average approximately 120 days. In arbitrage, the culmination of a position is effectively a return of cash as the position is closed. In order to allow the Shareholders to realise a predictable, but not assured, level of cash flow and some liquidity periodically on their investment, the Company has adopted a "managed dividend policy". This policy seeks to pay Shareholders a quarterly dividend in relation to the Net Asset Value of the Company at the time, which may be changed at any time by the Board. Between inception and 30 June 2021, the Company returned $1.79 per share to shareholders, consistent with its dividend policy. Dividends are paid only when declared by the Board subject to the Board's assessment of the Company's financial position and only if the Company has sufficient income and distributable reserves to make the dividend payment, and the level of dividend may vary over time. As such, the portfolio's managed distribution of capital through the payment of quarterly dividends is under review as we enter the new Fiscal Year.
MARC GABELLI
Chairman
15 October 2021
INVESTMENT OBJECTIVE AND POLICY
INVESTMENT OBJECTIVE
The Company's primary investment objective is to seek to generate total return, consisting of capital appreciation and current income. The Company will seek a secondary objective of the protection of capital, uncorrelated to equity and fixed income markets.
INVESTMENT POLICY
The Company will seek to meet its investment objective by utilising the Gabelli Private Market Value (PMV) with a CatalystTM, investment methodology, maintaining a diversified portfolio of event merger arbitrage strategies to seek to create an optimal risk/ reward profile for the portfolio.
"Event Driven Merger Arbitrage" is a highly specialised active investment approach designed principally to profit from the differences between the public market price and the price achieved through corporate catalyst events. Catalysts are utilised to earn returns independent of the broad markets' direction. This includes corporate events such as announced mergers, acquisitions, takeovers, tender offers, leveraged buyouts, restructurings, demergers and other types of reorganisations and corporate actions ("deals").
The Company will invest globally although it is expected to have an emphasis on securities traded in the United States, predominantly equity securities issued by companies of any market capitalisation. The Company is permitted to use a variety of investment strategies and instruments, including but not limited to: convertible and non-convertible debt securities; asset-backed and mortgage-backed securities; fixed interest securities, preferred stock, non-convertible preferred stock, depositary receipts; shares or units of UCIs or UCITS; rights qualifying as transferable securities; when issued, delayed delivery transferable securities; forward contracts; swaps; recently issued transferable securities; repurchase agreements, money market instruments and warrants.
The Company may invest part of its net assets in cash and cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with banks or other counterparties having at least a single A (or equivalent) credit rating from an internationally recognised rating agency or government and other public securities, if the Portfolio Manager believes that it would be in the best interests of the Company and its Shareholders. This may be the case, for example, if the Portfolio Manager believes that adverse market conditions justify a temporary defensive position. Any cash or surplus assets may also be temporarily invested in such instruments pending investment in accordance with the Company's investment policy.
The Company may take both long and short positions in equity and debt securities. For shorting purposes, the Company may use indices, individual stocks, or fixed income securities.
The Company may utilise financial derivative instruments to create both long and synthetic covered short positions with the aim of maximising positive returns. The Company may use strategies and techniques consisting of options, futures contracts, and currency transactions and may enter into total rate of return, credit default, or other types of swaps and related derivatives for various purposes, including to gain economic exposure to an asset or group of assets that may be difficult or impractical to acquire.
The Company may also use derivatives for efficient portfolio management purposes including, without limitation, hedging and risk management and leverage.
The Company has broad and flexible investment authority and, accordingly, it may at any time have investments in other related or unrelated areas. Strategies and financial instruments utilised by the Company may include: (i) purchasing or writing options (listed or unlisted) of any and all types including options on equity securities, stock market and commodity indices, debt securities, futures contracts, future contracts on commodities and currencies; (ii) trading in commodity futures contracts, commodity option contracts and other commodity interests including physical commodities; (iii) borrowing money from brokerage firms and banks on a demand basis to buy and sell short investments in excess of capital; and (iv) entering into swap agreements (of any and all types including commodity swaps, interest rate swaps and currency swaps), forward contracts, currencies, foreign exchange contracts, warrants, credit default swaps, synthetic derivatives (for example, CDX), collateralised debt obligations tranches, and other structured or synthetic debt obligations, partnership interests or interests in other investment companies and any other financial instruments of any and all types which exist now or are hereafter created.
There has been no change to the investment policy since the launch of the Company on 19 July 2017. No material change will be made without shareholder approval.
PORTFOLIO MANAGER'S REVIEW
METHODOLOGY AND MARKET OPPORTUNITY
Gabelli Funds would like to thank our investors for allocating a portion of their assets to the Gabelli Merger Plus+ Trust ("GMP"). We appreciate the confidence and trust you have placed in our organization through your investment in GMP. Our investment objective is to compound and preserve wealth over time while remaining non-correlated to the broad markets. As a firm, we have invested in mergers since 1977 and created the Gabelli group's first dedicated, announced merger fund more than thirty years ago. We remain vigilant in the application of our investment philosophy and in our search for opportunities. In this context, let us outline our investment methodology and the investment environment through 30 June 2021.
Merger arbitrage is a highly specialized investment approach designed principally to profit from corporate events, including the successful completion of proposed mergers, acquisitions, takeovers, tender offers, leveraged buyouts, restructurings, demergers, and other types of corporate reorganizations and actions. As arbitrageurs, we seek to earn the differential, or "spread," between the market price of our investments and the value ultimately realized through deal consummation.
We are especially enthusiastic about the opportunities to grow client wealth in the decades to come, and we highlight below several factors that should help drive results. These include:
· Increased market volatility, which enhances our ability to establish positions for the prospect of improved returns;
· A return of corporate deal making as unprecedented liquidity provides an accommodative market for mergers and acquisitions.
· The Fund's experienced investment team, which pursues opportunities globally through the disciplined application of Gabelli's investment methodology;
GLOBAL DEAL ACTIVITY1
Global deal merger and acquisition ("M&A") activity totalled $3.6 trillion in 2020, a 5% year over year decline driven by shutdowns related to COVID-19. However, in the second half of the year, the first half of the Company's fiscal year, merger activity recovered substantially and totalled $2.3 trillion, as countries began phased re-openings and governments instituted accommodative monetary and fiscal policies, marking the strongest second half on record and a 90% increase over the first half of the year. The first half of 2021 saw M&A total $2.8 trillion, a year over year increase of 131% and the best start to a year on record. The second quarter alone saw $1.6 trillion in deals and marked the fourth consecutive quarter to pass $1 trillion. The total number of deals worldwide increased to an all-time high, including twenty-seven deals greater than $10 billion, compared to just 13 in the first half of 2020.
The resurgence of deal activity was largely driven by United States-based targets, which saw $1.3 trillion in deal activity through 30 June 2021, an increase of 249% year over year. Cross-border M&A activity totalled $863 billion during the first half of 2021, an increase of 95% and a three-year high. Similarly, the value of private equity-backed buyouts hit an all-time high of $533 billion, an increase of 76% year over year, accounting for nearly 18% of total M&A activity.
Geographically, during the second half of 2020, Europe and Asia Pacific were bright spots for M&A, increasing 36% and 16% respectively, while deal making in the U.S. declined by 21% to $1.4 trillion as COVID-19 battered major U.S. cities. In the first half of 2021, European M&A tallied $581 billion of transactions, an increase of 39%. Asia Pacific saw an 84% increase, while Japan saw a 12% increase in the first half of the year.
Viewed by sector, deal making in Technology buoyed the overall M&A market in 2020, with volumes totaling $684.3 billion, an all-time high. Financials and Energy & Power were the second and third most active sectors, respectively, accounting for 26% of all deal making. In the first half of 2021, the Technology sector was again the biggest contributor to merger activity, with deals totaling $672 billion, more than triple 2020 levels and accounting for nearly 24% of total announced deal volume. Financials and the Energy and Power sectors were also large contributors, each accounting for 11% of M&A activity.
1 Thomson Reuters M&A Review - Second Half 2020 and First Half 2021.
PORTFOLIO IN REVIEW
From a portfolio perspective, we are off to a solid start in 2021. The resurgence in the merger and acquisition market that began in the second half of 2020 has persisted into 2021, as robust deal activity provided fertile ground for merger investing, with strong performance from deals in our pipeline as well as our absolute return investments. Merger activity had its strongest first half on record, and has now surpassed $1 trillion globally for four straight quarters. The M&A market has highlighted the scarcity value of companies with strong market positions, and accommodative capital markets and the easing of COVID-related restrictions are also providing support for would-be acquirers contemplating their strategic direction. These conditions have created something of a sellers' market, which has helped bolster performance in recent months. We have seen a number of deals benefit from improving terms, either via overbids by a third party or a "bump" in consideration by the acquirer. For an arbitrageur, these types of situations are a best-case scenario, as we are protected by the agreed upon terms, with the possibility to earn an even greater return.
After the roller coaster of 2020 ended on a high note, stocks posted their second best first half in 23 years, with the S&P 500 Index up over 15% year-to-date and up 9% for the second quarter of 2021, making for combined strong performance for the company. Optimism in the market was fuelled by a combination of government spending, aggressive monetary policy by the Fed, and improving corporate earnings. All of this is set against the backdrop of an increasingly vaccinated population-as more than half of the U.S. population has received at least one vaccine dose-who are ready to spend.
While there is never a lack of risk in the market, the drivers for a strong M&A environment persist: borrowing costs remain historically cheap, debt markets continue to be accommodative, and private equity firms and management teams have substantial dry powder and a mandate to become more competitive in an evolving global marketplace. These dynamics should continue to propel M&A for the rest of 2021 and beyond.
While one of the main topics of conversation and concern this year has been rising inflation, the Federal Reserve has, at least for the time being, dampened those fears. In June 2021, the Fed disclosed that most of its voting members expect interest rates to rise before the end of 2023. Although the Fed maintained its $120 billion monthly bond buying program and remained tolerant of inflation temporarily above its 2% target, commentary suggested that accommodation would one day end, avoiding a policy error that would have fanned inflation.
In recent weeks, spreads have widened on the back of what appears to be a more hawkish antitrust enforcement policy by the new Administration in the U.S., as well as some renewed concerns around China's willingness to approve certain transactions. Such volatility provides us an opportunity to add to our highest conviction positions at lower prices-the benefits of which will be apparent as these transactions close in the coming months.
We continue to find attractive investment opportunities in newly-announced deals and add to existing positions in our portfolio. We remain focused on investing in highly strategic, well-financed deals with an added focus on near-term catalysts, and are upbeat about our prospect to generate absolute returns.
Notable drivers of performance this year include:
· Acacia Communications, Inc. (ACIA-NASDAQ), which develops high-speed coherent optical interconnect products, saw significant spread tightening into year-end and traded through the terms as the January 8th outside date of the merger approached. Strong fundamentals and an uplift in the sector over the 18-month period since the deal was announced suggested the $70.00 per cash terms severely undervalued the company. On January 8, Acacia decided to walk away from the transaction, while Cisco contended that it did receive all regulatory approvals before the lapsing of the agreement and looked to the Delaware courts to support its claim. Ultimately, the companies were able to agree to new terms under which Acacia shareholders received $115.00 cash per share, valuing the transaction at approximately $5 billion.
· Alexion Pharmaceuticals (ALXN-NASDAQ), a biopharmaceutical company that develops treatments for cardiovascular and autoimmune diseases, made significant progress in its deal to be acquired by AstraZeneca when it received antitrust approval in the U.S. in April. The deal was seen as an early test of the Biden Administration's approach to pharmaceutical mergers, and the spread remained wide due to the potential for an extended review, but the market welcomed the quick approval and the spread subsequently narrowed. Shareholders approved the transaction in May and the deal closed on 21 July, 2021.
· Collectors Universe, Inc. (CLCT-NASDAQ), which provides authentication and grading services for collectibles, agreed to be acquired under improved terms by an investor group led by Nat Turner and Steve Cohen's family office. After several large shareholders expressed their disappointment with the price, the buyout group increased their offer from $75.25 to $92.00 cash per share, valuing the transaction at approximately $1 billion. The transaction was subject to the tender of at least a majority of shares outstanding and closed in the first quarter.
· Hunter Douglas N.V. (HDG NA-Amsterdam Stock Exchange), a manufacturer of window coverings and architectural products, agreed to be acquired under improved terms by the Sonnenberg family, which controls the company through its ownership of more than 80% of Hunter Douglas stock. Under terms of the revised agreement, Hunter Douglas shareholders received €82.00 cash per share in a tender offer, valuing the transaction at approximately €3 billion. In December 2020, Hunter Douglas had previously agreed to be acquired by the Sonnenberg family for €64.00 cash per share, but the non-executive members of the Board of Hunter Douglas requested an increase in the offer price based on stronger than expected earnings after the initial deal terms were agreed upon.
· Inphi Corp. (IPHI-NASDAQ), which designs and manufactures analog semiconductors for the communications and computing markets, received Chinese regulatory approval to be acquired by Marvell Technology in March, which was the final regulatory approval required to close the deal. After an April vote from shareholders, the deal closed. Inphi shareholders received $66 cash and 2.323 shares of Marvell for each share of Inphi, valuing the transaction at roughly $9 billion.
· Pluralsight, Inc. (PS-NASDAQ), which offers an online professional education platform to IT-related companies and individuals, agreed to be acquired under improved terms by Vista Equity Partners. In December 2020, Pluralsight had agreed to be acquired by Vista for $20.26 cash per share, but after a number of shareholders expressed concerns about the sale process and valuation, Vista agreed to increase the takeover price to $22.50 cash per share, or about $3 billion, via tender offer. The deal subsequently closed when the tender offer expired on 5 April 2021.
· Slack Technologies Inc. (WORK-NASDAQ), an enterprise communications platform that agreed to be acquired by Salesforce For $26 billion in cash and stock in December 2020, received unconditional clearance from the Australian antitrust regulator in May. The acquisition was completed on 21 July 2021.
· Suez S.A. (SEV FP-Paris Stock Exchange), a French water and environmental services company, agreed to be acquired by French competitor Veolia under improved terms. Veolia acquired a 29.9% stake in Suez in October 2020 at €18.00 per share and launched a tender to acquire the rest of Suez at the same price. Following protracted negotiations between the companies, they reached an agreement in principle, whereby Veolia will pay €20.50 cash per share to acquire the remaining public shares of Suez, valuing Suez at €27 billion.
SELECT PORTFOLIO HOLDINGS AS OF 30 JUNE 2021
Aerojet Rocketdyne Holdings, Inc. (AJRD-NYSE) agreed to be acquired by Lockheed Martin Corp. (LMT-NYSE). Aerojet Rocketdyne designs, develops, manufactures, and sells aerospace and defense products and systems in the U.S. Under terms of the agreement, Aerojet shareholders will receive $56.00 cash per share, including a $5.00 pre-closing special dividend, valuing the transaction at approximately $5 billion. The transaction is subject to shareholder, as well as regulatory approvals, and is expected to close in the second half of 2021.
Alexion Pharmaceuticals, Inc. (ALXN-NASDAQ) agreed to be acquired by AstraZeneca plc (AZN-NASDAQ). Alexion Pharmaceuticals develops and commercializes various therapeutic products. Under terms of the agreement, Alexion shareholders will receive $60.00 cash and 2.1243 shares of AstraZeneca common stock per share, valuing the transaction at approximately $39 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approval, and is expected to close in the third quarter of 2021.
Dialog Semiconductor plc (DLG GY-Frankfurt Stock Exchange) agreed to be acquired by Renesas Electronics Corp. (6723 JP-Tokyo Stock Exchange). Dialog Semiconductor develops highly integrated, mixed signal integrated circuits (ICs) for personal, portable, hand-held devices. Under terms of the agreement, Dialog shareholders will receive €67.50 cash per share, valuing the transaction at approximately €5 billion. The transaction is subject to shareholder as well as regulatory approvals, and is expected to close in the second half of 2021.
IHS Markit Ltd. (INFO-NYSE) agreed to be acquired by S&P Global, Inc. (SPGI-NYSE). IHS Markit provides critical information, analytics, and solutions for various industries and markets worldwide. Under terms of the agreement, IHS Markit shareholders will receive 0.2838 shares of S&P common stock per share, valuing the transaction at approximately $44 billion. The transaction is subject to approval by shareholders of both companies as well as regulatory approval, and is expected to close in the second half of 2021.
Nuance Communications, Inc. (NUAN-NASDAQ) agreed to be acquired by Microsoft Corp. (MSFT-NASDAQ). Nuance Communications provides conversational and cognitive artificial intelligence innovations. Under terms of the agreement, Nuance shareholders will receive $56.00 cash per share, valuing the transaction at approximately $17 billion. The transaction is subject to shareholder as well as regulatory approvals, and is expected to close in the fourth quarter of 2021.
PNM Resources, Inc. (PNM-NYSE) agreed to be acquired by Avangrid, Inc. (AGR-NYSE). PNM Resources operates two regulated utilities providing electricity in the southwest United States. Under terms of the agreement, PNM shareholders will receive $50.30 cash per share, valuing the transaction at approximately $8 billion. The transaction is subject to shareholder as well as regulatory approvals, and is expected to close in the fourth quarter of 2021.
Proofpoint, Inc. (PFPT-$172.11-NASDAQ) agreed to be acquired by Thoma Bravo. Proofpoint is a cybersecurity company that enables large and mid-sized organizations to defend, protect, archive, and govern their sensitive data worldwide. Under terms of the agreement, Proofpoint shareholders will receive $176.00 cash per share, valuing the transaction at approximately $10 billion. The transaction is subject to shareholder, as well as regulatory approvals, and is expected to close in the third quarter of 2021. Proofpoint is also permitted to solicit superior bids from parties during a 45-day "go-shop" period.
Maxim Integrated Products, Inc. (MXIM-NASDAQ) agreed to be acquired by Analog Devices, Inc. (ADI-NASDAQ). Maxim Integrated Products designs and manufactures a range of linear and mixed-signal integrated circuits. Under terms of the agreement, Maxim shareholders will receive 0.63 shares of Analog common stock per share, valuing the transaction at approximately $20 billion. The transaction is subject to approval by shareholders of both companies, as well as regulatory approval, and is expected to close in the second half of 2021.
Slack Technologies, Inc. (WORK-NYSE) agreed to be acquired by salesforce.com, inc. (CRM-NYSE). Slack Technologies operates Slack, an international business technology software platform. Under terms of the agreement, Slack shareholders will receive $26.79 cash and 0.0776 shares of salesforce.com common stock per share, valuing the transaction at approximately $28 billion. The transaction is subject to shareholder as well as regulatory approvals, and closed in July 2021.
Suez SA (SEV FP-Paris Stock Exchange) agreed to be acquired by Veolia Environment SA (VIE FP-Paris Stock Exchange). Suez engages in the water cycle and waste cycle management business globally. Under terms of the agreement, Suez shareholders will receive €20.50 cash per share, valuing the transaction at approximately €27 billion. Veolia first offered to acquire Suez in April and the two companies signed the combination agreement in May. The transaction is subject to shareholder as well as regulatory approvals, and is expected to close in the fourth quarter of 2021.
Xilinx, Inc. (XLNX-NASDAQ) agreed to be acquired by Advanced Micro Devices, Inc. (AMD-NASDAQ). Xilinx designs and develops programmable devices and associated technologies worldwide. Under terms of the agreement, Xilinx shareholders will receive 1.7234 shares of Advanced Micro common stock per share, valuing the transaction at approximately $34 billion. The transaction is subject to approval by shareholders of both companies as well as regulatory approval, and is expected to close by the end of 2021.
SELECT CLOSED DEALS AS OF 30 JUNE 2021
CoreLogic, Inc. was acquired by Stone Point Capital and Insight Partners in June 2021. CoreLogic provides property information, insight, analytics, and data-enabled solutions in North America, Western Europe, and the Asia Pacific regions. On 4 February 2021, Stone Point and Insight announced it would acquire CoreLogic for $80.00 cash per share, valuing the transaction at approximately $8 billion.
Cooper Tire & Rubber Co. was acquired by The Goodyear Tire & Rubber Co. in June 2021. Cooper Tire designs and manufactures replacement tires in North America, Latin America, Europe and Asia. On 22 February 2021, Goodyear announced it would acquire Cooper for $41.75 cash and 0.907 shares of Goodyear common stock per share, valuing the transaction at approximately $3 billion.
GW Pharmaceuticals plc was acquired by Jazz Pharmaceuticals plc in May 2021. GW Pharmaceuticals develops novel therapeutics from its proprietary cannabinoid product platform. On 3 February 2021, Jazz announced it would acquire GW for $200.00 cash and $20.00 worth of Jazz common stock per share, subject to a collar, valuing the transaction at approximately $7 billon.
HMS Holdings Corp. was acquired by Gainwell Technologies in March 2021. HMS Holdings provides cost containment solutions in the U.S. healthcare marketplace. On 21 December 2020, Gainwell announced it would acquire HMS for $37.00 cash per share, valuing the transaction at approximately $3 billion.
Inphi Corp. was acquired by Marvell Technology Group Ltd. in April 2021. Inphi provides high-speed analog and mixed signal semiconductor solutions to the communications, datacenter, and computing markets in China, the United States, Thailand, and other regions. On 29 October 2020, Marvell announced it would acquire Inphi for $66.00 cash and 2.323 shares of Marvell common stock per share, valuing the transaction at approximately $9 billion.
Navistar International Corp. was acquired by TRATON SE in July 2021. Navistar manufactures and sells commercial trucks, diesel engines, school and commercial buses, and service parts for trucks and diesel engines worldwide. On 7 November 2020, TRATON announced it would acquire Navistar for $44.50 cash per share, valuing the transaction at approximately $5.7 billion.
Perspecta, Inc. was acquired by Veritas Capital in May 2021. Perspecta provides enterprise information technology services to government customers in the U.S. federal, state, and local markets. On 27 January 2021, Veritas announced it would acquire Perspecta for $29.35 cash per share, valuing the transaction at approximately $7 billion.
Pluralsight, Inc. was acquired by Vista Equity Partners in April 2021. Pluralsight operates a cloud-based technology skills platform in the U.S., Europe, the Middle East, Africa, and other regions. On 13 December 2020, Vista announced it would acquire Pluralsight for $20.26 cash per share, which was later revised to $22.50 cash per share in March 2021, valuing the transaction at approximately $4 billion.
RealPage, Inc. was acquired by Thoma Bravo in April 2021. RealPage operates a real estate technology platform. On 21 December 2020, Thoma Bravo announced it would acquire RealPage for $88.75 cash per share, valuing the transaction at approximately $10 billion.
Tiffany & Co. was acquired by LVMH Moët Hennessy Louis Vuitton SE in January 2021. Tiffany & Co. designs, manufactures, and retails jewelry and other items internationally. On 25 November 2019, LVMH announced it would acquire Tiffany for $135.00 cash per share, which was later revised to $131.50 cash per share in October 2020, valuing the transaction at approximately $17 billion.
Varian Medical Systems, Inc. was acquired by Siemens Healthineers AG in April 2021. Varian Medical Systems designs, manufactures, and services medical devices and software products for treating cancer and other medical conditions worldwide. On 2 August 2020, Siemens announced it would acquire Varian for $177.50 cash per share, valuing the transaction at approximately $16 billion.
Viela Bio, Inc. was acquired by Horizon Therapeutics plc in March 2021. Viela Bio engages in the research and development of treatments for severe inflammation and autoimmune diseases in the U.S. On 1 February 2021, Horizon announced it would acquire Viela for $53.00 cash per share, valuing the transaction at approximately $3 billion.
William Hill plc was acquired by Caesars Entertainment, Inc. in April 2021 for approximately $4 billion. William Hill provides sports betting and gaming services in the U.K and U.S as well as internationally.
PORTFOLIO SUMMARY
Largest Portfolio Security holdings (excluding cash and cash equivalents)
| | | As at 30 June 2021 | |||
|
|
| % of total | | Offsetting market | % of total |
| Alexion Pharmaceuticals Inc | AstraZeneca plc | 5.3 | 5,461 | (3,779) | 1.6 |
| Altaba Inc.* | | 4.6 | 4,779 | | 4.6 |
| PNM Resources Inc.* | | 3.9 | 3,997 | | 3.9 |
| Xilinx Inc | Advanced Micro Devices Inc. | 3.8 | 3,914 | (4,261) | (0.3) |
| Maxim Integrated Products Inc | Analog Devices Inc | 3.1 | 3,223 | (3,317) | (0.1) |
| | | ------------ | ------------ | ------------ | ------------ |
| Proofpoint Inc.* | | 3.0 | 3,103 | | 3.0 |
| IHS Markit Ltd | S&P Global Inc. | 2.9 | 2,992 | (3,087) | (0.1) |
| Talend SA* | | 2.3 | 2,329 | | 2.3 |
| Change Healthcare Inc.* | | 2.3 | 2,318 | | 2.3 |
| Liberty Media Corp-Liberty SiriusXM‡ | | 2.2 | 2,262 | | 2.2 |
| | | ------------ | ------------ | ------------ | ------------ |
| Luminex Corp. * | | 2.2 | 2,222 | | 2.2 |
| Shaw Communications Inc. * | | 2.1 | 2,124 | | 2.1 |
| Great Canadian Gaming Corp. * | | 2.1 | 2,121 | | 2.1 |
| Aerojet Rocketdyne Holdings Inc.* | | 2.1 | 2,110 | | 2.1 |
| Coherent Inc. | II-VI Inc. | 2.0 | 2,095 | (424) | 1.6 |
| | | ------------ | ------------ | ------------ | ------------ |
| At Home Group Inc.* | | 1.8 | 1,871 | | 1.8 |
| QTS Realty Trust Inc.* | | 1.2 | 1,201 | | 1.2 |
| Cloudera Inc.* | | 1.1 | 1,132 | | 1.1 |
| W.R. Grace & Co.* | | 1.1 | 1,108 | | 1.1 |
| Liberty Media Acquisition Corp.* | | 1.0 | 1,079 | | 1.0 |
| | | ------------ | ------------ | ------------ | ------------ |
| Sub-total | | 50.0 | 51,439 | (14,870) | 35.6 |
| Other holdings7 | | 50.0 | 79,712 | (13,438) | 64.4 |
| | | ------------ | ------------ | ------------ | ------------ |
| Total holdings | | 100.0 | 131,151 | (28,307) | 100.0 |
| | | ======= | ======= | ======= | ======= |
1 Long position.
2 Short position taken, based on the acquirer of the security when acquirer stock is being offered in whole, or in part, to finance the transaction.
3 Represents the total position value (market value plus the offsetting market value) as a percentage of the total portfolio value.
4 Market value of the long position.
5 Market value of the offsetting short position.
6 Represents the market value as a percentage of the total portfolio value.
7 Including derivatives and equity short positions, and excluding U.S. Treasuries.
* At 30 June 2021, the deal terms specified an all-cash transaction and there is no offsetting short position.
A Statement of Portfolio Changes is available from the Adminstrator upon request.
STRATEGY
OUR KEY PERFORMANCE INDICATORS ("KPIS")
The Company's strategy is to generate returns for its shareholders by pursuing its investment objective while mitigating shareholder risk, by investing in a diversified spread of equity investments. Through a process of bottom-up stock selection and the implementation of disciplined portfolio construction, we aim to create value for the Company's shareholders.
The largest holdings in the Company's portfolio are listed on page 12.
GEARING POLICY
At the sole discretion of the Portfolio Manager, the Company may use leverage as part of its investment programme. It is anticipated that the Company will structurally gear and use tactical leverage or portfolio borrowings in an amount (calculated at the time of investment) of around 2 times of the Net Asset Value, subject to maximum gearing of 2.5 times the Net Asset Value. Please refer to page 65 in the Glossary for further discussion of gearing.
BUSINESS MODEL
Please see the Methodology in Action on page 06.
OUR KEY PERFORMANCE INDICATORS ("KPIS")
The Board recognises that it is share price performance that is most important to the Company's shareholders. Fundamental to share price performance is the performance of the Company's net asset value. The central priority is to generate returns for the Company's shareholders through net asset value and share price total return, and discount management.
For the year ended 30 June 2021, the Company's KPIs as monitored closely by the Board at each meeting, are listed below:
Net Asset Value Total Return
Year ended 30 June 2021
12.12%
(30 June 2020: 0.98%)
Share Price Total Return
Year ended 30 June 2021
5.46%
(30 June 2020: (7.69%))
Discount to Net Asset Value
Year ended 30 June 2021
25.63%
(30 June 2020: 19.61%)
The above table sets out the key KPIs for the Company. These KPIs fall within the definition of 'Alternative Performance Measures' (APMs) under guidance issued by the European Securities and Markets Authority (ESMA). Information explaining how these are calculated is set out in the Glossary. These KPIs including APMs have been carefully selected by the Board on discussion with the Portfolio Manager, to give the most appropriate overview of performance in the financial year to shareholders and other stakeholders.
| Performance measured against various indices | The Company does not use a benchmark. However, at each meeting the Board reviews and compares portfolio performance in the context of the performance of the ETF MNA and Credit Suisse Merger Arb Liquid Indices. Information on the Company's performance is given in the Chairman's Statement and the Portfolio Manager's Review. |
| Share Price Total Return | The Company's primary investment objective is to seek to generate total return consisting of capital appreciation and current income. In order to allow the Shareholders to realise a predictable, but not assured, level of cash flow and some liquidity periodically on their investment, the Company has adopted a "managed dividend policy". This policy seeks to pay Shareholders a quarterly dividend in relation to the Net Asset Value of the Company at the time, which may be changed at any time by the Board. Between inception and 30 June 2021, the Company returned $1.79 per share to shareholders, consistent with its dividend policy. Dividends are paid only when declared by the Board subject to the Board's assessment of the Company's financial position and only if the Company has sufficient income and distributable reserves to make the dividend payment, and the level of dividend may vary over time. As such, the portfolio's managed distribution of capital through the payment of quarterly dividends is under review as we enter the new Fiscal Year. |
| Share price discount to net asset value (NAV) per share | The NAV per share is published on a daily basis on the London Stock Exchange and The International Stock Exchange. The NAV is calculated in accordance with the Association of Investment Companies (AIC) formula. At each Board meeting, the Board monitors the level of the Company's discount to NAV, the changes thereto and the reason for such changes. The Directors recognise the importance to investors that the shares should not trade at a significant discount to NAV. Accordingly, the Board would consider implementing a share buy back programme to ensure that the share price does not trade at a significant discount to the NAV. In the year under review, the Company's shares have traded from a discount of 19.61% as of 30 June 2020 to a discount of 25.63% as of 30 June 2021. |
Performance is assessed on a total return basis for the NAV and share price.
CUMULATIVE PERFORMANCE CHART (USD) FROM 19 JULY 2017
DIVIDEND HISTORY
| | Rate ($) | Ex-dividend date | Record date | Payment date |
| Fourth interim 2021 | 0.12 | 14 October 2021 | 15 October 2021 | 29 October 2021 |
| Third interim 2021 | 0.12 | 15 April 2021 | 16 April 2021 | 30 April 2021 |
| Second interim 2021 | 0.12 | 14 January 2021 | 15 January 2021 | 28 January 2021 |
| First interim 2021 | 0.12 | 15 October 2020 | 16 October 2020 | 30 October 2020 |
| | ------------ | | | |
| Total | 0.48 | | | |
| | ======= | | | |
| Fourth interim 2020 | 0.12 | 16 July 2020 | 17 July 2020 | 31 July 2020 |
| Third interim 2020 | 0.12 | 16 April 2020 | 17 April 2020 | 30 April 2020 |
| Second interim 2020 | 0.12 | 16 January 2020 | 17 January 2020 | 30 January 2020 |
| First interim 2020 | 0.12 | 10 October 2019 | 11 October 2019 | 25 October 2019 |
| | ------------ | | | |
| Total | 0.48 | | | |
| | ======= | | | |
PRINCIPAL RISKS
The Company continues to have exposure to a variety of risks and uncertainties, and the Audit Committee has focused attention on identifying and mitigating key risks likely to crystallise in the current economic environment. The Board continues to prioritise a robust system of controls to minimise exposure to global macro events in particular, which remains highlighted as a generic risk as in recent Annual Reports.
The Directors confirm that they have carried out a further robust assessment of the principal risks facing the Company during the year, including those that would threaten its investment objective, business model, future performance, solvency or liquidity. The Company maintains a risk matrix which sets out the risks facing the Company, the likelihood and potential impact of each risk and the controls established for mitigation. The risk matrix is reviewed by the Audit Committee on a regular basis throughout the financial year, and was specifically refreshed in 2021 to introduce more stringent risk ratings for each risk and to reflect the impact of related mitigating controls.
The core principal risks set out in the 2020 Annual Report remain largely unchanged and are set out in the following table with an explanation of how they are mitigated. On review during the year, the Board re-rated several principal risks and considered the adequacy of mitigating controls in place across the Company's operations and those of its key third party providers. The Audit Committee has also specifically considered the risks associated to the Portfolio Manager's use of Contracts for Difference within the investment strategy, which on review were felt to continue to be appropriate. The risk narrative in the table below includes a summary of the actions taken to position the Company to withstand the related effects for markets and investments:
| Risk | Mitigation |
| Investment Portfolio | |
| Decline in the U.S. equity markets. | By investing in a diversified portfolio and by adhering to a carefully monitored series of investment restrictions, enabled by automated pre-trade compliance features and daily review of trade tickets. These strictures mandate that no single security purchase can, at the time of investment, account for more than 15% of the gross assets of the Company. The Board meets the portfolio management team quarterly at the Board meetings to review the risk factors and their effect on the portfolio, and a thorough analysis of the investment strategy is undertaken. |
| Merger and event driven risks address the possibility that deals do not go through, are delayed beyond the original closing dates, or that the terms of the proposed transactions change adversely. | Portfolio management team's careful selection and active monitoring of mergers and acquisitions deals, and maintaining a thorough knowledge of the selected securities in the portfolio. |
| Global Macro Event | |
| Global instability or events external to the management and controls of the Company. | Global economic, geopolitical, and financial conditions are constantly monitored. Diversification of Company assets is incorporated into the investment strategy and, if disruptive events occur, the Manager is prepared to adopt a temporary defensive position and invest some or all of the Company's portfolio in cash or cash equivalents, money market instruments, bonds, commercial paper, or other debt obligations with banks or other counterparties, with appropriate ratings as determined by an internationally recognised rating agency and approved by the Board. Another option is the investment in "government and public securities" as defined for the purposes of the Financial Conduct Authority Handbook. The COVID-19 pandemic continues to create uncertainty for economic forecasts and markets as Governments globally seek to transition communities, businesses and individuals to more normalised patterns, following 18 months of restrictions and disruption. The Manager has therefore carefully managed the Company's investments to protect shareholders' interests and to position the Company to benefit from future performance of markets in line with its key investment principle. The pandemic has also impacted the day-to-day operational management of both the Board and the Company's third party service providers. The Board and all its third party service providers continue to successfully work and meet remotely, and regular third party briefings have kept the Board informed of how related risks are minimised through the pandemic and ongoing global recovery. The Audit Committee have noted that it is possible that a future event may temporarily compromise the availability of an individual board member or a key representative or integral team member of a third party service provider, in turn impacting the Company's performance. |
| Operational | |
| The operational functions of the Company are outsourced to third parties. Systems disruptions, control failures and/or operational lockdowns caused by the COVID-19 pandemic at these companies could impact the Company. | All third parties report to the Board on a regular basis and their reports and representations are reviewed by the Board, the AIF Manager and the Portfolio Manager. |
| Market and Share Price | |
| The market price of the Company falling below the NAV | To address a discount, the Board may consider using share buybacks, through which shares would be repurchased when trading at a discount from NAV, up to a maximum percentage of 14.99% of the issued share capital. The Company has continued its shareholder engagement programmes to increase its visibility and interaction with existing and potential investors. |
| Financial | |
| Comprise: (i) market price risk (comprising interest rate risk, currency risk and other price risk); (ii) liquidity risk; and (iii) credit risk. | Further details of these risks are disclosed in Note 12 to the financial statements together with a summary of the policies for managing these risks. |
| Corporate Governance and Regulatory | |
| Damage to its reputation through poor corporate governance. Shareholder discontent due to a lack of appropriate communications and/or inadequate financial reporting. | The Board actively performs self-assessments of compliance with best governance practices. The Board is in contact with its major shareholders on a regular basis, and it monitors shareholder sentiment. In addition, regulatory risks, in the form of failure to comply with mandatory regulations, could have an impact on the Company's continuity. The Company receives and responds to guidance from both its external and internal advisors on compliance with the Listing Rules, and Disclosure and Transparency Rules, as well as other applicable regulations. |
| Tax Risks | |
| In order to qualify as an investment trust, the Company must comply with Section 1158-59 of the Corporation Tax Act 2010. A breach of these sections could result in the Company losing investment trust status and, as a consequence, capital gains realised within the Company's portfolio would be subject to Corporation Tax. | The criteria are monitored by the Administrator, AIF Manager and the Portfolio Manager and the Board receives a report on compliance at each quarterly meeting. |
| Environmental, Social and Climate Change Risks | |
| Each of environmental, social and climate risks are gaining traction globally as key priorities, including for investment companies. The Company could be exposed by a failure to integrate these themes in its strategy and investment approach. | The Board and Investment Manager actively consider how environmental, social and climate change risks potentially affect the Company's portfolio companies and shareholder returns. |
VIABILITY STATEMENT
In accordance with the provisions of the UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months referred to in the 'Going Concern' guidelines.
The Board conducted this review focusing on a period of five years. This period was selected as it is aligned with the Company's investment objective of generating total return, consisting of capital appreciation and current income. In making this assessment the Board also considered the Company's principal risks.
Investment trusts in the UK operate in a well established and robust regulatory environment and the Directors have assumed that:
· Investors will continue to want to invest in closed-end investment trusts because the fixed capitalisation structure is suited to pursuing the Portfolio Manager's proprietary long term PMV with a CatalystTM investment strategy;
· The Company's remit of investing globally with an emphasis on securities traded in the U.S., and predominantly equity securities issued by companies of any market capitalisation will continue to be attractive to investors.
As with all investment vehicles, there is a risk that the performance of individual investments will vary and that capital may be lost, but this is not regarded as a threat to the viability of the Company.
Operationally, the Company retains title to all assets, and cash and securities are held with a custodian bank approved by the Portfolio Manager and the Board.
The nature of the Company's investments means that solvency and liquidity risks are low because:
· The Company's portfolio is invested in readily realisable, listed securities;
· The closed-end nature of the Company means that, unlike an open-ended fund, it does not need to liquidate positions when shareholders wish to sell their shares; and
· The expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments currently foreseen which would alter that position.
The Board have closely monitored the impact of the COVID-19 pandemic on global markets during 2020 and 2021 year to date. Those impacts and related continuing uncertainty have short and potentially medium term implications for the Company's investment strategy. However, the Board continuously monitors the Company's investment portfolio, liquidity and gearing, along with levels of market activity, to appropriately minimise and mitigate consequential risks to capital and future income.
Taking these factors into account, the Directors confirm that they have a reasonable expectation that the Company will continue to operate and meet its expenses as they fall due over the next five years. The Directors have also considered the fact that there will be a continuation vote at the Company's 2022 Annual General Meeting, as well as the likelihood of shareholders voting in favour of continuation, having consulted and maintained close contact with the Company's major shareholders through its advisers. In the event that shareholders take up the option of the Fifth Anniversary Tender Offer for their shares, those shares would be redeemed at NAV less expenses, and the Company would be dissolved.
The Company's portfolio consists primarily of U.S. investments. Accordingly, the Company believes that the post "Brexit" arrangements introduced by the U.K. government and market regulators will not materially affect the prospects for the Company, but the Board and Portfolio Manager will continue to keep developments under review.
This Viability Statement, and the Strategic Report for the year ended 30 June 2021 of which it forms a part, was approved by the Board of Directors.
MARC GABELLI
Chairman
15 October 2021
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company Law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS'). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing the financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· state whether applicable international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS'), have been followed, subject to any material departures disclosed and explained in the financial statements;
· make judgements and accounting estimates that are reasonable and prudent; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
DIRECTORS' CONFIRMATIONS
The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
In the case of each Director in office at the date the Director's Report is approved:
· so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
BY ORDER OF THE BOARD
MARC GABELLI
Chairman of the Board
15 October 2021
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
| | | Year ended 30 June 2021 | Year ended 30 June 2020 | ||||
|
| | Revenue | Capital | Total | Revenue | Capital | Total |
| Investment income | 5 | 327 | - | 327 | 925 | - | 925 |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| Total investment income | | 327 | - | 327 | 925 | - | 925 |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| Gains/(losses) on investments | | | | | | | |
| Net realised and unrealised gains on investments | 3, 14 | - | 15,435 | 15,435 | - | 2,318 | 2,318 |
| Net realised and unrealised currency (losses)/gains | | - | (142) | (142) | - | 144 | 144 |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| Net gains on investments | | - | 15,293 | 15,293 | - | 2,462 | 2,462 |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| Total income and gains on investments | | 327 | 15,293 | 15,620 | 925 | 2,462 | 3,387 |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| Expenses | | | | | | | |
| Portfolio management fee | 6 | (852) | - | (852) | (840) | - | (840) |
| Performance fee | 6, 13 | - | (2,796) | (2,796) | - | (248) | (248) |
| Other expenses | 6 | (901) | (174) | (1,017) | (886) | (352) | (1,238) |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| Total expenses | | (1,753) | (2,970) | (4,665) | (1,726) | (600) | (2,326) |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| (Loss)/profit before taxation | | (1,426) | 12,323 | 10,955 | (801) | 1,862 | 1,061 |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| Taxation on ordinary activities | 8 | (33) | - | (33) | (65) | - | (65) |
| | | ------------ | ------------ | ------------ | ------------ | ------------ | ------------ |
| (Loss)/profit for the year | | (1,459) | 12,323 | 10,922 | (866) | 1,862 | 996 |
| | | ======= | ======= | ======= | ======= | ======= | ======= |
| (Loss)/Earnings per share (basic and diluted) | 9 | ($0.14) | $1.20 | $1.06 | ($0.08) | $0.18 | $0.10 |
| | | ======= | ======= | ======= | ======= | ======= | ======= |
The total column of this statement represents the Statement of Comprehensive Income prepared in accordance with International Financial Reporting Standards ("IFRS"). The supplementary revenue return and capital return columns are both prepared under guidance issued by the Association of Investment Companies. All items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year ended 30 June 2021.
The Company does not have any income or expense that is not included in net profit for the year. Accordingly, the net profit for the period is also the total comprehensive income for the year, as defined in IAS1 (revised).
STATEMENT OF CHANGES IN EQUITY
| | | Year ended 30 June 2021 | ||||
|
| | Called up | Special | | | |
| Balance as at 1 July 2020 | | 103 | 88,912 | 9,279 | (1,954) | 96,340 |
| Ordinary shares bought back into treasury | | - | - | (543) | - | (543) |
| Profit/(loss) for the period after tax on ordinary activities | | - | - | 12,323 | (1,459) | 10,864 |
| Dividends paid | 7 | - | (4,936) | - | - | (4,936) |
| | | ------------ | ------------ | ------------ | ------------ | ------------ |
| Balance as at 30 June 2021 | | 103 | 83,976 | 21,059 | (3,413) | 101,725 |
| | | ======= | ======= | ======= | ======= | ======= |
| | | Year ended 30 June 2020 | ||||
|
| | Called up | Special | | | |
| Balance as at 1 July 2019 | | 103 | 93,872 | 7,459 | (1,088) | 100,346 |
| Ordinary shares bought back into treasury | | - | - | (42) | - | (42) |
| Profit/(loss) for the period after tax on ordinary activities | | - | - | 1,862 | (866) | 996 |
| Dividends paid | 7 | - | (4,960) | - | - | (4,960) |
| | | ------------ | ------------ | ------------ | ------------ | ------------ |
| Balance as at 30 June 2020 | | 103 | 88,912 | 9,279 | (1,954) | 96,340 |
| | | ======= | ======= | ======= | ======= | ======= |
* The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2021, the net amount of reserves that are distributable is $80,563,000 (2020: $86,958,000).
STATEMENT OF FINANCIAL POSITION
| | | As at 30 June 2021 | As at 30 June 2020 | ||
| | Note | $000 | $000 | $000 | $000 |
| Non-current assets | | | | | |
| Investments held at fair value through profit or loss | 3 | | 98,369 | | 56,481 |
| Current assets | | | | | |
| Cash and cash equivalents | 10 | 12,405 | | 45,074 | |
| Receivable for investment sold | | 2,622 | | 3,935 | |
| Other receivables | 15 | 147 | | 68 | |
| | | ------------ | | ------------ | |
| | | 15,174 | | 49,077 | |
| Current liabilities | | | | | |
| Portfolio management fee payable | | (82) | | (67) | |
| Offering fees payable | | (52) | | (52) | |
| Performance fee payable | | (2,796) | | (248) | |
| Payable for investment purchased | | (1,822) | | (2,265) | |
| Other payables | 15 | (314) | | (237) | |
| | | ------------ | ------------ | ------------ | ------------ |
| Net current assets | | | 10,108 | | 46,208 |
| Non-current liabilities | | | | | |
| Investments at fair value through profit or loss | 3 | | (6,752) | | (6,349) |
| | | | ------------ | | ------------ |
| Net assets | | | 101,725 | | 96,340 |
| | | | ------------ | | ------------ |
| Share capital and reserves | | | | | |
| Called-up share capital | 11 | 103 | | 103 | |
| Special distributable reserve* | | 83,976 | | 88,912 | |
| Capital reserve | | 21,059 | | 9,279 | |
| Revenue reserve* | | (3,413) | | (1,954) | |
| | | ------------ | ------------ | ------------ | ------------ |
| Total shareholders' funds | | | 101,725 | | 96,340 |
| | | | ======= | | ======= |
| Net asset value per ordinary share | 9 | | $9.94 | | $9.33 |
| | | | ======= | | ======= |
* The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2021, the net amount of reserves that is distributable are $80,563,000 (2020: $86,958,000).
STATEMENT OF CASH FLOWS
|
| Year ended | Year ended | ||
| | $000 | $000 | $000 | $000 |
| Cash flows from operating activities | | | | |
| Profit before tax | | 10,897 | | 1,061 |
| Adjustments for: | | | | |
| Gains on investments | (15,293) | | (2,462) | |
| Cash flows from operating activities | | | | |
| Purchases of investments* | (276,928) | | (266,640) | |
| Sales of investments* | 250,878 | | 293,347 | |
| Decrease/(increase) in receivables | 904 | | (1,524) | |
| Increase/(decrease) in payables | 2,197 | | (1,834) | |
| Dividend income | 330 | | 651 | |
| Foreign withholding taxes on dividends | (33) | | (65) | |
| Currency (loss)/gain on cash equivalents | (142) | | 144 | |
| | ------------ | ------------ | ------------ | ------------ |
| Net cash flows from operating activities | | (27,190) | | 22,678 |
| | | ------------ | | ------------ |
| Cash flows from financing activities | | | | |
| Shares bought back for cash | (543) | | (42) | |
| Dividends paid | (4,936) | | (4,960) | |
| | ------------ | ------------ | ------------ | ------------ |
| Net cash flows from financing activities | | (5,479) | | (5,002) |
| Net (decrease)/increase in cash and cash equivalents | | (32,669) | | 17,676 |
| Cash and cash equivalents at the start of the period | | 45,074 | | 27,398 |
| | | ------------ | | ------------ |
| Cash and cash equivalents at the end of the period** | | 12,405 | | 45,074 |
| | | ======= | | ======= |
* Receipts from the sale of, and payments to acquire, investment securities, have been classified as components of cash flows from operating activities because they form part of the Company's dealing operations.
** As at 30 June 2021, $11,697,439 was held as collateral at UBS Securities and is restricted.
Gabelli Merger Plus+ Trust Plc is registered in England and Wales under Company number 10747219.
The financial statements were approved by the Board of Directors on 15 October 2021 and signed on its behalf by
MARC GABELLI
Chairman
NOTES TO THE FINANCIAL STATEMENTS
1 GENERAL INFORMATION
Gabelli Merger Plus+ Trust Plc (the "Company") is a closed-ended public limited company incorporated in the United Kingdom on 28 April 2017 with registered number 10747219. The Company commenced operation on 19 July 2017 and intends to conduct its affairs so as to qualify, at all times, as an investment trust for the purposes of section 1158 of the Corporation Tax Act 2010 (as amended).
2 ACCOUNTING POLICIES
(a) Basis of preparation - The financial statements of Gabelli Merger Plus+ Trust Plc have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS') and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss.
The principal accounting policies adopted by the Company are set out below. Where presentational guidance set out in the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Companies ('AIC') in October 2019 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
(b) Presentation of Statement of Comprehensive Income - To better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income.
(c) Going concern - Having assessed the principal risks and the other matters discussed in connection with the viability statement on page 17, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements. In forming the opinion, the directors have considered any potential impact of the COVID-19 pandemic on the going concern and viability of the Company. They have considered the potential impact of COVID-19 and the mitigation measures which key service providers, including the Portfolio Manager, have in place to maintain operational resilience particularly in light of COVID-19. The Directors have reviewed income and expense projections and the liquidity of the investment portfolio in making their assessment.
(d) Statement of estimation uncertainty - In the application of the Company's accounting policies, the Investment Manager is required to make judgements, estimates, and assumptions about carrying values of assets and liabilities that are not always readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may vary from these estimates. There have been no significant judgements, estimates, or assumptions for the period.
(e) Income recognition - Revenue from investments (other than special dividends), including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend, or where no ex-dividend date is quoted, when the Company's right to receive payment is established. Franked investment income is stated net of the relevant tax credit. Other income includes any taxes deducted at source.
Special dividends are credited to capital or revenue, according to the circumstances. Scrip dividends are treated as unfranked investment income; any excess in value of the shares received over the amount of the cash dividend is recognised as a capital item in the Statement of Comprehensive Income.
Interest income is accounted for on an accrual basis by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
(f) Expenses - The management fees are allocated to revenue in the Statement of Comprehensive Income. Interest receivable and payable and management expenses are treated on an accruals basis. All other expenses are charged to revenue except where they directly relate to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale proceeds.
The formation and initial expenses of the Company are allocated to capital.
(g) Investments - Investments, including short sales of equities, have been designated upon initial recognition at fair value through profit or loss. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned, and are initially measured at fair value. Subsequent to initial recognition, investments are valued at fair value. Movements in the fair value of investments and gains/ losses on the sale of investments are taken to the Statement of Comprehensive Income as capital items.
The Company's investments are classified as held at fair value through profit or loss in accordance with applicable International Financial Standards.
Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. The Company shall offset financial assets and financial liabilities if it has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis. Financial assets and liabilities are derecognised when the Company settles its obligations relating to the instrument.
Contracts for Difference (CFDs)
CFDs are recognised in the Statement of Financial Position at the accumulated unrealised gain or loss as an asset or liability, respectively. This represents the difference between the nominal book cost and market value of each position held. Movements in the unrealised gains/losses are taken to the Statement of Comprehensive Income as capital items.
(h) Cash and cash equivalents - The Company may invest part of its net assets in cash and cash equivalents, money market instruments, bonds, commercial papers or other debt obligations with banks or other counterparties, having at least a single-A (or equivalent) credit rating from an internationally recognised rating agency or government and other public securities, if the Portfolio Manager believes that it would be in the best interests of the Company and its shareholders. This may be the case, for example, where the Portfolio Manager believes that adverse market conditions justify a temporary defensive position. Any cash or surplus assets may also be temporarily invested in such instruments pending investment in accordance with the Company's investment policy. Cash balances are marked to market based on the prevailing exchange rate as of the valuation date. US Treasuries are valued at their amortised cost.
(i) Transaction costs - Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Statement of Comprehensive Income.
(j) Foreign currency - Foreign currencies are translated at the rates of exchange ruling on the period end date. Revenue received/ receivable and expenses paid/payable in foreign currencies are translated at the rates of exchange ruling at the transaction date.
(k) Fair value - All financial assets and liabilities are recognised in the financial statements at fair value.
(l) Dividends payable - Interim and final dividends are recognised in the period in which they are declared.
(m) Capital reserve - Capital distributions received, realised gains or losses on investments that are readily convertible to cash, and capital expenses are transferred to the capital reserve. Share buybacks are funded through the capital reserve, with details of buybacks disclosed on page 21 and in note 11.
(n) Taxation - The tax effect of different items of income/gains and expenditure/losses is allocated between revenue and capital on the same basis as the particular item to which it relates, under the marginal method, using the Company's effective rate of tax. Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the period end date where transactions of events that result in an obligation to pay more or a right to pay less tax in future have occurred at the period end date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods.
(o) Functional and presentation currency - The functional and presentation currency of the Company is the U.S. dollar.
3 INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
The financial assets measured at fair value through profit or loss in the financial statements are grouped into the fair value hierarchy as follows:
| | As at 30 June 2021* | |||
|
| Level 1 | Level 2 | Level 3 | Total |
| Financial assets at fair value through profit or loss | | | | |
| Quoted equities | 92,205 | 5,498 | - | 97,703 |
| Contingent value rights | - | 278 | - | 278 |
| Derivatives - CFDs | - | 388 | - | 388 |
| | ------------ | ------------ | ------------ | ------------ |
| Gross fair value | | | | 98,369 |
| Derivatives - CFDs | - | (1,892) | - | (1,892) |
| Quoted equities - shorts | (4,860) | - | - | (4,860) |
| | ------------ | ------------ | ------------ | ------------ |
| Net fair value | 87,345 | 4,272 | - | 91,617 |
| | ======= | ======= | ======= | ======= |
* There were no transfers between levels during the year.
| | As at 30 June 2020 | |||
|
| Level 1 | Level 2 | Level 3 | Total |
| Financial assets at fair value through profit or loss | | | | |
| Quoted equities | 48,917 | 6,716 | - | 55,633 |
| Contingent value rights | - | 243 | 42 | 285 |
| Derivatives | - | 563 | - | 563 |
| | -------------- | -------------- | -------------- | -------------- |
| Gross fair value | | | | 56,481 |
| | | | | ======== |
| Derivatives | - | (350) | - | (350) |
| Quoted equities - shorts | (5,999) | - | - | (5,999) |
| | -------------- | -------------- | -------------- | -------------- |
| Net fair value | 42,918 | 7,172 | 42 | 50,132 |
| | ======== | ======== | ======== | ======== |
Analysis of changes in market value and book cost of portfolio investments in year
|
| Year ended | Year ended |
| Opening book cost | 59,509 | 74,893 |
| Opening investment holding losses | (9,377) | (372) |
| | -------------- | -------------- |
| Opening market value | 50,132 | 74,521 |
| | ======== | ======== |
| Additions at cost | 276,928 | 266,640 |
| Disposals proceeds received | (250,878) | (293,347) |
| Gains on investments | 15,435 | 2,318 |
| | -------------- | -------------- |
| Market value of investments | 91,617 | 50,132 |
| | ======== | ======== |
| Closing book cost | 93,078 | 59,509 |
| Closing investment holding losses | (1,461) | (9,377) |
| | -------------- | -------------- |
| Closing market value | 91,617 | 50,132 |
| | ======== | ======== |
The company received $250,878,000 (2020: $293,347,000) from investments sold in the year. The book cost of these investments when they were purchased was $243,359,000 (2020: $282,024,000). Further explanation of the disposal proceeds received in the year can be found in the Net realised and unrealised gains/(losses) on investments section on page 50.
Fair value hierarchy
IFRS 13 requires the Company to classify its financial instruments held at fair value using a hierarchy that reflects the significance of the inputs used in the valuation methodologies. These are as follows:
· Level 1 - quoted prices in active markets for identical investments;
· Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments, credit risk, etc.); and
· Level 3 - Significant unobservable inputs.
Valuation process and techniques for Level 3 valuations
The investments in contingent value rights are reviewed regularly to ensure that the initial classification remains correct given each asset's characteristics and the Company's investment policies. The contingent value rights are initially recognised using the transaction price as the best evidence of fair value at acquisition, and are subsequently measured at fair value. At 30 June 2021, the quantitative inputs used to value the level 3 contingent value rights were the last sale price and the merger price for each.
Level 2 financial assets at fair value through profit or loss
The investments in contracts for difference are marked at the price of the underlying equity. Contingent value rights in Level 2 are marked using broker quotes.
Level 3 financial assets at fair value through profit or loss
|
| Year ended | Year ended |
| Opening valuation | 42 | 229 |
| Assets acquired during the year | 2 | 29 |
| Assets disposed during the year | - | (196) |
| Total profit or loss included in net profit/(loss) on investments in the Statement of Comprehensive Income | (44) | (20) |
| | -------------- | -------------- |
| Closing valuation | - | 42 |
| | ======== | ======== |
Net realised and unrealised gains/(losses) on investments
|
| Year ended | Year ended |
| Realised gains on investments | 7,519 | 11,323 |
| Movement in unrealised gains/(losses) on investments | 7,916 | (9,005) |
| | -------------- | -------------- |
| Net realised and unrealised gains on investments | 15,435 | 2,318 |
| | ======== | ======== |
4 TRANSACTIONS COSTS
During the year commissions and other expenses were incurred in acquiring within gains/(losses) in the Statement of Comprehensive Income. The total costs were as follows:
|
| Year ended | Year ended |
| Purchases | 79 | 88 |
| Sales | 75 | 25 |
| | -------------- | -------------- |
| Total transaction costs | 154 | 113 |
| | ======== | ======== |
5 INVESTMENT INCOME
|
| Year ended | Year ended |
| Income from investments | | |
| Overseas equities | 286 | 546 |
| Income on short term investments1 | (7) | 256 |
| Other income | 48 | 123 |
| | -------------- | -------------- |
| Total income | 327 | 925 |
| | ======== | ======== |
1 Income on short term investments represents the return on cash and cash equivalents, primarily U.S. Treasury Bills. Further information can be found in Note 10 on page 54.
6 EXPENSES
|
| Year ended | Year ended |
| Revenue expenses | | |
| Portfolio Management Fee | (852) | (840) |
| Contracts for Difference | (277) | (60) |
| Directors' Remuneration | (163) | (132) |
| Audit Fees - PwC | (68) | (46) |
| Company Secretary Fees - Maitland | (62) | (57) |
| Regulatory Filing Fees - AIFMD1 | (58) | - |
| AIFM - Carne | (53) | (54) |
| Legal Fees | (45) | 2 |
| Administration Fees - State Street | (42) | (81) |
| Custodian/Depositary Fees - State Street | (38) | (42) |
| Registrar - Computershare | (16) | (11) |
| LSE RNS fees | (14) | (14) |
| Printing | (13) | (15) |
| Other | (36) | (19) |
| Ongoing LSE and UKLA Fees | (10) | (10) |
| Dividend Expense on Securities Sold Short | (7) | (275) |
| Marketing expenses | (3) | (12) |
| Directors' Expenses | - | (22) |
| Broker Retainer Fee2 | 4 | (38) |
| | -------------- | -------------- |
| Total revenue expenses | (1,753) | (1,726) |
| | ======== | ======== |
| Capital expenses | | |
| Performance Fee3 | (2,796) | (248) |
| Transaction costs on derivatives | (103) | (189) |
| Transaction Charges - State Street | (71) | (72) |
| Finance Charges (Paid) - State Street | - | (91) |
| | -------------- | -------------- |
| Total capital expenses | (2,970) | (600) |
| | ======== | ======== |
1 Includes filing fees from prior fiscal years.
2 The broker retainer fee in the year to 30 June 2021 reflects a Cantor Fitzgerald Europe retainer reimbursement.
3 Further information regarding the Performance Fee can be found in Note 13 on page 59.
Management Fee
Under the terms of the Portfolio Management Agreement, the Portfolio Manager will be entitled to a management fee ("Management Fee"), together with reimbursement of reasonable expenses incurred by it in the performance of its duties under the Portfolio Management Agreement, other than the salaries of its employees and general overhead expenses attributable to the provision of the services under the Portfolio Management Agreement. The Management Fee shall be accrued daily and calculated on each Business Day at a rate equivalent to 0.85% of NAV per annum.
AIFM fees
The Company has appointed Carne Global Fund Managers (Ireland) Limited ("Carne") as its Alternative Investment Fund Manager pursuant to the AIFMD. Carne is entitled to receive from the Company such annual fees, accrued and payable at such times, as may be agreed in writing between itself and the Company from time to time. The fees are payable monthly and subject to a minimum monthly fee of €2,500.
7 Equity dividends
|
| Year ended | Year ended |
| Dividends paid | 4,936 | 4,960 |
| | ======== | ======== |
During the year ended 30 June 2021 dividends paid per share totalled $0.48 (30 June 2020: $0.48 per share). More detailed information can also be found in the Dividend History table on page 14.
8 TAXATION ON ORDINARY ACTIVITIES
| | Year ended 30 June 2021 | ||
|
| Revenue | Capital | Total |
| Irrecoverable overseas tax | (33) | - | (33) |
| | -------------- | -------------- | -------------- |
| Total | (33) | - | (33) |
| | ======== | ======== | ======== |
| | Year ended 30 June 2020 | ||
|
| Revenue | Capital | Total |
| Irrecoverable overseas tax | (65) | - | (65) |
| | -------------- | -------------- | -------------- |
| Total | (65) | - | (65) |
| | ======== | ======== | ======== |
| | Year ended 30 June 2021 | ||
|
| Revenue | Capital | Total |
| (Loss)/profit before taxation | (1,426) | 12,323 | 10,897 |
| | -------------- | -------------- | -------------- |
| UK Corporation tax at effective rate of 19% | 271 | (2,341) | (2,070) |
| Effects of: | | | - |
| Non taxable overseas dividends | 54 | - | 54 |
| Losses on investments held at fair value through profit or loss | - | 2,933 | 2,933 |
| Irrecoverable overseas tax | (33) | - | (33) |
| Expenses not deductible for tax purposes | (1) | (12) | (13) |
| Gains on foreign currencies | - | (27) | (27) |
| Movement in excess management expenses | (324) | (553) | (877) |
| | -------------- | -------------- | -------------- |
| Total | (304) | 2,341 | 2,037 |
| | ======== | ======== | ======== |
| Total tax charge for the year | (33) | - | (33) |
| | ======== | ======== | ======== |
| | Year ended 30 June 2020 | ||
|
| Revenue | Capital | Total |
| (Loss)/profit before taxation | (801) | 1,862 | 1,061 |
| UK Corporation tax at effective rate of 19% | 152 | (354) | (202) |
| Effects of: | | | |
| Non taxable overseas dividends | 96 | - | 96 |
| Overseas tax expensed | 1 | - | 1 |
| Gains on investments held at fair value through profit or loss | - | 441 | 441 |
| Irrecoverable overseas tax | (65) | - | (65) |
| Expenses not deductible for tax purposes | (52) | (14) | (66) |
| Gains on foreign currencies | - | 27 | 27 |
| Movement in excess management expenses | (231) | (101) | (332) |
| Movement in deferred tax rate on excess management expenses | 34 | 1 | 35 |
| | -------------- | -------------- | -------------- |
| Total | (217) | 354 | 137 |
| | ======== | ======== | ======== |
| Total tax charge for the year | (65) | - | (65) |
| | ======== | ======== | ======== |
At the year end after offset against income taxable on receipt, there is a potential deferred tax asset of $1,510,046 (2020: $633,370) in relation to surplus tax reliefs. It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these amounts and therefore no deferred tax asset has been recognised.
Due to the Company's status as an investment trust and the intention to continue to meet the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on capital gains and losses arising on the revaluation or disposal of investments.
9 EARNINGS PER SHARE
Earnings per ordinary share is calculated with reference to the following amounts:
|
| Year ended | Year ended |
| Revenue return | | |
| Revenue loss attributable to ordinary shareholders ($000) | (1,459) | (866) |
| | --------------- | --------------- |
| Weighted average number of shares in issue during year | 10,247,238 | 10,335,485 |
| Total revenue return (loss) per ordinary share | ($0.14) | ($0.08) |
| | --------------- | --------------- |
| Capital return | | |
| Capital return attributable to ordinary shareholders ($000) | 12,323 | 1,862 |
| | --------------- | --------------- |
| Weighted average number of shares in issue during year | 10,247,238 | 10,335,485 |
| Total capital return per ordinary share | $1.20 | $0.18 |
| | --------------- | --------------- |
| Total return per ordinary share | $1.06 | $0.10 |
| | ========= | ========= |
|
| As at | As at |
| Net assets attributable to shareholders ($000) | 101,725 | 96,340 |
| Number of shares in issue at year end | 10,238,206 | 10,328,206 |
| Net asset value per share | $9.94 | $9.33 |
| | ======== | ======== |
10 CASH AND CASH EQUIVALENTS
|
| As at | As at |
| Cash | 12,405* | 6,580 |
| U.S. Treasuries | - | 38,494 |
| | -------------- | -------------- |
| Total | 12,405 | 45,074 |
| | ======== | ======== |
* As at 30 June 2021, $11,697,439 was held as collateral at UBS Securities LLC and is restricted.
The Board and Investment Manager oversee investments held in cash and cash equivalents in accordance with the Investment Policy.
11 CALLED UP SHARE CAPITAL
|
| As at | As at |
| Allotted, called up and fully paid: | | |
| 10,238,206 (2020: 10,328,206) Ordinary shares of $0.01 each - equity | 102 | 103 |
| | -------------- | -------------- |
| Treasury shares: | | |
| 95,960 (2020: 5,960) Ordinary shares of $0.01 each - equity | 1 | * |
| | -------------- | -------------- |
| Total shares | 103 | 103 |
| | ======== | ======== |
* Less than $500.
12 FINANCIAL RISK MANAGEMENT
The Company's financial instruments comprise securities and other investments, cash balances, receivables, and payables that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and receivables for accrued income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures, and options, for the purpose of managing currency and market risks arising from the Company's activities.
The main risks the Company faces from its financial instruments are (i) market price risk (comprising interest rate risk, currency risk, and other price risk), (ii) liquidity risk, and (iii) credit risk.
The Board regularly reviews, and agrees upon, policies for managing each of these risks. The Portfolio Manager's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short term receivables and payables, other than for currency disclosures.
(i) Market price risk
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, currency risk, and other price risk.
Interest rate risk
Interest rate movements may affect the level of income receivable and payable on cash deposits.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions.
Interest risk profile
The interest rate risk profile of the portfolio of financial assets and liabilities at the year end date was as follows:
| | As at 30 June 2021 | |||
|
| Interest | Local | Foreign | US Dollar |
| Assets: | | | | |
| US dollar | 0.00 | 12,462 | 1.00 | 12,462 |
| Australian dollar | 0.00 | 1 | 1.33 | 1 |
| Canadian dollar | 0.00 | 6 | 1.24 | 5 |
| Euro currency | (0.75) | (12) | 0.84 | (14) |
| GBP sterling | 0.00 | (39) | 0.72 | (54) |
| Hong Kong dollar | 0.00 | 1 | 7.77 | * |
| Japanese yen | (0.35) | 265 | 110.99 | 2 |
| Polish zloty | 0.00 | 1 | 3.81 | * |
| Singapore dollar | 0.00 | 4 | 1.34 | 3 |
| Swedish krona | (1.25) | 1 | 8.55 | * |
| | -------------- | -------------- | -------------- | -------------- |
| Total | | | | 12,405 |
| | | | | ======== |
* Less than $500.
| | As at 30 June 2020 | |||
|
| Interest | Local | Foreign | US Dollar |
| Assets: | | | | |
| US dollar | 0.00 | 45,035 | 1.00 | 45,035 |
| Australian dollar | 0.00 | 17 | 1.45 | 12 |
| Canadian dollar | 0.00 | 1 | 1.36 | 1 |
| Euro currency | (0.75) | 9 | 0.89 | 10 |
| GBP sterling | 0.00 | (8) | 0.81 | (10) |
| Japanese yen | (0.35) | (216) | 107.89 | (2) |
| New Israeli sheqel | (0.50) | 10 | 3.46 | 3 |
| New Zealand dollar | 0.00 | 20 | 1.55 | 13 |
| Norwegian krone | 0.00 | (10) | 9.65 | (1) |
| Singapore dollar | 0.00 | 15 | 1.40 | 11 |
| Swedish krona | (1.25) | 19 | 9.32 | 2 |
| | -------------- | -------------- | -------------- | -------------- |
| Total | | | | 45,074 |
| | | | | ======== |
Interest rate sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the year end date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.
If interest rates had been 10 (2020: 10) basis points higher or lower and all other variables were held constant, the Company's profit or loss for the reporting year to 30 June 2021 would increase/decrease by $12,000 (2020: $45,000). This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances.
Currency risk
The Company's investment portfolio is invested predominantly in foreign securities and the year end can be significantly affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investments with foreign currency borrowings.
The revenue account is subject to currency fluctuation arising from overseas income.
Currency risk exposure by currency of denomination:
| | As at 30 June 2021 | ||
|
| Net | Net monetary | Total currency |
| Australian dollar | - | (7) | (7) |
| Canadian dollar | 4,845 | (4,851) | (6) |
| Euro currency | 1,327 | (604) | 723 |
| GBP sterling | - | (44) | (44) |
| Hong Kong dollar | - | (12) | (12) |
| Japanese yen | - | 5 | 5 |
| Norwegian krone | - | 4 | 4 |
| Singapore dollar | - | 2 | 2 |
| South African rand | - | (2) | (2) |
| | -------------- | -------------- | -------------- |
| Total non US Investments | 6,172 | (5,509) | 663 |
| | -------------- | -------------- | -------------- |
| US dollar | 91,806 | 9,256 | 101,062 |
| | -------------- | -------------- | -------------- |
| Total | 97,978 | 3,747 | 101,725 |
| | ======== | ======== | ======== |
| | As at 30 June 2020 | ||
|
| Net | Net monetary | Total currency |
| | | | |
| Australian dollar | 6 | 12 | 18 |
| Canadian dollar | 1,204 | (1,274) | (70) |
| Euro currency | 54 | (78) | (24) |
| GBP sterling | 1,932 | (10) | 1,922 |
| Japanese yen | 1 | (3) | (2) |
| New Israeli sheqel | - | 3 | 3 |
| New Zealand dollar | 15 | 13 | 28 |
| Norwegian krone | - | (1) | (1) |
| Singapore dollar | (1) | 10 | 9 |
| Swedish krona | - | 2 | 2 |
| | -------------- | -------------- | -------------- |
| Total non US Investments | 3,211 | (1,326) | 1,885 |
| | -------------- | -------------- | -------------- |
| US dollar | 46,921 | 47,534 | 94,455 |
| | -------------- | -------------- | -------------- |
| Total | 50,132 | 46,208 | 96,340 |
| | ======== | ======== | ======== |
Currency sensitivity
The following table details the Company's sensitivity to a 10% increase and decrease in US dollars against the relevant foreign currencies and the resultant impact that any such increase or decrease would have on net return before tax and equity shareholders' funds. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates.
|
| As at | As at |
| Australian dollar | (1) | 1 |
| Canadian dollar | (1) | - |
| Euro currency | 72 | 1 |
| GBP sterling | (4) | (1) |
| Japanese yen | 1 | - |
| New Zealand dollar | - | 1 |
| Singapore dollar | - | 1 |
| | ======== | ======== |
The relevant US dollar exchange rates as at 30 June 2021 were: Australian Dollar (1: 1.332); Canadian Dollar (1: 1.2383); Euro currency (1: 0.8432); GBP Sterling (1: 0.7239) and Japanese Yen (1: 110.99).
Other price risk
Other price risks, i.e., changes in market prices other than those arising from interest rate or currency risk, may affect the value of the quoted investments.
The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on a recognised stock exchange.
Other price risk sensitivity
If market prices at the year end date had been 15% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders for the year ended 30 June 2021 would have increased/decreased by $13,743,000. The calculations are based on the portfolio valuations as at the year end date, and are not representative of the year as a whole.
(ii) Liquidity Risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. All creditors are payable within 3 months.
Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary.
(iii) Credit risk
This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
The table below shows the counterparty risk as at the Balance Sheet date:
|
|
| Derivative |
|
|
| Counterparty | | | | |
| UBS Securities, LLC | - | 1,504 | (11,697) | (10,193) |
| State Street | 4,859 | - | (524) | 4,335 |
| | -------------- | -------------- | -------------- | -------------- |
| Total | 4,859 | 1,504 | (12,221) | (5,858) |
| | ======== | ======== | ======== | ======== |
Net exposure represents the mark-to-market value of derivative contracts less any cash collateral held. Negative exposure represents the Fund's exposure to that counterparty. Positive amounts are not an exposure to the Fund.
The risk is managed as follows:
· Investment transactions are carried out mainly with brokers whose credit ratings are reviewed periodically by the Portfolio Manager.
· Most transactions are made delivery versus payment on recognised exchanges.
· Cash is held at State Street Bank and Trust which has a credit rating by Standard and Poor's on short term deposits of A-1+ and long term deposits AA-.
The maximum credit risk exposure as at 30 June 2021 was $15,174,000 (2020: $49,077,000). This was due to cash and receivables as per note (10) 'Cash & cash equivalents', note (15) 'Total other receivables' and Statement of Financial Position Receivable for investment sold.
Capital management policies and procedures
The Company's capital management objectives are:
· to ensure that the Company will be able to continue as a going concern; and
· to maximise the revenue and capital return to its equity shareholders through an appropriate balance of equity capital and debt.
The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. The Board considers the Company's capital requirements in the context of both the Special Distributable and Revenue reserves being treated as distributable, as permitted by current accounting standards for listed investment trusts. The distributable reserves can be used to fund dividends and share repurchase programmes. This review includes the nature and planned level of gearing, which takes account of the Portfolio Manager's views on the market and the extent to which revenue in excess of that which is required to be distributed under the investment trust rules should be retained.
The analysis of shareholders' funds is as follows:
|
| As at | As at |
| Called-up share capital | 103 | 103 |
| Special distributable reserve* | 83,976 | 88,912 |
| Capital reserve | 21,059 | 9,279 |
| Revenue reserve* | (3,413) | (1,954) |
| | -------------- | -------------- |
| Total shareholders' funds | 101,725 | 96,340 |
| | ======== | ======== |
* The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2021, the net amount of reserves that are distributable is $80,563,000 (2020: $86,958,000).
Alternative Investment Fund Managers' ('AIFM') Directive
In accordance with the Alternative Investment Fund Managers' Directive ("AIFMD"), the Company has appointed Carne Global Fund Managers (Ireland) Limited as its Alternative Investment Fund Manager (the "AIFM") to provide portfolio management and risk management services to the Company in accordance with the investment management agreement.
Leverage
For the purposes of the AIFM Directive, leverage is required to be calculated using two prescribed methods: (i) the gross method; and (ii) the commitment method, and expressed as the ratio between a fund's total exposure and its net asset value. As measured using the gross method, the level of leverage to be incurred by the Portfolio Manager on behalf of the Company is not to exceed the equivalent of a ratio of 5. The gross method calculates exposure as the absolute value of the sum of all investment positions (long and short), including derivative positions for which exposure is calculated as the equivalent position in an underlying asset. As measured using the commitment method, the level of leverage to be incurred by the Portfolio Manager on behalf of the Company is not to exceed the equivalent of a ratio of 2.5. The commitment method calculates exposure from all investment positions, including derivative positions for which exposure is calculated as the equivalent position in an underlying asset, but factors in hedging arrangements that offset exposure.
The Company's maximum leverage levels at 30 June 2021 are shown below:
|
| Gross | Commitment | |
| Maximum permitted limit | 500% | 250% |
|
| Actual | 138% | 151% |
|
| | ======== | ======== |
|
The leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted in the Company's Articles of Association. The AIFM is also required to comply with the gearing parameters set by the Board in relation to borrowings.
13 PERFORMANCE FEE
Subject to the satisfaction of the Performance Conditions, the Portfolio Manager shall be entitled under the Portfolio Management Agreement, in respect of each Performance Period, to receive 20% of the Total Return relating to such Performance Period, provided that such amount shall not exceed 3% of the Average NAV.
Performance Conditions
The Portfolio Manager's entitlement to a Performance fee in respect of any Performance Period shall be conditional on the Closing NAV per Share in respect of the Performance Period (adjusted for any changes to the NAV per Share through dividend payments, Share repurchases (howsoever effected) and Share issuances since Admission being in excess of the Performance Hurdle and High Water Mark. For the year ended 30 June 2021, a Performance fee of $2,795,658 (2020: $248,101) was to be paid. As at 30 June 2021, $2,795,658 was outstanding to the Portfolio Manager in respect of the performance fee, reflecting the performance period matching the Company's financial year (2020: $248,101).
14 DERIVATIVES RISK
The Company's investment policy may involve the use of derivatives (including, without limitation, forward foreign exchange contracts, equity contracts for difference ("CFDs"), securities sold short and/or structured financial instruments). The Company may use both exchange-traded and over-the-counter derivatives as part of its investment activity. The cost of investing utilizing derivatives may be higher than investing in securities (whether directly or through nominees) as the Company will have to bear the additional costs of purchasing and holding such derivatives, which could have a material adverse effect on the Company's returns. The low initial margin deposits normally required to establish a position in such instruments permit a high degree of leverage. As a result, depending on the type of instrument, a relatively small movement in the price of a contract may result in a profit or a loss which is high in proportion to the amount of funds actually placed as initial margin and may result in unquantifiable further losses exceeding any margin deposited. In addition, daily limits on price fluctuations and speculative position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses.
The use of derivatives may expose the Company to a higher degree of risk. These risks may include credit risk with regard to counterparties with whom the Company trades, the risk of settlement default, lack of liquidity of the derivative, imperfect tracking between the change in value of the derivative and the change in value of the underlying asset that the Company is seeking to track and greater transaction costs than investing in the underlying assets directly. Additional risks associated with investing in derivatives may include a counterparty breaching its obligations to provide collateral, or, due to operational issues (such as time gaps between the calculation of risk exposure to a counterparty's provision of additional collateral or substitutions of collateral or the sale of collateral in the event of a default by a counterparty), there may be instances where credit exposure to its counterparty under a derivative contract is not fully collateralised. The use of derivatives may also expose the Company to legal risk, which is the risk of loss due to the unexpected application of a law or regulation, or because a court declares a contract not legally enforceable.
The use of CFDs is a highly specialised activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In a CFD, a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state of short term interest rates and the returns on the Company's portfolio securities at the time a CFD transaction reaches its scheduled termination date, there is a risk that the Company will not be able to obtain a replacement transaction or that terms of the replacement will not be as favourable as on the expiring transaction. At 30 June 2021 the Company held CFDs, as shown in the following table.
|
|
|
| As at 30 June |
| Adapteo Oyj | SEK | 7 | ** |
| Advanced Micro Devices Inc | USD | (45) | (573) |
| Aggreko PLC | GBP | 68 | ** |
| Ampol Ltd | AUD | 7 | (8) |
| Analog Devices Inc | USD | (19) | (88) |
| Aon PLC | USD | (19) | 219 |
| Apollo Global Management Inc | USD | (17) | (37) |
| Arrow Global Group PLC | GBP | 47 | 1 |
| AstraZeneca PLC | USD | (63) | (71) |
| Atrium European Real Estate Ltd | EUR | 95 | (9) |
| Biotest AG | EUR | 8 | (6) |
| Boston Private Financial Holdings Inc | USD | 15 | (1) |
| Brookfield Asset Management Inc | USD | (3) | (4) |
| Canadian National Railway Co. | USD | (2) | 8 |
| Canadian Pacific Railway Ltd | USD | (6) | 19 |
| CapitaLand Ltd | SGD | 53 | (1) |
| Cerved Group SpA | EUR | 50 | ** |
| CIT Group Inc | USD | 6 | (8) |
| Crown Ltd | AUD | 5 | ** |
| Deutsche Wohnen SE | EUR | 44 | (6) |
| Dialog Semiconductor PLC | EUR | 36 | 6 |
| Distell Group Ltd | ZAR | 5 | (2) |
| EDF S.A. | EUR | 12 | (6) |
| Euskaltel S.A. | EUR | 38 | (4) |
| First Citizens BancShares Inc | USD | * | 9 |
| Gamesys Group PLC | GBP | 9 | (1) |
| Grifols S.A. | USD | (17) | 40 |
| II-VI Inc | USD | (6) | (15) |
| Inmobiliaria Co | EUR | (6) | 6 |
| John Laing Group PLC | GBP | 111 | (1) |
| Just Eat Takeaway.com NV | USD | (8) | (5) |
| Kansas City Southern PLC | USD | 9 | (102) |
| Lennar Corp | USD | (9) | (61) |
| Middleby Corp | USD | (1) | (4) |
| Natixis SA | EUR | 37 | ** |
| Naturgy Energy Group SA | EUR | 6 | (2) |
| Norwegian Finans Holding ASA | NOK | 8 | (2) |
| Nuance Communications PLC | USD | 76 | (36) |
| Orange Belgium S.A. | EUR | 6 | (7) |
| PDD Inc | USD | 48 | (1) |
| Realty Income PLC | USD | (14) | 42 |
| Regal Beloit Corp | USD | * | 2 |
| Rexnord Corp | USD | 2 | (3) |
| Sparkassen Immobilien AG | EUR | 3 | (7) |
| S&P Global Inc | USD | (8) | (130) |
| Salesforce.com Inc | USD | (9) | (36) |
| Sbanken ASA | NOK | 48 | 6 |
| Siltronic AG | EUR | 8 | 2 |
| Slack Technologies Inc | USD | 123 | (22) |
| Société Foncière Lyonnaise | EUR | 1 | (6) |
| SOHO China Ltd | HKD | 363 | (12) |
| Solarpack Corp | EUR | 9 | ** |
| Spire Healthcare PLC | GBP | 49 | (1) |
| Suez S.A. | EUR | 120 | ** |
| SVB Financial Group PLC | USD | * | 2 |
| Tarkett S.A. | EUR | 7 | ** |
| Toshiba Corp | JPY | 2 | 2 |
| UDG Healthcare PLC | GBP | 32 | 10 |
| Vectura Group PLC | GBP | 116 | 1 |
| VEREIT Inc | USD | 20 | (48) |
| VMWare | USD | (3) | 13 |
| Willis Towers Watson PLC | USD | 21 | (566) |
| | | -------------- | -------------- |
| Total unrealised (loss) on derivatives | | | (1,504) |
| | | | ======== |
* Less than 500 shares.
** Less than $500.
15 CURRENT ASSETS AND LIABILITIES
The categories of other receivables and other payables include:
|
| As at 30 June | As at 30 June |
| Other receivables | | |
| FX currency sold | 57 | - |
| All other receivables | 90 | 68 |
| | -------------- | -------------- |
| Total other receivables | 147 | 68 |
| | ======== | ======== |
| Other payables | | |
| FX currency purchased | 20 | 6 |
| Custodian fees | 8 | 9 |
| Accounting fees | 13 | 19 |
| Audit fees | 70 | 35 |
| All other payables | 203 | 168 |
| | -------------- | -------------- |
| Total other payables | 314 | 237 |
| | ======== | ======== |
16 RELATED PARTY DISCLOSURE: DIRECTORS
Each of the Directors is entitled to receive a fee from the Company at such rate as may be determined in accordance with the Articles of Incorporation. The Directors' remuneration is $30,000 per annum for each Director, other than:
· the Chairman, who will receive an additional $1,000 per annum*;
· the Chairman of the Audit Committee, who will receive an additional $5,000 per annum; and
· the Members of the Audit Committee, who will receive an additional $1,000 per annum
· Following the approval of shareholders at the 2020 Annual General Meeting, the Directors' fees were also increased during the year to include an aggregate $10,000 fee supplement to be paid annually in the form of Ordinary Shares in the Company. During the year ended 30 June 2021, the Company paid to Directors the cash equivalent of the share supplement, including dividends, for the period from 1 January 2020 through 30 June 2021. Subsequent supplements will be paid in the form of cash, in the amount of $2,500 per quarter. During the year ended 30 June 2021, the Company paid to Directors the cash equivalent of the share supplement, including dividends, for the period from 1 January 2020 through 30 June 2021.
· Mr Gabelli has waived his fees since appointment as Chairman.
Each of the Directors is also entitled to be paid all reasonable expenses properly incurred by them in connection with the performance of their duties. These expenses will include those associated with attending general meetings, Board or committee meetings and legal fees. The Board may determine that additional remuneration may be paid, from time to time, to any one or more Directors in the event such Director or Directors are requested by the Board to perform extra or special services on behalf of the Company.
Related parties disclosure: other
The Portfolio Management fee and Performance fee for the year ended 30 June 2021 paid by the Company to the Portfolio Manager are presented in the Statement of Comprehensive Income. Details of Portfolio management fee paid during the year are disclosed in Note 6. Details of Performance fee paid during the year are disclosed in Note 13.
As at 30 June 2021, Associated Capital Group Inc., an affiliate of the Portfolio Manager, held 6,179,100 Ordinary Shares in the Company.
Further details of related parties and transactions, including with the Company's AIFM Carne Global Fund Managers (Ireland) Limited, are disclosed in the Directors' Report.
Connected party transactions
All connected party transactions are carried out at arm's length. There were no such transactions during the year ended 30 June 2021.
17 CONTINGENT LIABILITIES AND COMMITMENTS
As at 30 June 2021, the Company had no contingent liabilities or commitments (30 June 2020: nil).
18 SIGNIFICANT EVENTS
Since the beginning of 2020, global financial markets have experienced and may continue to experience significant volatility resulting from the spread of COVID-19. While containment efforts were made to slow the spread of the epidemic the outbreak has now spread globally resulting in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand and general market uncertainty. The effects of COVID-19 have adversely affected the global economy and may continue to do so.
The Board is aware that global financial markets have been reacting to the outbreak. All markets have incurred increased volatility and uncertainty since the onset of the pandemic.
The Board has also noted the operational risks that are posed to the Fund and its service providers due to global and local movement restrictions that have been enacted by various governments. COVID-19 pandemic is an unprecedented event and the eventual impact on the global economy and markets will largely depend on the scale and duration of the outbreak. The Board will continue to monitor this situation.
19 HISTORICAL SHARE AND NAV INFORMATION
| | 30 June 2021 | 30 June 2020 | 30 June 2019 |
| Total Shares | 10,238,206 | 10,328,206 | 10,334,166 |
| Total NAV ($000) | 101,725 | 96,340 | 100,346 |
| NAV per share | $9.94 | $9.33 | $9.71 |
| | ======== | ======== | ======== |
20 POST BALANCE SHEET EVENTS
On 12 July 2021 the Board announced the appointment of Derringtons Limited to take over as the Company Secretary from Maitland Administration Services Limited. At 30 September 2021 the NAV per share of the Company was $9.93. From the year end to 30 September 2021 the share price decreased 18.2%, from $7.40 to $6.05.
Gabelli Merger Plus+ Trust Plc is registered in England and Wales under Company number 10747219.
The financial statements were approved by the Board of Directors on 15 October 2021 and signed on its behalf by
MARC GABELLI
Chairman
Enquiries:
Email: Info@Gabelli.co.uk
LEI: 5493006X09N8HK0V1U37
Date: 13 October 2021
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