TIDMINV
RNS Number : 2950B
Investment Company PLC
07 October 2020
Embargoed for release at 7.05am on 7 October 2020
The Investment Company PLC
(the "Company")
Proposed change of investment objective and policy
This Announcement contains Inside Information as defined under
the Market Abuse Regulation (EU) No. 596/2014
The Investment Company PLC, the premium listed investment trust
originally incorporated in November 1868, is pleased to announce
proposals for the future of the Company (the "Proposals") including
recommendations for a new investment objective and policy.
The key features of the Proposals include:
-- A new objective of wealth preservation and long term capital growth
-- A new investment policy of investing both in quoted
businesses which the Directors believe are suitable for the
long-term compounding of earnings and also a portfolio of liquid
reserves in cash, debt instruments and tangible assets such as gold
bullion
-- Adoption of a strong set of guiding principles which will
guide the Board's process in relation to making investment
decisions
-- Two new directors, Tom Cleverly and Michael Weeks, to join
the board. Both individuals bring the relevant experience to
contribute to the implementation of the proposed new investment
objective and policy
-- Changes to the articles of association to revise the
continuation vote period to once every five years, consistent with
the proposed long term investment objective, and to update
provision for the remuneration of directors
A circular containing details of the Proposals and convening a
general meeting of shareholders is today being dispatched to
shareholders.
Ian Dighé, Chairman, commenting on the Proposals said:
"These proposals form a new foundation for our future dedicated
to protecting the purchasing power of our shareholders' savings. In
a time of incredible confusion about the nature of money, savings
and wealth, we seek to return to an investment framework that
values business judgment over formulas and where directors and
shareholders share a common purpose of preserving their
savings"
Enquiries:
The Investment Company PLC
Ian Dighé, Tel: +44 (0) 20 3934 6630
Shore Capital (Financial Adviser and Broker)
Robert Finlay / Rose Ramsden, Tel: +44 (0) 20 74080 4050
Maitland Administration Services Limited
Faith Pengelly, Tel: +44 (0) 1245 950317
Background to the Proposals
The Company's current structure is a legacy of arrangements made
in 2012 to appoint an external investment manager, ostensibly to
grow the assets of the Company. These arrangements were further
changed, as was the composition of the Board, in 2018. The current
investment manager, against a formidable income target, has, in the
opinion of the Directors, administered the assets well.
The Company's historical antecedents as a split capital trust
invested in fixed income securities have given it a history of a
high level of dividend payments. In recent years this has become
increasingly difficult to achieve without detriment to the capital
base of the Company. By 2020, market interest rates had dropped to
historically low levels and the Covid-19 pandemic has led to many
companies re-appraising their dividend policies. Although the
Company's investment portfolio has not suffered unduly from
dividend cuts so far, the current market conditions make further
development under the current mandate problematic and, therefore,
the future direction of the Company is now in sharp focus.
The Board has considered a range of alternatives for the future
of the Company, including the possibility of merging the Company
with other investment entities. Of the options considered, the
Board believes that adopting an objective of wealth preservation
and long term capital growth is likely to be most attractive to the
majority of Shareholders.
Accordingly, we announce today details of important new
proposals for the future of the Company, being the adoption of a
New Investment Objective and Policy and amendments to the Articles
and to explain why the Board considers them to be in the best
interests of the Shareholders as a whole. The Board believes that,
if implemented, the New Investment Objective and Policy will be
attractive to those Shareholders who consider the preservation of
capital paramount and should provide an opportunity to increase the
size of the Company, so reducing its pro rata costs and improving
its long term viability.
If the Proposals are approved, the Board proposes to appoint two
new directors, Tom Cleverly and Michael Weeks, to contribute to the
implementation of the proposed New Investment Objective and Policy.
Both individuals are directors of Edelweiss Investments Limited, a
wholly-owned subsidiary of Edelweiss Holdings plc ("Edelweiss"), a
private investment holding company incorporated in Jersey. Their
background makes them well suited to the investment policy and
guiding principles now being proposed by the Board.
Implementation of the Proposals requires the approval of
Shareholders and is therefore conditional on the passing of the
Resolutions that will be proposed at a General Meeting to be held
at 11.15 a.m. on 4 November 2020, or immediately after the
conclusion or adjournment of the annual general meeting of the
Company to be held on the same day, notice of which is set out in
the circular being dispatched to shareholders
At the annual general meeting of the Company convened for the
same date as the General Meeting, the Directors are proposing a
resolution that the Company continue in existence as an investment
trust. If this resolution is not passed at the annual general
meeting, the General Meeting will be adjourned indefinitely and the
Proposals will not be put to Shareholders.
New Investment Objective and Policy
The Company's proposed New Investment Objective and Policy is
set out below:
"Investment Objective
The Company's investment objective is to protect the purchasing
power of its capital in real terms, and to participate in enduring
economic activities which lend themselves to genuine capital
accumulation and wealth creation.
Investment Policy
The Company will seek to acquire and hold, with no predetermined
investment time horizon, a collection of assets which, in the
Directors' judgment, are well-suited to the avoidance of a
permanent loss of capital. These assets will be comprised of
minority participations in the equity, debt or convertible
securities of quoted businesses which the Directors believe are led
by responsible and like-minded managers and suitable for the
long-term compounding of earnings. In addition, to protect its
capital as well as to maintain liquidity for future investments,
the Company will keep reserves in (a) liquid debt instruments such
as cash in banks or securities issued by governments and/or (b)
liquid, non-debt, tangible assets such as gold bullion, whether
held indirectly or in physical form.
The Company has no predetermined maximum or minimum levels of
exposure to asset classes, currencies or geographies, and has the
ability to invest globally. These exposures will be monitored by
the Board in order to ensure an adequate spreading of risks. No
holding in an individual company or debt instrument will represent
more than 15 per cent. by value of the Company's total assets at
the time of acquisition (such restriction does not, however, apply
to gold bullion or cash balances). The Company's holdings of gold
bullion may be as high as 35 per cent. of total assets at the time
of investment.
Given the Company's investment objective, asset mix and time
horizon, the portfolio will not seek to track any benchmark or
index. The Company will not invest more than 10 per cent. of its
total assets in other listed closed-ended investment funds. The
Company will not use derivative instruments for speculative
purposes, nor will it use currency hedges to manage returns in any
currency.
The Company's gearing will not exceed 20 per cent. of net assets
at the time of drawdown."
No material change will be made to the investment policy without
the approval of Shareholders by ordinary resolution.
Guiding principles
The success of the Company demands a shared understanding of the
Company's goals and an appreciation of the values that will guide
the Board's decision-making. While the investment work will speak
for itself, we (your Board) believe it necessary to set out a
statement of principles that will guide our investment
decisions.
Our purpose is to protect the savings of our Shareholders. It is
not to try to make Shareholders rich or to impress anyone. We do
not promise returns of any kind, either relative or absolute.
Instead we promise two things: to be faithful to the principles
outlined here, and to participate alongside those we serve as
fellow Shareholders. The Company's financial results will be lumpy
and, if considered over only a few years, will sometimes be
disappointing. We are not concerned with tomorrow, but with
preserving savings for the next generation.
We believe savings are scarce. It takes time, effort and
sacrifice to acquire them, and holding on to them is difficult. We
have the utmost respect for their irreplaceability. For this
reason, our understanding of "risk" is fundamentally different from
much of the financial industry. We are unconcerned with the "risk"
(singular) of the volatility of returns as compared to an index. We
are, however, profoundly concerned with understanding and managing
the myriad "risks" (plural) that may result in a permanent loss of
capital. In doing so, we believe that hubris, unaccountability, and
financialisation are every bit as threatening as weak financial
accounts and poor competitive standing.
We have no predetermined investment horizon or exit strategies
and are keen to participate in the long-term compounding of
earnings. We see ourselves as owners rather than investors, and we
seek to deploy our capital alongside other owners whose life's work
is committed to the long-term survival of their company. The
attributes we prize most-scarcity, permanence and independence-are
rare. When we do come across them, we are not looking to sell.
We pay no attention to the views of others in the financial
industry, what they expect or what they consider valuable. We are
neither bearish nor bullish, but keen to distinguish what is real
and true from what is not. We believe that our success will not
come from a strict set of rules regarding asset allocation,
position sizes, the blind pursuit of diversification, or the
mimicking of any index. We do not rely on diversification to
compensate us for risks we don't understand.
We do nothing complicated or formulaic. We invest in businesses
and people we understand and avoid those we do not, no matter how
compelling they may appear to be. We avoid the idea of growth for
its own sake, short-term thinking, and financial engineering. We
like natural monopolies and economic niches having scale, barriers
to entry and pricing power. We prefer what is firm, durable,
earned, and designed for continuity, rather than what is fragile,
fleeting, and unsure. We think that endurance is valuable and that
it is the result of focusing on the customer rather than financial
rewards that ensue. Our emphasis on the qualitative may not be
fashionable, but we believe it to be correct.
We believe our ability to hold adequate and suitable reserves is
important to achieving our purpose, and that the quality of our
reserves matters just as much as the quality of our investments. We
want reserves that are timeless - true assets that are neither
someone else's liability nor the plaything of central banks and
political parties. For this reason gold bullion is well suited to
be an important component of our reserves.
We value responsibility and accountability in corporate
governance, as well as the avoidance of conflicts of interest
consistent with the duty of loyalty and the duty of care. We will
strive to keep our costs low, but will not sacrifice our
intellectual or operational freedom for the sake of lower
costs.
Management and organisation
The Directors
The Board of the Company currently comprises the following
individuals:
Ian Dighé (Chairman) was appointed as Chairman on 6 July 2018.
He has significant listed company experience, particularly in the
investment banking, corporate broking, asset management and closed
end funds sectors. He was a co--founder of Bridgewell Group plc and
was Chairman of Miton Group plc ("Miton") from February 2011,
overseeing the successful refinancing and subsequent growth of the
group. He retired from the Miton board in December 2017. He is an
Independent Director of Edelweiss Holdings plc, and a director of a
number of private companies, and charities.
Tim Metcalfe was appointed to the Board on 6 July 2018. He is an
experienced corporate financier, having spent over 20 years working
at Robert Fleming & Co., N M Rothschild, Westhouse Securities,
and Northland Capital Partners and was Joint CEO of Zeus Capital,
prior to being the co-founder, in 2015, of IFC Advisory, an
investor relations and financial PR adviser to small and mid-cap
companies.
Martin Perrin (Audit Committee Chairman) was appointed to the
Board in June 2013. He is a non-executive director of Fiske plc. He
is a Chartered Accountant and Chartered Wealth Manager and has wide
international experience of operations and finance in both
regulated financial services firms and in technology companies.
Proposed Directors
Subject to the passing of the Resolutions, the following
additional individuals (the "Proposed Directors") will be appointed
to the Board:
Tom Cleverly spent the 10 years to 2011 in the audit profession,
working for Grant Thornton in the UK and subsequently as a senior
audit manager with Mazars in Bermuda. He served on the Board of
Edelweiss Holdings plc between November 2011 and September 2015,
and has since held directorships in Edelweiss group companies, and
currently serves as the company's treasurer and member of its
executive committee. He is a director of Kayson Green Limited, a
family controlled distributor of abrasive products, based in the
UK. Mr Cleverly holds a degree in accounting and finance from the
University of Plymouth and is a Fellow Member of the Institute of
Chartered Accountants in England and Wales. He is a British citizen
and resident of the UK.
Michael Weeks joined the investment team of Edelweiss Holdings
plc in 2011, where he has since served as an analyst, head of
research, and since 2014 as director in different Edelweiss group
companies. He is a CFA charterholder and holds degrees in chemical
engineering and philosophy from Rice University. He is a US citizen
and resident in Switzerland.
Proposed organisational structure
Currently, investment advisory services are provided to the
Board by Fiske plc. On the basis that Shareholders approve the New
Investment Objective and Policy, the advisory agreement with Fiske
plc will be terminated in accordance with its terms. Overall
responsibility for the investment of the portfolio will remain with
the Board, including the Proposed Directors. The Company is and
will remain a small registered UK AIFM. The Board will, however,
delegate some day-to-day investment decisions to a sub-committee of
the Board, for which appropriate terms of reference are in place,
and may also delegate responsibility for the execution of specific
transactions to a single Director. Any sub-committee of the Board,
or any individual Director holding responsibility delegated by the
Board, shall report to the Board regularly with regard to any
decisions taken. More significant investment decisions will be made
by the full Board. The Board believes that, with the addition of
the two Proposed Directors, the Board will have the appropriate mix
of investment skills and experience, including in portfolio
construction and management. The membership of the investment
sub-committee will include the Chairman of the Board, Tom Cleverly,
and Michael Weeks.
For the time being the Company will continue to have no
employees and company secretarial, administrative and custodial
services will remain outsourced to third party suppliers. The Board
retains ultimate responsibility for the delivery of these services
and will oversee and monitor these service providers on a regular
basis. The Board will be responsible for corporate governance.
Information on Edelweiss
Edelweiss is a privately owned investment holding company
incorporated in Jersey, which is the continuation of a fund first
formed in 2002. Under the oversight of a Supervisory Committee of
its Board of Directors, which includes Ian Dighé, the strategy
implementation and day-to-day management of Edelweiss is the
responsibility of its executive committee, which includes Tom
Cleverly. Led by Michael Weeks, investment, industry and economic
research is provided to Edelweiss's executive committee by
Edelweiss Investments Limited, a company incorporated in Jersey,
whose board of directors includes Michael Weeks and Tom Cleverly.
Edelweiss had shareholders' funds of USD 338 million as at 31
December 2019.
Whilst there is no commercial agreement between the Company and
Edelweiss, whether relating to the appointment of the Proposed
Directors or otherwise, the independent members of the board of
Edelweiss have nevertheless consented to their appointment to the
Board.
Due to the very different scale of their operations, no
conflicts of interest are expected to arise between the Company and
Edelweiss in the immediate future. However, should these
circumstances change and situations emerge where a material
conflict of interest does arise, this will be addressed by the
independent members of the Board and the board of Edelweiss.
Changes to the Articles
Directors' remuneration
If the Company's New Investment Objective and Policy is adopted,
in connection with the appointment of the Proposed Directors, the
Board is proposing that the Articles be amended to remove the
restriction which limits the remuneration of the Directors to
GBP15,000 per Director per annum and replace it with a maximum
aggregate amount of GBP250,000 per annum. Whilst there is no
present intention that the aggregate of the Directors' annual
remuneration will approach this level, the Directors believe that
it is appropriate to have a limit which provides flexibility for
the future development of the Company. The aggregate remuneration
of the Directors following implementation of the Proposals and the
appointment of the Proposed Directors will be lower than the
aggregate of the Directors' and investment advisory fees currently
payable to the Directors and to Fiske plc, respectively.
Continuation vote
Pursuant to the Articles, an ordinary resolution proposing that
the Company continues in existence as a closed-ended investment
company must be put to Shareholders at every annual general
meeting. The Board considers that, in the event that Shareholders
approve the adoption of the New Investment Objective and Policy, an
annual continuation resolution is no longer appropriate because of
the nature of the prospective portfolio and the Company's vision of
itself as a long-term owner. The Board considers that the annual
general meeting in 2025 will be an appropriate point at which
Shareholders can reflect and re-evaluate the success of the new
strategy and the performance of the Board, including the Proposed
Directors, against the New Investment Objective and Policy and the
guiding principles set out above at paragraph 3. The Board will of
course maintain an ongoing and regular dialogue with Shareholders
regarding the performance of the portfolio.
It is therefore proposed to amend the Articles to provide that
an ordinary resolution proposing that the Company continues in
existence as a closed-ended investment company next be put to
Shareholders at the annual general meeting to be held in 2025, and,
if passed, every 5 years thereafter.
Dividend policy
With the change of investment objective to be focused on
protecting the purchasing power of its capital in real terms,
payment of dividends will not, unlike the present position, be the
key objective of the Company. Nevertheless, in accordance with the
legislative requirements for an investment trust, the Company will
not retain more than 15 per cent. of its income in respect of each
accounting period and the Board therefore expects to pay dividends
reflecting the future investment portfolio's flow of income.
Discount management policy
The Board currently intends to seek Shareholder approval each
year for the authority to repurchase up to 14.99 per cent. of the
Company's issued share capital. The Board will use this authority
at its discretion to repurchase Ordinary Shares. No other mechanism
to manage any discount/premium currently is, or will be in the
immediate future, in place if the Proposals are approved.
Benefits of the Proposals
The Directors believe that the Proposals are in the best
interests of Shareholders and represent an appropriate and
attractive future for the Company for the following reasons:
-- the New Investment Objective and Policy offers a genuine
opportunity and advantage to Shareholders when viewed against the
costs of liquidation and other actions which would be the likely
alternative to implementing the Proposals;
-- the successful business track records of both the existing
and Proposed Directors combined with the proposed New Investment
Objective and Policy afford the prospect of protecting
Shareholders' wealth and generating enhanced value over the longer
term; and
-- the New Investment Objective and Policy, and management may
better place the Company in a position to attract further capital
and so spread its fixed costs over a broader base, so improving the
return to Shareholders.
In light of the above, the Board considers that implementing the
Proposals is in the best interests of the Company and its
Shareholders as a whole. If the Proposals are not approved at the
General Meeting, the Directors will consider alternative proposals
for the future of the Company, which may include liquidation.
Voting intentions and undertakings
The Directors intend to vote in favour of the Resolutions in
respect of their beneficial holdings amounting to 34,707 Ordinary
Shares in aggregate (representing approximately 0.73 per cent. of
the Ordinary Shares in issue as at the date of the circular).
Undertakings to vote in favour of the Resolutions have been
received from Shareholders representing, in aggregate, a further 15
per cent. of the Ordinary Shares in issue as at the date of this
document.
A copy of the circular to shareholders will submitted to the
National Storage Mechanism and will shortly be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The
circular will also be available on the Company's website at
https://www.maitlandgroup.com/investment-trusts/the-investment-company-plc/.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
CIRMFBFTMTIMBMM
(END) Dow Jones Newswires
October 07, 2020 02:05 ET (06:05 GMT)
Investment (LSE:INV)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Investment (LSE:INV)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
