TIDMGVP
RNS Number : 3940B
Gabelli Value Plus+ Trust PLC
09 June 2021
Gabelli Value Plus+ Trust Plc
Legal Entity Identifier: 213800FZFN1SD1GNNZ11
Annual Report and Accounts 2021
OVERVIEW AND PERFORMANCE
AT A GLANCE
GABELLI VALUE PLUS+ TRUST PLC ("GVP" or the "Company") was
launched in February 2015 to invest in U.S. equities. The Company
is a public company, limited by shares. Trading on the London Stock
Exchange under the symbol GVP, the Company brings the "best of"
Gabelli Funds through an actively managed fund investing in U.S.
companies, giving UK investors direct access to the Gabelli value
investment methodology. It incorporates a portfolio of Gabelli
Funds all cap U.S. equity ideas with selective deployment of their
classic merger arbitrage approach. The merger arbitrage approach
aims to earn absolute returns in excess of short term interest
rates, non-correlated with the overall equity markets.
Through its Manager, Gabelli Funds, LLC ("Gabelli Funds"), the
Company provides access to Gabelli's core methodology, which has
delivered annualised outperformance of the Standard & Poor's
500 Index of 5% since the launch of this strategy in 1977. The
Company's investment portfolio is diversified across securities,
capitalisations, sectors, and event time horizons; it is flexible
through various market cycles and opportunistic where
appropriate.
The Company is part of the lineage of Gabelli Closed-End Funds.
The Gabelli Fund complex currently includes 14 U.S.-based
closed-end funds, two funds based in the UK, 24 open-end funds and
a SICAV, with two sub-funds.
FINANCIAL HIGHLIGHTS
As at As at
Performance (unadjusted for distributions) 31 March 2021 31 March 2020
------------------------------------------------ --------------- ---------------
Net asset value per share (cum income) 168.5p 103.0p
Net asset value per share (ex income) 167.2p 101.9p
Share price 162.0p 82.5p
Discount relative to the NAV (cum income) (--) 3.9% 19.9%
Exchange Rate (US$/ GBP) 1.38 1.24
------------------------------------------------ --------------- ---------------
Year ended Year ended
Total returns 31 March 2021 31 March 2020
----------------------------------- --------------- ---------------
Net asset value per share(#) (--) 64.3% (25.0%)
Russell 3000 Value Index (GBP) 42.3% (14.0%)
Standard & Poor's 500 Index (GBP) 40.5% (2.5%)
Share price (--) 98.2% (32.7%)
----------------------------------- --------------- ---------------
Income
Revenue return per share 1.32p 1.09p
----------------------------------- --------------- ---------------
Ongoing charges*
Annualised ongoing charges** (--) 1.32% 1.24%
----------------------------------- --------------- ---------------
Source: Investment Manager (Gabelli Funds, LLC), verified by the
Administrator, State Street Bank and Trust Company.
(#) The net asset value ("NAV") total return for the year
reflects the movement in the NAV, adjusted for the reinvestment of
any dividends paid.
The total share price return for the year to 31 March 2021
reflects the movement in the share price during the year, adjusted
to reflect the reinvestment of any dividends paid.
* 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.
** The annualised ongoing charges are the recurring operating
and investment management costs of the Company, expressed as a
percentage of the average net assets. The breakdown is set out in
the following table. Portfolio transaction charges are shown for
transparency, although they do not form part of the ongoing charges
under the AIC's recommended methodology.
-- Alternative Performance Measure (please refer to the Glossary
in the Annual Report and Financial Statements)
Year ended Year ended
31 March 2021 31 March 2020
% of average net % of average net
GBP000 assets GBP000 assets
---------------------------- ------- ------------------ ------- ------------------
Revenue expenses 543 0.41 474 0.34
Investment management fees 1,193 0.91 1,258 0.90
---------------------------- ------- ------------------ ------- ------------------
1,736 1.32 1,732 1.24
Transaction costs 103 0.08 94 0.07
---------------------------- ------- ------------------ ------- ------------------
CHAIRMAN'S STATEMENT
Introduction
I a m p l e as e d t o p r ese n t t h e Co m pan y 's annual r
esu l ts f o r t h e y ear t o 3 1 Mar ch 2 0 2 1 . Th e p e r i o
d un d e r rev iew saw f i nan c ial mar k e ts, i n t h e U n i t
e d S tat es a n d w o r l d w i d e , r e a c t i n g t o t h e sp
r e ad of t h e CO VID - 1 9 pan d e m i c , w i th g o v e r n m e
n ts st e pp i n g i n t o p r o v i de f iscal st i m u l us f o r
t h e e c o n o m y t h r o u gh f i nan c ial su pp o r t f o r b
o t h i n d i v i d uals an d c o m pan i es. Wh ilst i n i t iall
y h eav ily i m pac t e d i n t h e ear l y par t of 2 0 20 w i t h
g o v e r n m e n ts' st i m u l us an d , m o re r e c e n t ly, t
h e availab ili t y of a nu m b e r of vac c i n es, mar k e ts hav
e r e c o v e r e d t he ear l y l osses an d m o re.
Pe r f o r man ce
B y all measu res, t he fiscal year en ding o n 3 1 Mar c h 2 0
2 1 was a ver y g ood year in per f o r mance ter ms f o r Gabelli
Value Plus+ T r ust . F o r t he year, NAV p e r f o r m a nc e w
as u p 6 4 . 33 % a nd share p rice per f o r mance was u p by 9 8
. 1 5 % . O f c o u rse, t his was c o min g off a disapp oin tin g
p rio r year, w hen t he glo bal pan demic was hittin g t he U.S.
st o c k mar ket , an d all glo bal mar kets, ex cep tio nally har
d . O u r in vest ment manager, Gabelli F un ds, d oes n ot ben c h
mar k itself against an y passive in dex , b u t rat her t ries t o
generate absolu te ret u r ns o ver t he lo n g ter m. F o r c o m
pariso n p u r p oses, t he S&P 500 Index was u p 4 0 . 5 % (in
sterlin g ), o r 5 6 . 35 % % (in U.S. d ollars) d u ring t he
year. The Russell 3000 Value In dex i n c reased b y 4 2 . 3 % (in
sterlin g ) , o r 5 8 . 4% ( i n U .S. d o ll a rs) o v e r t h e
sa m e perio d. The B oar d w o uld like t o c o n g rat ulate t he
i n v es tmen t manager f o r t he per f o r mance d u rin g t he
past year.
Th r o u g h 30 June 2 0 2 0 , t he S&P 50 0 In dex was off
a mere 3 % f r o m t he star t of 2 0 2 0 , havin g rallied alm ost
40 % f r o m its M a r c h l o w . G r o w t h st o c ks c o n
tinued t heir winnin g st reak , p o wered b y Faceb oo k, A maz o
n , Net flix , Goo gle/ Alp habet, M i c r o s o f t , an d A pple.
A t mid - 2 0 2 0 , t hese six st o c ks had an agg regate mar ket
capitalizatio n of $ 6 . 3 t rillio n , c o m p rising 2 3 % of t
he S&P 500 an d c o n t rib u tin g 5 .4 p oin ts of p ositive
year - t o - date ret u r n . In late May/early J une smaller
capitalization an d value st o c ks snat c hed mar ket leadership
bef o re reversin g.
S t o c k s c o n tinued t o rise d u rin g t he t hird q uar
ter of 2 0 2 0 , wit h t he S&P 500 Index u p 8 . 9 % , as g a
i ns i n J u l y a n d A u g ust were par tially offset b y a
decline in Se pt e m b er. T h e m a i n issu es st i ll f a cing t
he mar kets cen t red lar gely ar o un d t he CO VID - 1 9 pan
demic : specifically, how lo n g w o uld it persist , w o uld "sec
o nd wave" cases spike sig nifican tly hig her, leadin g t o a ret
u r n t o f u r t her ec o n o mic s hu td o w ns an d w hen w o
uld t herapeu tics an d vac cines be read y f o r develo p ment an
d dist rib u tion?
It t oo k CO VID - 1 9 t o en d t he U nited S tates' lo n gest
b ull mar ket , w hic h lasted 1 3 1 m o n t hs, o nly t o give way
t o its sh o r test bear mar ket of just o ver o ne m o n t h . A f
ter declinin g 3 4 % peak - t o-t r o u g h Feb r uar y t o Mar c h
, t he S&P 500 In dex en ded u p 1 8 % f o r 2 0 20 (in U.S. d
ollars) , 6 5 % hig her t han its Mar c h lo w. U n f o r t
unately, even in t he face of rising asset p rices an d an o verall
in c reased savin gs rate, t he ex ten ded ec o n o mic shu td o w
n st rained t he balance sheets of man y small b usinesses an d im
paired t he skills of man y em ployees.
The first q uar ter of 2 0 2 1 , t he Co m pan y's final fiscal
q uar ter, p r o vided a sig nificant c o n t rast t o t he first q
uar ter of 2 0 2 0. Last year, mar kets were hittin g lo ws amid
uncer tain t y regar din g t he ultimate reac h of CO VID - 1 9 an
d t he resulting e c o n o m i c w r e c k a g e a t a t i m e w h
en even gettin g a diag n ostic test was ex ceedin gly diffic ult .
M o re recen tly, n o t o nly have ef fec tive vac cines been
develo ped , b u t m ost U.S. S tates have o p e n e d u p t h ei r
v a c c i n e p r o g r a ms to all ad ults, o r have ann o unced t
hat t hey will in t he near f u t u re. A t t he same time o t her
c o un t ries are seein g in c reases in in fec tio n rates an d
rein t r o d u cin g or in c reasin g rest ric tio ns t o c o m bat
t hem. D u rin g t he q uar ter, mar kets were at all time hig hs
amid o p timism ab o u t t he " reo penin g " of t he ec o n o m y
an d t he pen t u p deman d f o r vario us ac tivities an d g oo
ds, especially t ravel, leisu re, and en ter tain men t.
D i v i d e n d
The Co m pan y's p o r t f olio is c o nst r u c ted w i t h t o
t a l r e t u r n i n m i n d r a t h e r t h an an y split bet
ween inc o me an d capital ret u r n . The p o r t f olio is likely
t o vary c o nsiderably relative t o t hat of t he U.S. st o c k
mar ket , acc o r din g t o t he in vest men t st o c k selec tio
ns. Revenue ear nin gs per share d u rin g t he year were 1 . 3 2
pence per share, w hic h c o m pares wit h 1 .0 9 pence in t he p
rio r year.
The Direc t o rs have declared an in terim dividen d of 1.2
pence per share ( 2 0 20: 1 . 10 pence per share, c o m p risin g a
final dividen d of 1 .0 pence per share an d an in terim dividen d
of 0 . 1 pence per share) f o r t h e y e ar. T h e d i v i d e n d
w ill b e p aid o n 2 July 2 0 2 1 to shareh olders o n t he
register at t he close of b usiness o n 18 J une 2 0 2 1 . The ex -
dividen d date is 17 J une 2 0 2 1.
Shar e p r i c e rat i n g an d b u y backs
The share p rice star ted t he perio d at a disc o un t of 1 9 .
9 % t o NAV an d finished t he year at a disc o un t of 3 . 9 % .
In lig ht of t he o u t c o me of t he c o n tinuatio n v o te at
last year's A nnual General Meeting ( ' AGM') t he B oar d did n o
t c o nsider it app r o p riate t o un der take an y share b u y
bac ks d u rin g t he year.
A s shareh olders are aware, t he managemen t fee paid t o t he
In vest ment Manager is calc ulated o n mar ket capitalisatio n ,
since t his is t h o u g h t to bet ter alig n its in terests wit h
t hat of shareh olders.
B o ard
A s rep o r ted in last year's A nnual Rep o r t, Kasia Ro
binski stepped d o w n as Direc t or an d A u dit Chair f ollo win
g t he c o n clusion of t he AGM o n 30 July 2 0 2 0 . I sh o uld
like t o t han k her f o r her valuable c o n t rib u tion t o t h
e C o m p a n y a n d w ish h e r w ell f or t he f u t u re.
Co n t i nuat i o n Vo te
A s shareh olders will be aware, t he c o n t i nu a t i o n v o
t e at l ast y e a r's A GM was o ver w helmin gly defeated . The o
u t c o m e of t h e v o t e p r o v i d e d t he B oar d wit h a
clear in dicatio n t hat t he majo rit y of in depen den t shareh
olders wished t o realise t heir in vest men t in t he Co m pan y
at , o r close, t o t he p revailing net asset value. The B oar d ,
t o get her wit h t he Co m pan y's B r o ker, have liaised ex
tensively wit h t he majo rit y of shareh olders t o seek t o
deliver o n t he o u t c o me of t hat v o te. The sig nificant sh
a r e h o l d i n g of Asso c iat e d Ca p i t al Gr o u p ( '
ACG') , an affiliate of t he In vest men t Manager, w o uld have
been su fficien t t o defeat an y special resolu tion t hat c o uld
be p u t bef o re a general meetin g of t he Co m pany, in clu ding
an y v o te t o place t he Co m pan y in to mem bers' v olun tar y
liq uidatio n.
A s ann o unced o n 8 Feb r uar y 2 0 2 1, ho wever, ACG ir rev
o cably un der t oo k to abstain f r o m v o tin g o n a c o n
tinuation resolu tio n an d o n a resolu tio n t o place t he Co m
pan y in t o mem bers' v olun tary liq uidatio n , t o be p r o p
osed at a general meetin g of t he Co m pan y w hic h is to f ollo
w t he AGM.
Since t he o u t c o me of t he c o n tinuation an d liq uidatio
n v o tes are b y n o means cer tain , t his rep resen ts a
material uncer tain t y w hic h may cast sig nificant d o u b t o n
t he Co m pan y's f u t u re an d its abilit y t o c o n tinue as a
g oin g c o ncer n. N o t wit hstan din g t his, t he finan cial
statemen ts have been p repared o n a g oin g c o ncer n basis. In
arrivin g at t he decisio n o n t he basis of p reparatio n, t he B
oar d c o nsidered t he finan cial p ositio n of t he Co m pany,
its cash flow an d liq uidit y p ositio n as well as t he uncer
tain t y su r r o un din g t he o u t c o me of t he c o n tinuatio
n an d liq uidation v o tes. Fu r t her c o mmen tary o n t he co n
tinuatio n and liquidation resolutions, including the voting
recommendation of the Board of Directors, is included in the
circular convening the GM which will be sent to shareholders
shortly.
A nnu a l G e n e r a l Mee t i n g a n d Ge n e ral Mee t i ng
The Co m pan y's A nnual General Meeting is t o be held at t he
offices of Gabelli, 3 S t . J a m es's Pla ce, L o n d o n SW1 A 1
NP on Monday, 12 J uly 2 0 2 1 at 11.00 am . The AGM w ill , b y n
e c essi ty, b e p u r el y f un c t i o n al i n n a t u r e . A r
r a n g e m e n ts w ill b e m a de t o ensu re t hat t he minim u
m nu m ber of shareh olders req uired t o f o r m a q u o r um will
be in at ten dance in o r der t hat t he meetin g may p r o ceed an
d t he b usiness be c o n clu ded . The B oar d c o nsiders t hese
ar ran gemen ts t o be in t he best in terests of shareh olders
given t he c u r ren t cir c u mstances.
The AGM will be f ollo wed b y a general meetin g of t he Co m
pan y at w hic h a continuation r eso l u t i o n and a resolution
t o p l a ce t he Co m pan y in t o mem bers' v olun tary liq
uidatio n will be proposed . A cir c ular in c o nnec tio n with t
he general meetin g refer red t o ab o ve will be p osted t o
shareh olders sh o r tly.
The B oar d st r o n gly disc o u rages shareh olders f r o m at
ten din g t he AGM an d t he su bseq uen t GM o n 12 J uly 2 0 21
an d en t r y will be ref used if Go ver n ment g uidance so req
uires o r if t he Chair man c o nsiders it t o be necessary. Shareh
olders are enc o u raged t o exer cise t heir v o tes in respec t
of t he meetin g in ad vance.
O n behalf of t he B oar d , I sh o uld like t o t han k shareh
olders in ad vance f or t heir c o - o peratio n an d un derstan
din g.
O u t l oo k
L oo k in g ahead , t he o u tloo k f o r t he Co m pan y
appears p r o misin g , with t he In vest men t Manager's b o t t o
m-u p , value st yle in vest men t p hiloso p hy f i n a ll y d eli
v e r i n g fav o u r a b le r e t u r ns f o r shareh olders. The
U.S. ec o n o my is t h rivin g , helped b y an agg ressive vac
cine r oll o u t an d massive fiscal stim ulus. In additio n , t he
Federal Reser ve has stated t hat t hey plan to k ee p sh o r t - t
e r m i n t e r est rat es n e ar zer o f o r t he f o reseeable f
u t u re, even if in flatio n reac hes its 2 % annual tar get. F u
r t her m o re, t he p r o babilit y is hig h t hat a lar ge in f
rast r u c t u re spen din g bill will be passed b y t he U.S. Co n
g ress an d sig ned in t o law b y Presiden t Biden . The lar gest
sec t o r allo catio n in t he p o r t f olio is in in d ust rial
st o c ks, an d t his sec t o r sh o uld benefit f r o m su c h a
bill.
N o t w it hstan din g t he p r o misin g o u tlook f o r t he
U.S. ec o n o m y an d mar kets, t he B oar d rec o g nises t hat
shareh olders have exer cised patience since t he p revio us c o n
tinuatio n v o te an d may wish t o take t he o pp o r t unity, rep
resen ted b y t he u p c o min g v o tes o n c o n tinuatio n and
mem bers' v olun tar y liq uidatio n , t o v o te f o r disc o n
tinuatio n an d su bseq uent mem bers' v olun tar y liq uidatio n
of t he Co m pany.
Pe t e r D i cks
Chair man of t he B oard
9 June 2 0 21
INVESTMENT MANAGER'S REVIEW
B o t h t he Co m pan y an d its In vest ment Manager are ec o n
o mically viable an d in st r o n g finan cial p ositio ns. The Co
m pany main tains a hig hly liq uid in vest ment p o r t f
olio.
A t t he u p c o min g GM , sc hed uled f or 12 J uly 2 0 2 1 ,
a c o n tinuatio n v o te will be held . D ue t o t his v o te, t h
r o u g h o u t t his A nnu a l Re p o r t t h e r e is l a n g uag
e r e lat ed t o t he " g oin g c o ncer n " of t he Co m pany. The
g oin g c o ncer n of t he Co m pany relates O N L Y t o t he uncer
tain t y of t he o u t c o me of t his c o n tinuatio n v o te.
Gab e lli Ph il oso p h y an d Pr o c ess
Gabelli F un ds w o uld like t o t han k o ur i n v est o rs f o
r e n t r ust i n g a p o r tio n of t heir assets t o t he Gabelli
Value Plus+ T r u s t . W e a pp r e ciate t he c o n fidence and t
r ust y o u have of fered o u r o r ganisation t h r o u g h an in
vest men t in GV P . T o day, as f o r m o re t han f o r t y
years, we remain vigilan t in t he applicatio n of o ur in vest men
t p hiloso p h y an d in o u r sear ch f o r o pp o r t unities.
Bef o re we review t he fiscal year just c o m pleted an d self
-assess t h e per f o r mance since o u r laun c h in 2015, we w o
uld like t o remin d o u r shareh olders of o u r in vest men t p
hiloso p h y and p r o cess.
W e a t Ga b e lli a r e a c t i v e , b o t t o m - u p , value
in vest o rs, an d seek t o ac hieve real capital app reciatio n (
relative t o in flatio n) over t he lo n g ter m , regar dless of
mar ket c y cles. We ac hieve ret u r ns t h r o u gh in vestin g
in b usinesses u tilisin g o ur p r o p rietar y Private Mar ket
Value ( "PM V") w i t h a Ca t al y s t (TM) m e t h o d o l o gy.
PM V is t he value t hat we believe an in f o r med b uyer w o uld
be willin g t o pay t o ac q uire an en tire c o m pan y in a p
rivate t ransac tio n. O u r team arrives at a PM V valuation t h r
o u g h t he rig o r o us assessmen t of f un damen tals, f r o m p
u blicly available in f o r matio n an d ju dg men t gained f r o m
o u r c o m p rehensive, ac c u m ulated k n o wledge of a variet y
of sec t o rs. We f o c us o n t h e b a l a nc e sh ee t , e a r n
i n gs, f ree cash flo w , an d t he managemen t of p r o s p e c t
i v e c o m panies. We are n o t in dex ben c h mar ked , an d c o
nst r u c t p o r t f olios ag n ostic of mar ket capitalisatio n
and in dex weig h tin gs. We have in vested t his way since 1
977.
O u r resear c h p r o cess iden tifies dif feren tiated f ran c
hise b usinesses, t y p i c a ll y w i t h st r o n g o r g a n i c
c ash flo w c harac teristics, balance sheet o pp o r t unities, an
d o peratio nal flexibility. We seek t o iden tify b usinesses w h
ose sec u rities t rade in t he p u blic mar kets at a sig nifican
t disc o un t t o o u r assessmen t of t heir PM V estimate, o r "
Mar gin of Safet y ". Havin g iden tified su c h sec u rities, we
loo k t o iden tify o ne o r m o re " catalysts" t hat will nar r o
w o r eliminate t he disc o unt asso ciated wit h t hat " Mar gin
of Safet y ". Catalysts can c o me in man y f o r ms in clu din g ,
b u t n o t limited t o c o r p o rate rest r u c t u rin gs (su c
h as de- mer gers and asset sales) , o peratio nal im p r ovemen
ts, reg ulat o r y o r managerial c han ges, special sit uatio ns
(su c h as liq uidatio ns) , and mer gers an d ac q uisitio ns.
It is t h r o u g h t his p r o cess of b o t t o m - up st o c
k selec tio n an d t he im plemen tation of d is ciplined p o r t f
olio c o nst r u c tion t hat we ex pec t t o c reate value f o r o
ur shareh olders.
T h e Y e a r i n Re v i e w : W h a t a D i f f e r e n c e a Y ear Mak es!
O n 3 1 Mar c h 2 0 2 0 , t he U nited S tates and t he en tire
w o rld were in t he early stages of dealin g wit h t he COVID - 1
9 glo bal pan demic . L o c k d o w ns were g oin g in to place ac
r oss t he U nited S tates, an d many b usinesses came t o a c o m
plete stan dstill. The st o c k mar ket was d r o ppin g q uic kly
d u rin g t he m o n t h of Mar c h , an d in vest o rs were at a
loss t r yin g t o fig u re o u t h ow t he pan demic w o uld play
o u t . It had been app r o ximately o ne hun d red years since t
he last pan demic , an d p r ojec tio ns f or p o ten tial deat hs
were all over t he map. S t o c k mar kets t h r o u g h o u t over
t he w o rld were su f ferin g g reat losses.
Fast f o r war d t o t o day, an d it is a very d i f f e r e n
t st o r y i n t h e U . S . V a c cine r ollo u ts are in f ull f
o r ce, an d states are g rad ually reo penin g f o r b usiness.
The Federal g over n men t has injec ted massive fiscal stim ulus
in t o t he ec o n o m y and t he Federal Reser ve has p u m ped hu
ge am o un ts of liq uidit y in t o t he mar kets. U n e m p l o y
m e n t has d r o pped sig nifican tly, t o app r o ximately 6 % ,
an d is ex pec ted to d r o p f u r t her t h r o u g h o u t 2 0 2
1 . The st o ck mar ket has m o re t han recovered an d is hittin g
new hig hs. Value st o c ks, w hich have been o u t of fav o r f o
r man y years, are star tin g t o per f o r m well. In additio n,
small- an d mid -capitalizatio n st o c ks are also star tin g t o
per f o r m well af ter many years of disapp oin tin g per f o r
mance.
W e are hap p y t o rep o r t t hat t he net asset value ( NAV )
of ( y ) o u r F un d is also hittin g new hig hs. Wit h t he p o
ten tial f or an in f rast r u c t u re spen din g bill t o pass Co
n g ress an d g o in t o law , we feel t he sig nifican t ex p osu
re of t he T r ust t o t he in d ust rial sec t o r sh o uld help t
he overall p o r t f olio t o per f o r m well. A f ter many y e a
rs of v a l u e i n v est i n g b e i n g o u t of st yle, it is
nice t o finally have t he win d to o u r bac ks.
S e l f - A s s e s s m e n t
It has n o w been just over six years since Ga b e lli Va l u e
Pl us+ T r ust w as la un c h ed in Feb r uar y of 2 0 1 5 . Wh en
we were c o n d u c t i n g t h e r o a d s h o w f o r t he laun
ch of t h e T r u s t , m a n y p o t e n t ial U K in vest o rs
wan ted t o par ticipate in t he U. S . st o ck mar ket , b u t t
hey wan ted a defensive ex p osu re. O u r Private Mar ket Value
with a Catalyst (T M) app r oac h , wit h its absolu te r e t u r n
f o c u s , seemed t o be a g oo d fit f or m a n y of t hese in
vest o rs, especially given t hat a p o r tio n of t he p o r t f
olio was to be in vested in ann o unced mer ger deals. A t t he
time, man y p o ten tial in vest o rs c o mmen ted t hat if we c o
uld generate hig h sin gle digit ret u r ns over a mar ket c y cle,
t hey w o uld be ver y hap py.
A s we reflec t o n t h ose years, we are hap p y t o p oin t o
u t t hat o riginal in vest o rs p ai d 100 pence at laun c h , an
d on 3 1 Mar c h 2 0 2 1 , t he NAV of Gabelli Value Plus+ T r ust
was 170 pence. That w o r ks o u t t o a c o m p o un ded average
rate of ret u r n of over 9 % over t he past six years. If o ne in
clu des t he dividen ds t hat have been paid o u t t o shareh
olders, t hen t he t o tal ret u r n is even hig her. It is w o r
th n o t hin g t hat , since t he laun c h of t he T r ust ,
leverage was never used at any time.
O n e c o ncer n ex p ressed t o us d u ring t he initial r
oadsh o w was t hat A merican m o ney managers were k n o w n f o r
c o ming t o t he U K t o raise m o ney an d t hen never c o min g
bac k t o u pdate in vest o rs o n t heir in vest men t . A t t hat
time, we p r o mised t hat we w o uld be ac tive in clien t ser
vice. T o date, t he New Y o r k - based p o r t f olio managers o
n t he T r ust have c o n d u c ted d o z e ns a n d d o z e ns of
i n - p e rson meetin gs wit h in vest o rs all over t he U K
.
In su mmary, we feel st r o n gly t hat we have d o ne exac tly
w hat we p r o mised we w o uld d o d u rin g t he r oad sh o w. We
p oin t t his o u t because in J uly t here will be an o t her c o
n tinuatio n v o te f or s h a r e h o l d e r s . We h o pe t hat
y o u share o ur belief t hat we have delivered o n w hat we said
we w o uld d o over six years ag o , and t hat t his T r ust c o n
tinues t o meet y o ur in vest men t o bjec tives.
Pe r f o r man c e S u mmar y 2 0 2 0/ 21
D u r in g t he past year, o u r best five c o n t rib u t o rs
t o o u r ret u r ns were o ur h oldin gs in t he shares of Her c ,
Freep o rt M c M oRan , Viac o m , Discovery, and Navistar. B y c o
n t rast , o u r h oldin gs in Her t z , Ry man H ospitality,
General Elec t ric , an d Aer ojet Ro c ketd y ne were all laggar
ds.
L e t 's Tal k S t o cks:
A er ojet Ro c ketd y ne H oldin gs In c. ( A JRD - $ 4 6 . 96 -
NYSE) , based in El Seg un d o , Calif o r nia, is a manu fac t u
rer of aer ospace and d e f e n se p r o d u c t s a n d s y s t e
m s f o r defense an d space applicatio ns. The manu fac t u rin g
o peratio n is a leadin g tec hn olo g y- based desig ner, develo
per, an d manu fac t u rer of aer ospace an d defense p r o d u c
ts f or t he U.S. g o ver n men t , in clu din g t he Depar t men t
of Defense an d N A S A. A JRD also manu fac t u res p r o d u c ts
f o r g o ver n men tal c o n t rac t o rs an d t he c o mmer cial
sec t or. O n 20 December
2 0 2 0 , t he c o m pan y ann o unced it had ag reed t o be ac
q uired by L o c k heed Mar tin Co r p o ratio n in an all- cash t
ransac tio n wit h t o tal eq uity v a l u e of $ 5 b illi o n , o
r $ 5 6 p e r sh a r e. As par t of t he t ransac tio n , Aer ojet
Ro c ketd y ne declared a $ 5 .00 per share p re- closin g special
dividen d, w h i c h was paid o n 24 Mar c h 2 0 2 1 . The t ransac
tio n is ex pec ted t o close in t he sec o n d half of 2 0 2
1.
B K Ban k of New Y o r k Mello n Co r p. ( B K - $ 4 7 . 2 9 -
NYSE) is a glo bal le a d e r i n p r o v i d i n g f i n a n c i a
l se r v i c es t o instit u tio ns an d in divid uals. The c o m
pan y o perates in m o re t han o ne hun d red mar kets w o rld
wide and st rives t o be t he glo bal p r o vider of c h oice f o r
in vest men t management an d in vest men t ser vices. As of Decem
ber 2 0 2 0 , t he Fir m had $ 4 1 .1 t rillio n in assets un der c
ust o dy an d $ 2 .0 trillion in assets un der managemen t . Goin g
f o r war d , we ex pec t B K t o benefit f r o m hig her in terest
rates, risin g glo bal inc o mes an d t he c r oss b o r der m o
vemen t of finan cial t ransac tio ns.
CN H IN D U S TRIA L N V (CN HI - $ 1 5 . 6 4 - NYSE) , wit h
headq uar ters in L o n d o n , En glan d , an d Bu rr Ridge, Illin
ois, is a glo bal capital eq uip ment m a nu f a c t u r e r t h a
t w as d e m e r g ed f r o m paren t Fiat in 2 0 1 3 . CN HI is
uniq ue in t hat it has leadin g p ositio ns in a variet y of glo
bal mac hinery mar kets. It is best k no w n f o r its ag ric ult u
ral eq uip men t b usiness, c o nsistin g of Case IH , New H olland
A g ric ult u re, an d S tey r b ran ds. The c o m pan y's o t her
b usinesses in clu de IVECO , a leadin g glo bal t r u c k an d b
us m a nu f a c t u r er, as w ell as Case a nd New H ollan d c o
nst r u c tio n mac hinery. Finally, its FPT In d ust rial b rand p
r o vides en gines an d t ransmissio ns f o r t he c o m pan y's
cap tive b usinesses an d also sells t o o t her mac hinery manu
fac t u rers. The new CEO , Sc o tt Wise, is c o mmit ted t o CN
HI's finan cial en gineerin g plan , b y w hic h it will separate
its O ff Hig h way b usiness f r o m its T r u c k an d En gine b
usiness via a tax f ree spin.
PNC Finan cial Ser vices Gr o u p In c. (PNC - $ 175 . 4 1 -
NYSE) is o ne of t he natio n's lar gest diversified finan cial ser
vices o r ganizatio ns. Fr o m t he c o m pan y's Pittsb u r g h
headq uar ters, PNC p r o vides retail an d c o mmer cial ban kin g
ser vices in t he N o r t heast, So u t heast , an d Mid west U.S.
via a regio nal b ran c h net w o r k of o ver t w o - t h o usan d
lo catio ns alo n g with m o r tg a g e a n d d e p osi t b usi n
esses on a natio nal basis. In N o vem ber 2 0 2 0, PNC ann o unced
t heir in ten tio n to ac q uire t he U.S. su bsidiar y of Spanish
ban k B BVA f o r $ 11 . 6 billio n in cash, w hic h w o uld add $
10 4 billio n in assets t o PNC an d ex pan d t he c o m pan y's f
oo t p rin t t h r o u g h o u t t he So u t h west an d West Coast
. The c o m pany ex pec ts t he mer ger t o close near t he middle
of 2 0 2 1 , an d p r o vide annual ear nin gs ac c retio n in ex
cess of 20 % d u rin g t he first f ull year of c o m bined o
peratio ns.
RSG Rep u blic Ser vices In c . (RSG - $ 9 9 . 35 - NYSE) ,
based in Ph oenix, A riz o na, became t he sec o n d lar gest solid
waste c o m pan y in N o r th A merica af ter its ac q uisitio n of
Allied Waste In d ust ries in Decem ber 20 0 8. Rep u blic p r o
vides n o nhazar d o us solid waste c ollec tio n ser vices f or c
o mm e r c i a l , i n d ust r i a l , m un i c i p a l, an d
residen tial c ust o mers in f o r t y- o ne states an d Puer t o
Ric o . Rep u blic ser ves m o re t han 2 , 800 m unicipalities an
d o perates 1 8 6 lan d fills, 220 t ransfer statio ns, 3 4 5 c
ollec tion o peratio ns, an d 76 rec y clin g facilities. Since t
he Allied mer ger, Rep u blic has benefited f r o m sy ner gies d
riven b y r o u te density, beneficial use of ac q uired assets, an
d red u c tio n in red un dan t c o r p o rate o ver head. Re p u b
li c i s c o mm i t t e d t o i ts c o re solid waste b usiness.
While o t her p r o viders have st rayed in t o alter native waste
reso u r ce tec hn olo gies and st rategies, we view Rep u blic's
plan t o remain stead fast in t he t raditio nal solid waste b
usiness p ositively. We ex pec t c o n tinued solid waste g r o w
th ac q uisitio ns, ear nin gs im p r o vemen t, an d in c remen
tal r o u te densit y and in ter nalizatio n g r o w t h in already
established mar kets t o generate real value in t he near t o mediu
m ter m, hig hlig h tin g t he c o m pan y's p o ten tial.
Gabelli Funds, LLC
9 June 2021
PORTFOLIO
PORTFOLIO SUMMARY
Portfolio distribution as at 31 March 2021 (%)*
Russell 3000
GVP Portfolio Value S&P 500
------------------------ -------------- ------------- --------
Communication Services 15.3 9.9 10.9
Consumer Discretionary 6.6 12.3 12.5
Consumer Staples 15.5 5.6 6.1
Energy 2.6 2.6 2.8
Financials 10.4 11.7 11.3
Health Care 8.6 13.5 13.0
Industrials 33.3 9.7 8.8
Information Technology 3.9 25.8 26.7
Materials 9.1 3.0 2.7
Real Estate 0.0 3.3 2.5
Utilities 4.7 2.6 2.7
Total 100.0 100.0 100.0
------------------------ -------------- ------------- --------
* Excludes cash and short-term investments.
By asset class (%)
As at As at
31 March 2021 31 March 2020
--------------------------------- --------------- ---------------
Equities 77.4 88.5
Cash and short-term investments 22.6 11.5
--------------------------------- --------------- ---------------
Total 100.0 100.0
--------------------------------- --------------- ---------------
Portfolio holdings
As at 31 March 2021
--------------------------
Market value % of total
GBP000 portfolio
---------------------------------- ------------- -----------
Navistar International Corp 6,063 4.7
Bank Of New York Mellon Corp 4,456 3.4
PNM Resources Inc 4,194 3.2
PNC Financial Services Group 4,068 3.2
Freeport-McMoRan Inc 4,009 3.1
---------------------------------- ------------- -----------
Mueller Industries Inc 3,966 3.1
CNH Industrial N.V. 3,911 3.1
GCP Applied Technologies 3,881 3.0
State Street Corp 3,836 3.0
Republic Services Inc 3,748 2.9
---------------------------------- ------------- -----------
Cubic Corp 3,513 2.7
Textron Inc 3,435 2.7
Aerojet Rocketdyne Holdings Inc 3,407 2.6
Sinclair Broadcast Group 2,969 2.3
Energizer Holdings Inc 2,649 2.0
---------------------------------- ------------- -----------
Flowserve Corp 2,588 2.0
Loral Space & Communications Inc 2,566 2.0
Myers Industries Inc 2,518 1.9
Dana Inc 2,381 1.8
Fox Corp 2,379 1.8
---------------------------------- ------------- -----------
Sub-total - top 20 holdings 70,537 54.5
Sub-total - top 21 - 40 holdings 33,824 26.1
Sub-total - top 41 - 60 holdings 15,717 12.1
Sub-total - remaining holdings 9,481 7.3
Total holdings* : 101 positions 129,559 100.0
---------------------------------- ------------- -----------
* Excludes cash and short-term investments.
All holdings are ordinary shares.
GOVERNANCE
STRATEGIC REPORT
The Direc t o rs p resen t t he S t rategic Re p o r t of t h e
C o m p a n y f o r t he year e n d e d 3 1 M a r c h 2 0 2 1 . T h
e a i m of t he S t rategic Rep o r t is t o p r o vide shareh
olders wit h t he abilit y t o assess ho w t he Direc t o rs have
per f o r med t heir d u t y t o p r o m o te t he success of t he
Co m pan y d u rin g t he year un der review.
The Chair man's S tatemen t an d t he In vest men t Manager's
Review f o r m par t of t he S t rategic Rep o r t.
B u si n ess Rev iew
S t r u c t u r e an d O b j e c t i v e of t h e Co m pany
Ga b elli Va l u e Pl us+ T r ust PL C (GVP or t he Co m pan y )
is an in vest men t t r ust c o m pan y t hat has a p remiu m
listin g on t he L o n d o n S t o c k Ex c han ge.
The Co m pan y's st rateg y is t o generate ret u r ns f o r its
shareh olders b y p u rsuing its in vest men t o bjec tive w hile
mitigating shareh older risk , b y in vestin g in a diversified sp
read of eq uit y in vest men ts. Th r o u g h a p r o cess of b o t
t o m - u p st o ck selec tio n an d t he im plemen tatio n of
disciplined p o r t f olio c o nst r u c tio n , t he Co m pan y
aims t o c reate value f o r its shareh olders.
In seekin g t o ac hieve its in vest ment o bjec tive t he Co m
pan y has c o n t rac t ually delegated t he managemen t of t he in
vest men t p o r t f olio t o Gabelli F un ds, L L C , ( t h e " M
a n a g e r " ) . G a b elli F un ds, LLC is also t he Co m pan y's
Alter native In vest men t F un d Manager.
The Co m pan y's existin g in vest ment o bjec tive an d in vest
men t p olic y are set o u t belo w.
I n v e s t m e n t P o li c y , R e s t r i c t i o n s a n d
Gu i d e li n es
The Co m pan y will seek t o meet its in vest men t o bjec tive
b y in vesting p red o minan tly in eq uit y sec u rities of U.S. c
o m panies, of an y mar ket capitalisatio n.
In selec tin g su c h sec u rities t he Manager will u tilise
its p r o p rietar y Private Mar ket Value ( "PM V " ) wit h a
Catalyst (T M) met h o d olo gy. PM V is t he value t hat t he
Manager believes an in f o r med in d ust rial b uyer w o uld be
willin g t o pay t o ac q uire an en tire c o m pany. The Manager
arrives at a PM V valuatio n b y a rig o r o us assess m e n t o f
f un damen tals ( f o c using o n t h e b a l a nc e sh ee t , e a
r n i n gs a nd f ree cash flo w ) f r o m p u blicly available i n
f o r m a t i o n a n d j u dg m e n t g a i n ed f r o m its c o m
p rehensive, ac c u m ulated k no wledge of a variet y of sec t o
rs.
The Manager's f un damen tal resear ch see ks t o i d e n t i f
y i n v est m e n ts t y pically feat u rin g , b u t n o t limited
t o, dif feren tiated f ran c hise b usinesses wit h o r ganic cash
flo w , balance sheet
o pp o r t un ities an d o peratio nal flexibility. The Manager
will seek t o iden tify b usinesses w h ose sec u rities t rade in
t he p u blic mar kets at a sig nifican t disc o unt t o t heir PM
V estimate w hic h t he Manager refers t o as a " Mar gin of Safet
y ".
H avin g iden tified su c h sec u rities, t he Manager will seek
t o iden tif y o ne o r m o re " catalysts" t hat will help t o nar
r o w or eliminate t he Mar gin of Safety. Catalysts can c o me in
man y f o r ms in clu din g , b ut n o t limited t o , c o r p o
rate rest r u c t u rin gs (su c h as demer gers an d asset sales),
o peratio nal im p r o vemen ts, reg ulat o r y or managerial c han
ges, special sit uatio ns (su c h as liq uidatio ns) an d mer gers
and ac q uisitio ns.
The Manager seeks value c reation t h r o u g h its p r o cess
of b o t t o m - u p st o ck selec tio n an d its im plemen tatio n
of a disciplined p o r t f olio c o nst r u c tion p r o cess.
A s at 3 1 Mar c h 2 0 2 1 , t he t o p 60 h oldin gs rep resen
t 9 2 . 7 % of t he t o tal in vest men ts, in line wit h ex pec
tatio ns at laun c h . Cash h oldin gs c u r ren tly rep resen t 22
. 6 % of t he p o r t f olio.
In additio n t o eq uit y sec u rities of U.S. c o m panies, t
he Co m pan y may (su bject t o t he in vest men t rest ric tio ns
set o ut belo w ) also in vest in o t her sec u rities f r o m time
t o time in clu din g n o n -U.S. sec u rities, c o n ver tible sec
u rities, fixed in terest sec u rities, p refer red st o c k , n o
n- c o n ver tible p refer red st o c k , dep ositary receip ts,
war ran ts an d o t her rig h ts. Su b je c t t o t h e i n v est m
e n t r est r i c tio ns set o u t belo w , t here is n o
limitation o n t he nu m ber of in vest men ts w hich may be ex p
osed t o an y o ne t y pe of catalyst even t , in clu din g demer
gers, r
est r u c t u r i n gs o r a nn o unc e d m e r g e rs an d ac q uisitio ns.
The Co m pan y may in vest t h r o u gh derivatives f o r
efficien t p o r t f olio managemen t an d f o r in vest ment p u r
p oses. A n y use of derivatives f or efficien t p o r t f olio
managemen t an d f or in vest men t p u r p oses will be su bjec t
to t he in vest men t rest ric tio ns set o u t belo w.
Risk d i v e rsi f i cat i on
Ge n e ral
Po r t f olio risk will be mitigated by in vestin g in a
diversified sp read of in vest men ts. In par tic ular, t he Co m
pany will o bser ve t he f ollo win g in vest ment rest ric tio
ns:
-- n o sin gle in vest men t shall, at t he time of in vest men
t , acc o un t f o r m o re t han 10 per cen t . of t he Gr oss
Assets;
-- n o m o re t han 1 5 per cen t . of t he Gr oss Assets, at t
he time of in vest men t , shall be in vested in sec u rities
issued by c o m panies o t her t han U.S. c o m panies; and
-- n o m o re t han 2 5 per cen t . of t he Gr oss Assets, at t
he time of in vest men t , shall be ex p osed t o any o ne in d ust
r y (as defined b y t he MSCI i n d u s t r y g r o u ps a cc o r d
i n g t o t he GICS ( glo bal in d ust r y classification stan dar
ds categ o risatio n ).
The Co m pan y may ad o p t a tem p o rary defensive p ositio n
w here it deter mines t hat ad verse mar ket c o n ditio ns exist
and in vest so me o r all of t he p o r t f olio in:
-- c ash o r cash eq uivalen ts, m o ney mar ket inst r u men
ts, b o n ds, c o mmer cial paper o r o t her debt o bligatio ns
wit h ban ks o r o t her c o un ter par ties havin g a sin gle A (
or e q u i v a le n t ) o r h i g h e r c r e d i t r a t i ng as
deter mined b y an in ter natio nally rec o g nised ratin g agen c
y ; or
-- a n y " g o ver n men t an d p u blic sec u rities" as
defined f o r t he p u r p oses of t he FCA Han db oo k.
In additio n , unin vested cash o r su r plus capital o r assets
may be in vested o n a tem p o rar y basis in su c h assets.
D e r i v at i v es an d sh o r t se lli ng
If t he Co m pan y in vests in derivatives an d / o r st r u c t
u red finan cial inst r u men ts f o r in vest men t p u r p oses
an d / or f o r efficien t p o r t f olio management p u r p oses,
t he t o tal n o tio nal value of derivatives an d / o r st r u c t
u red finan cial inst r u men ts at t he time of in vest ment will
n o t ex ceed , in agg regate, 10 per cen t. of its Gr oss Assets.
The Co m pan y may take b o t h lo n g an d sh o r t p ositio ns.
The C o m p a n y may sh o r t u p t o a li m i t of 10 per cen t .
of its Gr oss Assets. F o r sh o r ting p u r p oses, t he Co m pan
y may use in dices o r in divid ual st o c ks.
When in vestin g via derivatives an d/o r st r u c t u red finan
cial inst r u men ts ( w h e t h e r f o r i n v est m e n t p u r
p oses a n d/ o r f o r efficien t p o r t f olio management p u r
p oses) , t he Co m pan y will seek to mitigate an d / o r sp read
its c o un ter par ty risk exposure by collateralisation and/or
contracting with a potential range of counterparty banks, as
appropriate, each of whom shall, at the time of entering into such
derivatives and/or structured financial instruments, have a single
A (or equivalent) or higher credit rating as determined by an
internationally recognised rating agency.
In the event of a breach of the investment guidelines and
restrictions set out above, the Manager will inform the Board upon
becoming aware of the same and, if the Board considers the breach
to be material, notification will be made to a Regulatory
Information Service and the Manager will look to resolve the breach
with the agreement of the Board.
Borrowing policy
The Company may borrow up to 15 per cent. of Net Asset Value
(calculated at the time of draw down). Borrowings may be used for
investment and/or working capital purposes.
In accordance with the requirements of the UK Listing Authority,
any material change to the Company's investment policy will require
the approval of Shareholders by way of an ordinary resolution at a
general meeting.
There has been no change to the investment policy since the
launch of the Company in February 2015.
Culture and Values
The Directors seek to discharge their responsibilities and meet
shareholder expectations in an open and transparent manner. The
Board seeks to recruit Directors who have diverse experience. The
industry experience on the Board ensures that there is detailed
knowledge and constructive challenge in the decision-making
process. This helps the Company achieve its overarching aim
of enhancing shareholder value. The Directors are mindful of
costs and seek to ensure that the best value for money is achieved
in managing the Company.
The Company's values of skill, knowledge and integrity are
aligned to the delivery of its investment objective and are closely
monitored by the Board.
The Board seeks to employ third party providers who share the
Company's culture and, importantly, will work with the Directors in
an open and transparent manner to achieve the Company's aims.
Performance
Details of the Company's performance during the year are
provided in the Chairman's Statement. The Investment Manager's
Review includes a review of developments during the year as well as
information on investment activity within the portfolio.
Total Return, Revenue and Dividends
The Company's revenue earnings for the year amounted to 1.32
pence per share (2020: 1.09 pence).
The Company intends to pay dividends annually. Dividend yield is
a by-product of the investment process as part of the total return
sought. Investors should have no expectation that the Company will
pay dividends as anticipated, or at all, and past dividends are not
an indication of future dividend payments.
On 21 January 2021, the Directors declared an interim dividend
of 0.1 pence per ordinary share for the year ended 31March 2020.
The dividend was paid on 19 February 2021 to shareholders on the
register at the close of business on 29 January 2021.
On 9 June 2021 the Directors declared an interim dividend of 1.2
pence per ordinary share in respect of the year ended 31 March
2021. The dividend is payable on 2 July 2021 to shareholders on the
register at close of business on 18 June 2021.
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 to manage any discount or premium at which the
Company's shares trade. The principal KPIs are described below:
-- Performance
At each meeting, the Board reviews the performance of the
portfolio as well as the net asset value and share price. Although
the Company does not have a benchmark the Board reviews performance
in the context of the performance of the S&P 500 and Russell
3000 Value indices.
-- Performance attribution
The purpose of performance attribution analysis is to assess how
the Company achieved its performance and to understand the impact
on the Company's relative performance of the various components,
such as stock selection.
-- Share price discount to net asset value per share
The Board operates a share repurchase programme that seeks to
address imbalances in supply and demand for the Company's shares
within the market and thereby reduce the volatility of the discount
to NAV per share at which the Company's shares trade. In the year
to 31 March 2021, the discount ranged between 19.9% and 3.9% based
on daily data. The Company did not buy back any ordinary shares
during the year ended 31 March 2021.
The Board, at its regular meetings, undertakes reviews of
marketing and investor sentiment.
-- Ongoing charges
The ongoing charges represent the Company's management fee and
all other recurring operating expenses expressed as a percentage of
average net assets. The ongoing charges for the year ended 31 March
2021 were 1.32% (2020: 1 .24%).
Year ended Year ended
31 March 2021 31 March 2020
--------------------------------- --------------- ---------------
Net asset value total return(1) 64.3% (25.0%)
Share price total return(1) 98.2% (32.7%)
Discount to net asset value(2) 3.9% 19.9%
--------------------------------- --------------- ---------------
(1) This measures the Company's NAV and share price total
returns, which assumes dividends paid by the Company have been
reinvested.
(2) This is the difference between the share price and the
cum-income NAV per share at the year end.
The KPIs f o r t he Co m pan y are set o ut above . These KPIs
fall wit hin t he definitio n of "Alter native Per f o r mance M e
a s u r es" ( APMs) un d e r g uid a nce issued b y t he Eu r o
pean Sec u rities and M a r k e t s A u t h o r i t y (ESM A ) an d
additio nal in f o r matio n ex plainin g ho w t hese are calc
ulated is set o u t in t he Glossar y in the Annual Report.
Pr i n c i pal Risks
T h e D i r e c t o r s c o n fir m t hat t hey have carried o u
t a r o b ust assessmen t of t he p rin cipal risks facin g t he Co
m pany in clu din g t h ose t hat w o uld t h reaten its b usiness
m o del, f u t u re per f o r mance, s o l v e n c y o r li q u i d
i ty, i n c l u d i n g t he im pac t of t he CO VID - 1 9 pan
demic.
W it h t he assistance of t he Manager, t he B oar d has p r o d
uced a risk mat rix w hic h iden tifies t he Co m pan y's key
risks. I n a ssessi n g t h ese r isks a n d ho w t hey can be
mitigated , t he B oar d has given par tic ular at ten tio n t o t
h ose issues t hat t h reaten t he viabilit y of t he Co m pany.
These key risks remain un c han ged since last year an d are set o
u t belo w, t o get her wit h details of ho w t hese have been
mitigated o r managed , w here app r o p riate.
In v est m e n t Po r t f o li o Risks
O n e of t he main risks of an in vest ment in GVP is a decline
in t he U.S. eq uity mar kets. This is best mitigated by i n v est
i n g i n a d i v e rsi f ie d p o r t f o li o a nd b y ad herin g
t o a caref ully m o nit o red series of in vest men t rest ric tio
ns, enabled b y au t o mated p re- t rade c o m pliance feat u res
an d daily review of t rade tic kets. These st ric t u res man date
t hat n o sin gle sec u rit y p u r c hase can , at t he time of i
n v est m e n t , a cc o un t f o r m o r e t h a n 10 % of t he g
r oss assets of t he Co m pan y ; no m o re t han 1 5 % of t he g r
oss assets, at t he time of p u r c hase, can be in vested in sec u
rities issued b y c o m panies o t her t han U.S. c o m panies; an
d n o m o re t han 2 5 % of t he g r oss assets, at t he time of p
u r c hase, can be ex p osed to an y o ne in d ust r y as defined b
y t he M o r gan S tanley Capital In d ust r y g r o u ps acc o r
din g t o t he GICS categ o risatio ns. In additio n , t he B oar d
meets t he p o r t f olio m a n a g e m e n t t e a m q u a r t e r
l y a t t he B oar d meetin gs t o review t he risk fac t o rs an d
t heir ef fec t o n t he p o r t f olio , and a t h o r o u g h
analysis of t he in vest ment st rateg y is c o m pleted.
Gl o bal Mac r o Ev e n t Risks
Glo bal instabilit y o r even ts, su ch as t he CO VID - 1 9 pan
demic , c o uld un d e r m i n e m a r k e ts a n d t h e r e f o
re af fec t t he Co m pan y's share p rice and NAV . T o t his en d
, glo bal ec o n o mic, geo p olitical, an d finan cial c o n ditio
ns are c o nstan tly m o nit o red . Diversificatio n of Co m pan y
assets is inc o r p o rated in t o t he in vest men t st rateg y an
d , if disr u p tive even ts o c c ur, t he Manager may be p
repared t o ad o p t a tem p o rar y defensive p ositio n an d in
vest so me o r all of t he Co m pan y's p o r t f olio in cash o r
cash eq uivalen ts, m o ney mar ket inst r u men ts, b o n ds, c o
mmer cial paper o r o t her deb t o bligatio ns wit h ban ks o r o
t her c o un ter par ties, wit h app r o p riate ratin gs as deter
mined b y an in ter natio nally rec o g nised ratin g agen c y an d
app r o ved b y t he B oar d . A n o t her o p tio n is t he in
vest men t in " g o ver n men t an d p u blic se c u r i t ies" as
d e f
i n e d f o r t h e p u r p oses of t he Finan cial Co n d u c t A u t h o rity Han db oo k.
O p e r at i o nal Risks
The o peratio nal f un c tio ns of t he C o m p a n y are o u
tso u r ced t o t hir d par ties, w hic h in clu de Co m p u
tershare ( regist rar an d receivin g agen t ) , S tate S t reet
Ban k an d T r ust Co m pan y (c ust o dian, ad minist rat or, an d
dep ositar y ), Maitlan d A d minist ratio n Ser vices Limited ( c
o m pan y sec retar y ) an d Peel H un t (shareh older c o mm
unicatio ns). Disr u p tio ns t o t he systems at t hese c o m
panies o r c o n t r ol failu res c o uld im pac t t he Co m pany.
All of t hese t hird par ties rep o r t t o t he Co m pan y o n a
reg ular basis an d t heir rep o r ts and rep resen tatio ns are
reviewed b y t he B oar d an d t he Manager.
The CO VID - 1 9 pan demic resulted in t he o peratio nal f un c
tio ns of t he Co m pan y's t hir d par t y ser vice p r o viders t
ransitio ning t o rem o te w o r kin g un der t heir respec tive b
usiness c o n tinuit y plans. Ser vice levels are m o nit o red b y
t he B oar d an d t hey have c o n tinued t o o perate ef fec
tively.
C o r p o r a t e G o v e r n a n c e a n d R e g u l a t o r y
Risks
The Co m pan y can su f fer damage to its rep u tatio n t h r o
u g h p oo r c o r p o rate g o ver nance. The B oar d ac tively
per f o r ms self -assessmen ts of c o m pliance with best g o ver
nance p rac tices. Also, sh a r e h o l d e r d isc o n t e n t d u
e t o a l a ck of app r o p riate c o mm unicatio ns an d/ o r i n
a d e q u a t e f i n a n c i a l r e p o r t i ng c o uld cause
shareh olders t o red uce or liq uidate t heir p ositio ns, w hic h
c o uld im pac t t he mar ket p rice of t he shares. The B oar d is
in c o n tac t wit h its major shareh olders o n a reg ular basis,
and it m o nit o rs shareh older sen timen t . In additio n , reg
ulat o r y risks, in t he f o rm of failu re t o c o m ply wit h
man dat o ry reg ulatio ns, c o uld have an im pac t on t he Co m
pan y's c o n tinuity. The Co m pany receives, an d resp o n ds t o
, g uidance f r om b o t h its ex ter nal an d in ter nal ad viso
rs on c o m pliance wit h t he Listin g Rules, and Disclosu re an d
T ransparen c y Rules, as well as o t her applicable reg ulatio
ns.
T ax Risks
In o r der t o q ualif y as an in vest ment t r ust , t he Co m
pan y m ust c o m ply with Sec tio ns 11 5 8- 5 9 of t he Co r p o
ration Tax A c t 2 0 1 0 . A b reac h of t hese sec tio ns c o uld
result in t he Co m pany l osi n g i n v est m e n t t r ust stat
us a n d , as a c o nseq uence, capital gains realized wit hin t he
Co m pan y's p o r t f olio w o uld be su bjec t t o Co r p o ratio
n Tax . The criteria are m o nit o red b y b o t h t he B oar d an
d t he Manager.
M a r k e t P r i c e of t h e Shar es may t rad e at a d isc o un t t o N e t Asse t Val ue
The mar ket p rice of t he Co m pan y's shares may fall belo w t
he NAV per share. T o add ress a disc o un t , t he Co m pan y has
au t h o rit y t o make use of share b u y bac ks, t h r o u g h w
hic h shares are rep u r c hased w hen t radin g at a disc o un t t
o NAV. The Co m pan y may p u r c hase u p t o a maxim u m of 1 4 .
99 % of its issued share capital. In additio n , as disc ussed un
der "Co r p o rate Go ver nance an d Reg ulat o ry Risks, " t he Co
m pan y has in c reased its shareh older c o mm unicatio ns p r o g
rammes t o in c rease its visibilit y and in terac tio n wit h
existin g an d p o ten tial in vest o rs.
Me r g e r an d Ev e n t D r i v e n Risks
This risk is inheren t t o t he mer gers an d ac q uisitio ns c
o m p o nen t of t he C o m pan y's st rateg y an d add resses t he
p ossibilit y t hat a deal d oes n o t go t h r o u g h , is
delayed bey o n d t he o riginal closin g date, o r t hat t he ter
ms of t he p r o p osed t ransac tio ns c han ge ad versely. This
risk is add ressed b y t he p o r t f olio m a n a g e m e n t t e
a m's c a r e f u l sele c tion an d ac tive m o nit o rin g of mer
gers and ac q uisitio ns deals, an d main tainin g a t h o r o u g
h k no wledge of t he selec ted sec u rities in t he p o r t f
olio.
Cli mat e Chan g e Risk
The B oar d an d In vest men t Manager c o nsi d e r ho w c li m
a t e c h a n g e c o u ld a f f e c t t h e C o m p a n y's p o r
t f o lio c o m panies an d shareh older ret u r ns. C u r r e n t
l y , t h e n e a r t e r m e f f e c ts of climate c han ge an d
climate c han ge r e g u la t i o n o n t he Co m pan y's in vest
men ts are n o t c o nsidered t o be material.
F o r disc ussio n of additio nal risks, please refer t o N o te
11 t o t he finan cial statemen ts.
Se c t i o n 172 S tat e m e nt
The Direc t o rs are min d f ul of t heir d u ties t o p r o m o
te t he success of t he Co m pany f o r t he benefit of its shareh
olders, w hile also c o nsiderin g t he in terests of its wider
stakeh olders, as per sec tio n 172 of t he Co m panies A c t 20 0
6 . The mat ters set o u t in sec tio n 172 ( 1 )(a) t o ( f )
are:
( a) t he likely c o nseq uences of any decisio n in t he lo n g ter m;
( b ) t h e in terests of t he Co m pan y's em ployees;
( c ) t he need t o f oster t he c o m pan y's b usiness relatio
nships wit h su ppliers, c ust o mers an d o t hers;
( d ) t h e im pac t of t he c o m pan y's o p e r a t i o n s o
n t he c o mm unit y and t he en vir o n men t;
( e) t he desirabilit y of t he c o m pany main tainin g a rep u
tatio n f o r high stan dar ds of b usiness c o n d u c t ; and
( f ) t h e need t o ac t fairly bet ween mem bers of t he c o m pany.
The B oar d ac k no wledges t hat en gagemen t wit h key stakeh
olders assists t he B oar d in meetin g t hese o bligatio ns an d
has iden tified its key stakeh olders belo w . The f ollo wing o u
tlines t he B oar d's en gagemen t with stakeh olders in t he year.
The Co m pany has n o em ployees an d t heref o re no em ployee
stakeh older mat ters to c o nsider.
Stakeholder Group Engagement in the year and their material issues
------------------- ----------------------------------------------------------------------------------
Investors Shareholders play an important role in monitoring and safeguarding the governance
of the Company and have access to the Board via the Company Secretary throughout
the year and, under normal circumstances, are encouraged to attend the AGM.
During the year to 31 March 2021, the Board has had increased engagement with
shareholders as it seeks to deliver a satisfactory outcome on the result of
the continuation vote, which was defeated at last year's AGM.
Suppliers Key suppliers are required to report to the Board on a regular basis. The Company
employs a collaborative approach and looks to build long term partnerships based
on open terms of business and fair payment terms.
Investee Companies The Manager meets with the management of all companies in which the Company
has a significant interest and reports on findings to the Board on a quarterly
basis.
Regulators The Board ensures compliance with the necessary rules and regulations relevant
to the Company in order to build trust and reputation in the market.
------------------- ----------------------------------------------------------------------------------
We define principal decisions as both those that are material to
the Company but also those that are significant to any of our key
stakeholders as identified above. In making the following principal
decisions, the Board considered the outcome from its stakeholder
engagement as well as the need to maintain a reputation for high
standards of business conduct and the need to act fairly between
the members of the Company.
Principal Decision 1
------------------------------ --------------------------------------------------------------------------------
Requisitioned General Meeting During the year to 31 March 2021, the Board has had increased engagement with
shareholders as it seeks to deliver a satisfactory outcome on the result of
the continuation vote, which was defeated at last year's AGM.
------------------------------ --------------------------------------------------------------------------------
Principal Decision 2
------------------------------ --------------------------------------------------------------------------------
Continuation Vote The Board considered, and unanimously agreed, to recommend that shareholders
vote against the continuation of the Company and that they vote in favour of
the resolution to place the Company into members' voluntary liquidation at the
forthcoming GM.
------------------------------ --------------------------------------------------------------------------------
Viability Statement
In acc o r dance wit h t he p r o visio ns of t he U K Co r p o
rate Go ver nance Co de, t he Direc t o rs have assessed t he p r
ospec ts of t he Co m pan y o ver a lo n ger perio d t han t he 1 2
m o n t hs refer red t o in t he 'Going Co ncer n' g uidelines.
A t t he AGM held in 2020 a majo rity of shareh olders v o ted
against t he c o n t i nu a t i o n of t h e C o m p any . A t a
general meetin g of t he Co m pany req uisitio ned b y ACG an d
held in Decem ber 2020 , a majo rit y of shareh olders v o ted
against all of t h e res o l u t i o n s . I n t h e perio d since
t he AGM t he Direc t o rs have c o nsulted w i d el y w i t h a m
aj o r i t y of t he shareh olders. The c o nsensus am o n gst t he
majo rity of in depen den t shareh olders, t hat is, exclu din g
ACG, w hic h is an affiliate of t he Invest men t Manager , is t
hat t he Co m pany sh o uld be placed in t o mem bers' v olun tary
liq uidatio n as soo n as prac ticable. A general meetin g ('GM')
has been c onvened to f ollo w t he AGM at w hic h a further
continuation resolu tio n will be pro p osed, and also a resolution
t hat t he Co m pany be placed in t o mem bers' v olun tar y liq
uidatio n. In the shareholder circular convening the GM, the B oard
of Direc t o rs is unanim o usly rec o mmen ding t hat shareh
olders v o te against t he c o n tinuatio n of t he Co m pany an d
t hat t hey v o te in fav o ur of t he resolu tio n t o p la c e t
h e C o m p an y i n t o liq uidatio n; ho wever , t he o u t c o
me of t he c o n tinuation an d liq uidatio n v o tes are b y n o
means cer tain an d , as su c h , t he v o tes represent a material
uncer tain t y in t he c o n tex t of assessin g t he f u t ure
prospec ts of t he Co m pany. N o t wit hstan din g t his, t he D
ire c t o r s h a v e as s ess e d t h e v iab ilit y of t he Co m
pany over a t hree year perio d to Marc h 2024 . This perio d was
selec ted as t he Co m pany is su bjec t t o a c o n tinuation v o
te ever y t w o years an d t heref ore, if t he f o r t hc o min g
c o n tinuatio n v o te is passed, a n d t h e li q u i d a t i o n
v o t e is defeated , a f u r t her v o te w o uld be req uired t o
be p ut t o shareh olders in 2023 . Depen din g on t he o u t c o
me of t hat su bseq uen t v o te t he Direc t o rs may be req uired
t o p ut f o r ward pro p osals t o win d - u p , reorganise o r
rec o nst r u c t t he Co m pany. It is n ot un reas o n a b le t o
es t i m a t e t hat t his pro cess c o uld take u p t o a f u r t
her 12 m o n t hs. In makin g t his assessmen t t he B oard also c
o nsidered t he Co m pany 's p rin cipal risks.
In vest men t t r usts in t he U K o perate in a well
established an d r o b ust reg ulat o ry en vir o n men t an d , f
o r t he p u r p oses of assessin g t he viabilit y of t he Co m
pany an d n o t wit hstan din g t he uncer tain ty su r r o un din
g t he o u t c o me of t he c o n tinuatio n an d liq uidatio n v o
tes, t he Direc t o rs have assu med t hat:
-- Investors will c o n tinue t o wan t to in vest in closed -en
d in vest ment t r usts because t he fixed capitalisation st r u c
t u re is bet ter suited t o p u rsuing t he In vest men t
Manager's p r o p rietary lo n g ter m PM V in vest men t st rateg
y;
-- The Co m pan y's remit of in vesting p red o minan tly in t
he sec u rities of U.S. list e d c o m p a n ies w ill c o n t i nu
e t o be an ac tivit y t o w hic h in vest o rs will wish t o have
ex p osu re. ( Man y closed -end f un ds w e r e o r i g i n a ll y
c r e a t e d i n t he U K t o f a c ili tat e i n v
est m e n t i n t he " New W o rld . ")
A s wit h all in vest men t vehicles, t here is a risk t hat t
he per f o r mance of in divid ual i n v est m e n ts w ill v a r y
a n d t hat c a p i t al may be lost , b u t t his is n o t regar
ded as a t h reat t o t he viabilit y of t he Co m pany. O peratio
nally, t he Co m pany retains title t o all assets, an d cash and
sec u rities are held wit h a c ust o dian bank rec o mmen ded b y
t he Manager and app r o ved b y t he B oar d.
T h e nat u re of t he Co m pan y 's in vest men ts means t hat
solven c y an d liq uidity risks are lo w because t he p o r t f
olio is in vested mainly in readily realisable listed sec u
rities:
-- The closed -en d nat u re of t he Co m pan y means t hat ,
unlike an o pen -en ded f un d , it d oes n o t need to realise in
vest men ts w hen shareh olders wish t o sell t heir shares;
and
-- The ex penses of t he Co m pany are p redic table an d reaso
nable in c o m pariso n wit h t he assets an d t here are n o
capital c o mmit men ts c u r ren tly f o reseen w hic h w o uld
alter t hat p ositio n.
T akin g t hese fac t o rs in t o acc o un t , and in t he even
t t hat t he c o n tinuatio n and liq uidatio n v o tes d o n o t
req uire t he Co m pan y t o be w o un d u p in t he nex t 12 m o n
t hs, t he Direc t o rs c o n fir m t hat t hey have a reaso nable
ex pec tatio n t hat t he Co m pan y c o uld c o n tinue t o o
perate and meet its ex penses as t hey fall d ue o ver t he nex t t
h ree years.
The Co m pan y's p o r t f olio c o nsists of N o r t h A
merican in vest men ts. A cc o r d i n g ly, t h e B o a r d b
eliev es t h at t he o n g oin g " B rexit " t ransitio n p r o
cess will n o t materially af fec t t he p r ospec ts f o r t he Co
m pany, b u t t he B oar d and In vest men t Manager c o n tinue t
o keep develo p men ts un der review.
The CO VID - 1 9 pan demic initially had a sig nifican t im pac
t o n w o rld st o c k mar kets; ho wever, wit h t he pan demic
bein g b r o u g h t un der c o n t r ol an d t he availabilit y of
a nu m ber of ef fec tive vac cines, st o c k mar kets have reco
vered . The B oar d c o n tinues to m o nit o r t he CO VID - 1 9
sit uatio n b u t it d oes n o t ex pec t it t o im pac t t he f u
t u re viabilit y of t he Co m pany.
F u t u r e dev e l o p m e n ts
The f u t u re of t he Co m pan y is depen dent u p o n t he
success of t he in vest ment st rategy. The o u tloo k f o r t he
Co m pan y is d isc usse d i n t h e C h a i r m a n's S tat e
ment, In vest men t Manager's rep o r t , t he viability statemen t
an d t he g oin g c o ncer n statemen t.
B o ar d D i v e rsi ty
When rec r uitin g a new Direc t or, t he B oar d's p olic y is
t o app oin t in divid uals o n m e r i t . T h e B o a r d b e
liev es d i v e rsi ty is im p o r tan t in b rin gin g an app r o
p riate ran ge of skills, k n o wledge an d ex perience t o t he B
oar d an d gives t hat c o nsideration w hen rec r uitin g new
Direc t o rs.
A s at 3 1 Mar c h 2 0 2 1 t here were t h ree male Direc t o
rs. F ollo win g t he depar t u re f r o m t he B oar d of Kasia Ro
binski at t he c o n c l usi o n of t h e 2 0 20 A G M , a n d in
lig h t of t he uncer tain t y su r r o un din g t he c o n
tinuatio n of t he Co m pany, t he B oard has n o t so u g h t t o
replace Ms Ro binski. In t he even t t hat t he Co m pan y c o n
tinues in its c u r ren t f o r m , c o nsideratio n w o uld be
given t o recr uitin g an additio nal direc t or. D ue c o
nsideratio n w o uld be given to g e n d e r
a n d e t hn i c d i v e rsi t y as p a r t of t he recr uit men t p r o cess.
E m p l oy ee s , S o c i a l , C o mm un i t y a n d H u man Ri
g h ts Issu es
A s an in vest men t vehicle t he Co m pany has n o em ployees
an d acc o r din gly it has n o d i r e c t so c i a l o r c o mm
un i t y i m p a ct a n d li m i t e d e n v i r o n m e n t a l i
m p a c t f r om its o peratio ns. H o wever, t he Co m pany b
eliev es t h a t i t is i n sh a r e h o l d e rs' i n t e rests t
o c o nsider hu man rig h ts issues, en vir o n men tal, so cial an
d g o ver nance fac t o rs w hen selec tin g an d retaining in vest
men ts.
The Chair man's S tatemen t , t he In vest men t Managers Rep o
r t an d t he p o r t f olio analysis also f o r m par t of t his S
t rategic Rep o r t.
T h e S t r ategic Rep o r t was app r o ved by t he B oar d o n
9 June 2 0 2 1.
O n behalf of t he b oard
Pe t e r D i cks
Chair man
9 June 2 0 2 1
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 United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102 "The Financial Reporting
Standard applicable in the UK and Republic of Ireland", and
applicable law). 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 United Kingdom Accounting Standards,
comprising FRS 102, 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.
Each of the directors, whose names and functions are listed in
Board of Directors section confirm that, to the best of their
knowledge:
-- the company financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 102
"The Financial Reporting Standard applicable in the UK and Republic
of Ireland", and applicable law), give a true and fair view of the
assets, liabilities, financial position and loss of the company;
and
-- the Directors' Report includes a fair review of the
development and performance of the business and the position of the
company, together with a description of the principal risks and
uncertainties that it faces.
In the case of each director in office at the date the
Directors' 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.
On behalf of the Board
Peter Dicks
Chairman of the Board
9 June 2021
STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March 2021 Year ended 31 March 2020
----------------------------- ------------------------------
Revenue Capital Total Revenue Capital Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Dividend income 2,497 - 2,497 2,119 - 2,119
Interest on deposits - - - 19 - 19
Other income 3 - 3 - - -
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Total dividends and interest 2,500 - 2,500 2,138 - 2,138
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Net realised and unrealised (losses)/gains on
investments 2 - 67,586 67,586 - (33,893) (33,893)
Net realised and unrealised currency
(losses)/gains (5) (2,522) (2,527) 5 76 81
Investment management fee 3 (303) (890) (1,193) (310) (948) (1,258)
Other expenses 3 (543) (11) (554) (474) (9) (483)
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Net return on ordinary activities before
finance costs and taxation 1,649 64,163 65,812 1,359 (34,774) (33,415)
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Interest expense and similar charges (1) - (1) - - -
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Net return on ordinary activities before
taxation 1,648 64,163 65,811 1,359 (34,774) (33,415)
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Taxation on ordinary activities 5 (346) - (346) (281) - (281)
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Net returns attributable to shareholders 1,302 64,163 65,465 1,078 (34,774) (33,696)
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
Net returns per ordinary share - basic and
diluted 6 1.32p 65.28p 66.60p 1.09p (35.25)p (34.16)p
------------------------------------------------ ----- --------- -------- -------- -------- --------- ---------
The total columns of this statement are the profit and loss
accounts of the Company for the respective periods.
The revenue and capital items are presented in accordance with
the AIC's Statement of Recommended Practice ('SORP') 2014, and
updated 2019.
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued in the year ended 31
March 2021 (2020: none).
The notes form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
Called up Special
Share Distributable Capital Revenue
Capital Reserve* Reserve Reserve* Total
Year ended 31 March 2021 Note GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------------------- ----- ---------- --------------- ---------- ----------- ---------
Net assets as at 1 April 2020 1,001 95,885 3,106 1,278 101,270
Realised gains on investments at fair value 2 - - 12,733 - 12,733
Unrealised gains on investments at fair value 2 - - 54,853 - 54,853
Net realised and unrealised currency losses - - (2,522) - (2,522)
Capital expenses 3 - - (901) - (901)
Transfer to revenue reserve for the year - - - 1,302 1,302
Dividends paid 4 - - - (1,081) (1,081)
---------------------------------------------- ----- ---------- --------------- ---------- ----------- ---------
Net assets as at 31 March 2021 6 1,001 95,885 67,269 1,499 165,654
---------------------------------------------- ----- ---------- --------------- ---------- ----------- ---------
Year ended 31 March 2020
------------------------------------------------ --- ------ -------- --------- ------ ---------
Net assets as at 1 April 2019 1,001 97,699 37,880 944 137,524
Realised gains on investments at fair value 2 - - 4,943 - 4,943
Unrealised losses on investments at fair value 2 - - (38,836) - (38,836)
Net realised and unrealised currency gains - - 76 - 76
Capital expenses 3 - - (957) - (957)
Ordinary shares bought back into treasury 10 - (1,814) - - (1,814)
Transfer to revenue reserve for the year - - - 1,078 1,078
Dividends paid 4 - - - (744) (744)
------------------------------------------------ --- ------ -------- --------- ------ ---------
Net assets as at 31 March 2020 6 1,001 95,885 3,106 1,278 101,270
------------------------------------------------ --- ------ -------- --------- ------ ---------
* These reserves are distributable.
The notes form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
As at 31 March 2021 As at 31 March 2020
------------------------------------------------------- ----- ---------------------- ----------------------
Note GBP000 GBP000 GBP000 GBP000
------------------------------------------------------- ----- ---------- ---------- ---------- ----------
Fixed assets
Investments held at fair value through profit or loss 2 129,559 89,892
Current assets
Cash and cash equivalents 7 37,862 12,372
Receivables 8 808 231
------------------------------------------------------- ----- ---------- ---------- ---------- ----------
38,670 12,603
Current liabilities
Payables 9 (2,575) (1,225)
------------------------------------------------------- ----- ---------- ---------- ---------- ----------
Net current assets 36,095 11,378
------------------------------------------------------- ----- ---------- ---------- ---------- ----------
Net assets 165,654 101,270
------------------------------------------------------- ----- ---------- ---------- ---------- ----------
Capital and reserves
Called-up share capital 10 1,001 1,001
Special distributable reserve* 95,885 95,885
Capital reserve 67,269 3,106
Revenue reserve* 1,499 1,278
------------------------------------------------------- ----- ---------- ---------- ---------- ----------
Total shareholders' funds 165,654 101,270
Net asset value per ordinary share 6 168.5p 103.0p
------------------------------------------------------- ----- ---------- ---------- ---------- ----------
* These reserves are distributable.
Gabelli Value Plus+ Trust Plc is registered in England and Wales
under Company number 9361576.
The financial statements were approved by the Board of Directors
on 9 June 2021 and signed on its behalf by
Peter Dicks
Chairman
The notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1 Accounting policies
(a) Basis of preparation - For the year ended 31 March 2021, the
Company applied FRS 102 - The Financial Reporting Standard
applicable in the UK and Republic of Ireland, which forms part of
the revised Generally Accepted Accounting Practice (UK GAAP) issued
by the Financial Reporting Council ('FRC') in 2015.
As noted in the Company's Notice of Annual Results announcement,
released on 9 June 2021, the Board of Directors is recommending
that shareholders vote against the resolution to approve the
continuation of the Company and that they vote in favour of the
resolution to place the Company into members' voluntary
liquidation, both of which are to be proposed at the general
meeting which will follow the AGM. These decisions were reached
after consultation with a range of shareholders over the period
since the defeat of the continuation vote at the 2020 AGM. A vote
of 50% plus 1 of votes cast in favour is required for continuation.
A vote of 75% plus 1 of votes cast in favour of members' voluntary
liquidation is required for the resolution to be passed.
The voting will be such that if the relevant continuation
resolution is not passed and the liquidation resolution is passed
at the general meeting which follows the AGM, the Company will be
placed into members' voluntary liquidation with effect from the
conclusion of the GM.
As such, the outcome of the continuation and liquidation votes
at the GM respectively on 12 July 2021 represent a material
uncertainty which may cast significant doubt on the Company's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Company was
unable to continue as a going concern. In arriving at the decision
on the basis of preparation, the Board has considered the financial
position of the Company, its cashflow and liquidity position as
well as the uncertainty surrounding the outcome of the continuation
and liquidation votes. The Board further concluded that, as the
liquidation vote was contingent on shareholder approval and the
Company is considered solvent in all other regards, there is no
irrevocable path to liquidation and thus going concern remained the
most appropriate basis for preparation.
If it were not appropriate to prepare the financial statements
on a going concern basis of accounting then adjustments would be
required to reclassify all assets as current, and a provision for
further liabilities, including liquidation costs, would be made. In
the Directors' opinion the impact of these adjustments on the
financial statements is not expected to be significant.
These financial statements have been prepared on a going concern
basis in accordance with the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority, FRS 102 issued by the FRC
in September 2015, the revised Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture
Capital Trusts" (SORP) issued by the AIC in November 2014 and
updated in October 2019 and Companies Act 2006.
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 year.
Cash flow statement - The statement of cash flows has not been
included in the financial statements as the Company meets the
conditions set out in paragraph 7.1A of FRS 102, which state that a
statement of cashflows is not required to be provided by investment
funds that meet all of the following conditions:
(i) substantially all of the entity's investments are highly
liquid;
(ii) substantially all of the entity's investments are carried
at market value; and
(iii) the entity provides a statement of changes in net
assets.
(b) 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.
(c) Expenses - The investment management fees are allocated
seventy-five percent to capital and twenty-five percent to revenue
in the Statement of Comprehensive Income in accordance with the
Board's expected long term split of returns in the form of capital
gains and revenue, respectively. 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.
(d) Cash and cash equivalents - Cash comprises cash on hand and
on demand deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of
cash.
(e) Investments - Investments 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 Section 11 and Section 12
of FRS 102.
The Company's listed investments are fair valued using the
closing bid price of the valuation date.
(f) Foreign currency - Foreign currencies are translated at the
rates of exchange prevailing on the year end date. Revenue
received/receivable and expenses paid/ payable in foreign
currencies are translated at the rates of exchange prevailing at
the transaction date.
(g) Fair value - All financial assets and liabilities are
recognised in the financial statements at fair value.
(h) Dividends payable - Interim dividends are recognised in the
period in which they are paid. Final dividends are not recognized
until approved by the shareholders in the general meeting.
(i) 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 in note 10.
(j) 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
year end date where transactions or events that result in an
obligation to pay more or a right to pay less tax in future have
occurred at the year 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.
(k) Functional and presentation currency - The functional and
presentation currency of the Company is GBP sterling.
(l) Alternative Performance Measures ("APM's")
The Company's APMs are set out in the glossary in the Annual
Report.
2 Investments held at fair value through profit or loss
As at As at
31 March 2021 31 March 2020
GBP000 GBP000
------------------------------------------- --------------- ---------------
Opening book cost 120,116 128,532
Opening investment holding (losses)/gains (30,224) 8,612
------------------------------------------- --------------- ---------------
Opening market value 89,892 137,144
------------------------------------------- --------------- ---------------
Additions at cost 71,739 60,402
Disposal proceeds received (99,658) (73,761)
Gains/(losses) on investments 67,586 ( 33,893)
------------------------------------------- --------------- ---------------
Market value of investments 129,559 8 9,892
------------------------------------------- --------------- ---------------
Closing book cost 104,930 120,116
Closing investment holding gains/(losses) 24,629 (30,224)
Closing market value 129,559 89,892
------------------------------------------- --------------- ---------------
The C o m pan y received GBP9 9 , 6 5 8 ,000 ( 2 0 20: GBP73 ,76
1 ,000) f r o m in vest men ts sold in t he year. The b oo k c ost
of t hese in vest men ts w hen t hey were p u r c hased was GBP 8 6
, 9 2 5 ,000 ( 2 0 20: GBP6 8 , 8 1 8 ,000).
Fair value hierarchy
The Company has adopted the 'Amendments to FRS 102 - Fair value
hierarchy disclosure', where an entity is required to classify fair
value measurements using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The
fair value hierarchy shall have the following levels:
-- Level 1 - The unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date.
-- Level 2 - Inputs other than quoted prices included within
Level 1 that are observable, i.e., developed using market data, for
the asset or liability, either directly or indirectly.
-- Level 3 - Inputs are unobservable, i.e., for which market
data is unavailable, for the asset or liability.
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 31 March 2021
--------------------------------------
Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
------------------------------------------------------- -------- -------- -------- --------
Financial assets at fair value through profit or loss
Quoted equities 129,517 - - 129,517
Registered Investment Companies - 42 - 42
Net fair value 129,517 - - 129,559
------------------------------------------------------- -------- -------- -------- --------
As at 31 March 2020
--------------------------------------
Level 1 Level 1 Level 1 Level 1
GBP000 GBP000 GBP000 GBP000
------------------------------------------------------- -------- -------- -------- --------
Financial assets at fair value through profit or loss
Quoted equities 89,892 89,892 89,892 89,892
Net fair value 89,892 89,892 89,892 89,892
------------------------------------------------------- -------- -------- -------- --------
Net realised and unrealised gains/(losses) on investments
Year ended Year ended
31 March 2021 31 March 2020
GBP000 GBP000
Realised gains on investments 12,733 4,943
Movement in unrealised gains/(losses) on investments 54,853 (38,836)
Net realised and unrealised gains/(losses) on investments 67,586 (33,893)
----------------------------------------------------------- --------------- ---------------
Transaction costs
During the year, commissions and other expenses were incurred in
acquiring or disposing of investments classified at fair value
through profit or loss. G.research, LLC, an affiliate of the
investment manager, remained the largest recipient of these. These
have been expensed through capital and are within gains/ (losses)
in the Statement of Comprehensive Income. The total costs were as
follows:
Year ended Year ended
31 March 2021 31 March 2020
GBP000 GBP000
Purchases 47 53
Sales 56 41
Total 103 94
----------- --------------- ---------------
3 Management fees and other expenses
Year ended Year ended
31 March 2021 31 March 2020
GBP000 GBP000
Revenue expenses
Directors' remuneration 103 88
Accounting fees 57 54
Custody fees 15 8
Registrar - Computershare 26 17
Marketing and advertisement - 13
Company secretary fees 62 77
Broker retainer 36 57
Auditors' remuneration (inclusive of VAT) 42 39
Directors' insurance 11 11
Miscellaneous 192 110
------------------------------------------- --------------- ---------------
Sub total 543 474
------------------------------------------- --------------- ---------------
Management Fees
Manager fee - Revenue 303 310
Manager fee - Capital 890 948
Total 1,193 1,258
----------------------- ------ ------
Capital expenses
Transaction charges 11 9
Total 11 9
----------------------- ------ ------
Details of the contract between the Company and Gabelli Funds,
LLC for provision of investment management services are given in
the Directors' Report contained in the Annual Report and Financial
Statements.
4 Dividends
Year ended Year ended
31 March 2021 31 March 2020
GBP000 GBP000
------------------ --------------- ---------------
Final dividend 983 744
Interim dividend 98 -
------------------ --------------- ---------------
Total 1,081 744
------------------ --------------- ---------------
5 Taxation on ordinary activities
Year ended 31 March 2021
-----------------------------
Revenue Capital Total
Analysis of the charge in the year GBP000 GBP000 GBP000
---------------------------------------- --------- -------- --------
Foreign withholding taxes on dividends 348 - 348
Foreign withholding taxes on REIT (2) - (2)
Total 346 - 346
---------------------------------------- --------- -------- --------
Year ended 31 March 2020
-----------------------------
Revenue Capital Total
Analysis of the charge in the year GBP000 GBP000 GBP000
---------------------------------------- --------- -------- --------
Foreign withholding taxes on dividends 272 - 272
Foreign withholding taxes on REIT 9 - 9
Total 281 - 281
---------------------------------------- --------- -------- --------
The effective corporation tax rate was 19% (2020:19%). The tax
charge for the year differs from the charge resulting from applying
the standard rate of corporation tax in the UK for an investment
trust company. The differences are explained below.
Year ended 31 March 2021
------------------------------
Revenue Capital Total
Factors affecting the tax charge for the year GBP000 GBP000 GBP000
-------------------------------------------------------------------------------------- -------- --------- ---------
Net return before taxation 1,648 64,163 65,811
-------------------------------------------------------------------------------------- -------- --------- ---------
UK Corporation tax at effective rate of 19% 313 12,191 12,504
Effects of:
Gains on investments held at fair value through profit or loss - (12,841) (12,841)
Expenses not allowable for tax purposes - 2 2
Losses on foreign currencies - 479 479
Non taxable overseas dividends (473) - (473)
Foreign withholding taxes on dividends 346 - 346
Increase in excess management and overdraft expenses 165 169 334
Decrease in excess management and overdraft expenses: adjustment in respect of prior
years (5) - (5)
Total 346 - 346
-------------------------------------------------------------------------------------- -------- --------- ---------
Year ended 31 March 2020
------------------------------
Revenue Capital Total
Factors affecting the tax charge for the year GBP000 GBP000 GBP000
----------------------------------------------------------------- -------- --------- ---------
Net return before taxation 1,359 (34,774) (33,415)
----------------------------------------------------------------- -------- --------- ---------
UK Corporation tax at effective rate of 19% 258 (6,607) (6,349)
Effects of:
Losses on investments held at fair value through profit or loss - 6,439 6,439
Overseas tax expensed (1) - (1)
Expenses not allowable for tax purposes - 2 2
Gains on foreign currencies - (14) (14)
Non taxable overseas dividends (393) - (393)
Foreign withholding taxes on dividends 281 - 281
Increase in excess management and overdraft expenses 136 180 316
Total 281 - 281
----------------------------------------------------------------- -------- --------- ---------
At the year end, after offset against income taxable on receipt,
there is a potential deferred tax asset of GBP1,894,467 (2020:
GBP,560,390) 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 .
6 Return per ordinary share and net asset value
The return and net asset value per ordinary share are calculated
with reference to the following amounts:
Year ended Year ended
31 March 2022 31 March 2020
Revenue return
Revenue return attributable to ordinary shareholders GBP1,302,000 GBP1,078,000
-------------------------------------------------------- --------------- ----------------
Weighted average number of shares in issue during year 98,282,193 98,650,562
Total revenue return per ordinary share 1.32p 1.09p
-------------------------------------------------------- --------------- ----------------
Capital return
Capital return attributable to ordinary shareholders GBP64,163,000 (GBP34,774,000)
-------------------------------------------------------- --------------- ----------------
Weighted average number of shares in issue during year 98,282,193 98,650,562
Total capital return per ordinary share 65.28p (35.25p)
-------------------------------------------------------- --------------- ----------------
Total return
Total return per ordinary share 66.60p (34.16p)
-------------------------------------------------------- --------------- ----------------
As at As at
Net asset value per share 31 March 2021 31 March 2020
----------------------------------------- --------------- ---------------
Net assets attributable to shareholders GBP165,654,000 GBP101,270,000
Number of shares in issue at year end 98,282,193 98,282,193
Net asset value per share 168.5p 103.0p
----------------------------------------- --------------- ---------------
7 Cash and cash equivalents
As at As at
31 March 2021 31 March 2020
GBP000 GBP000
----------------- --------------- ---------------
GBP Sterling 199 659
Canadian Dollar 10 7
U.S. Dollar 37,653 11,706
Total 37,862 12,372
----------------- --------------- ---------------
8 Receivables: amounts falling due within one year
As at As at
31 March 2021 31 March 2020
GBP000 GBP000
---------------------- --------------- ---------------
Dividends receivable 127 218
Due from brokers 652 -
Prepaid expenses 29 13
Total 808 231
---------------------- --------------- ---------------
None of the Company's receivables were past due or impaired as
at the year end date.
9 Payables: amounts falling due within one year
As at As at
31 March 2021 31 March 2020
GBP000 GBP000
------------------------------------- --------------- ---------------
Due to brokers 2,313 936
Due to Manager (Gabelli Funds, LLC) 133 101
Other payables 129 188
Total 2,575 1,225
------------------------------------- --------------- ---------------
10 Called up share capital
As at As at
31 March 2021 31 March 2020
GBP000 GBP000
Authorised:
250,000,000 Ordinary shares of 1p each - equity 2,500 2,500
------------------------------------------------------------------- --------------- ---------------
Allotted, called up and fully paid:
98,282,193 (2020: 98,282,193) Ordinary shares of 1p each - equity 983 997
Treasury shares:
1,818,808 (2020: 1,818,808) Ordinary shares of 1p each - equity 18 4
Total shares 1,001 1,001
------------------------------------------------------------------- --------------- ---------------
During the year ended 31 March 2021, no shares (2020: 1,424,500)
were bought back into treasury (2020: at a cost of
GBP1,813,513).
11 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. No
derivatives transactions were undertaken during the year.
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 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 31 March 2021
-----------------------------------------------
Interest Local Foreign Sterling
rate currency exchange equivalent
% 000 rate GBP000
----------------- --------- ---------- ---------- ------------
Assets:
GBP Sterling 0.00 199 1.00 199
Canadian Dollar 0.00 18 1.73 10
U.S. Dollar 0.00 51,950 1.38 37,653
Total 37,862
----------------- --------- ---------- ---------- ------------
As at 31 March 2020
-----------------------------------------------
Interest Local Foreign Sterling
rate currency exchange equivalent
% 000 rate GBP000
----------------- --------- ---------- ---------- ------------
Assets:
GBP Sterling 0.00 659 1.00 659
Canadian Dollar 0.15 13 1.76 7
U.S. Dollar 0.00 14,514 1.24 11,706
Total 12,372
----------------- --------- ---------- ---------- ------------
Interest rate sensitivity
The sensitivity analyses below have 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 year 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 31 March 2021 would
increase / decrease by GBP38,000 (2020: GBP12,000). This is mainly
attributable to the Company's exposure to interest rates on its
floating rate cash balances.
As at 31 March 2021 an interest rate of 0.10% is used, given the
prevailing Bank of England base rate 0.10%. This level is
considered possible based on observations of market conditions and
historic trends.
Foreign currency risk
The Company's investment portfolio is invested mainly 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.
Foreign currency risk exposure by currency of denomination:
As at 31 March 2021
--------------------------------------------
Net monetary Total currency
Investments assets exposure
GBP000 GBP000 GBP000
----------------- ------------ ------------- ---------------
Canadian Dollar 1,894 10 1,904
Euro 402 (1) 401
Norwegian Krone 395 - 395
Swiss Franc 3 - 3
U.S. Dollar 126,865 35,993 162,858
----------------- ------------ ------------- ---------------
Total 129,559 36,002 165,561
----------------- ------------ ------------- ---------------
As at 31 March 2020
--------------------------------------------
Net monetary Total currency
Investments assets exposure
GBP000 GBP000 GBP000
----------------- ------------ ------------- ---------------
Canadian Dollar 1,442 7 1,449
U.S. Dollar 88,450 10,987 99,437
----------------- ------------ ------------- ---------------
Total 89,892 10,994 100,886
----------------- ------------ ------------- ---------------
The asset allocation between specific markets can vary from time
to time based on the Manager's opinion of the attractiveness of the
individual markets.
Foreign currency sensitivity
The following table details the Company's sensitivity to a 15%
increase and decrease in sterling 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 15% change in foreign
currency rates.
As at As at
31 March 2021 31 March 2020
GBP000 GBP000
Canadian Dollar 2 1
Euro -
Norwegian Krone -
Swiss Franc -
U.S. Dollar 5,399 1,648
----------------- --------------- ---------------
Total 5,401 1,649
----------------- --------------- ---------------
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
to review investment strategy. The investments held by the Company
are listed on recognised stock exchanges.
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 31 March
2021 would have increased / decreased by GBP19,434,000. 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 three 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 risk is managed as follows:
-- Investment transactions are carried out mainly with one
broker, G.research, LLC, whose credit ratings are reviewed
periodically by the Investment Manager.
-- Most transactions are made delivery versus payment on
recognised exchanges.
-- Cash is held only with reputable banks.
The maximum credit risk exposure as at 31 March 2021 was
GBP38,670,000 (2020: GBP12,603,000) This was due to cash and
receivables as per notes 7 and 8.
12 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. This review includes the
nature and planned level of gearing, which takes account of the
Investment 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
31 March 2021 31 March 2020
GBP000 GBP000
-------------------------------- --------------- ---------------
Equity share capital 1,001 1,001
Special distributable reserve* 95,885 95,885
Capital reserve 67,269 3,106
Revenue reserve* 1,499 1,278
Total 101,270 101,270
-------------------------------- --------------- ---------------
* These reserves are distributable.
13 Alternative Investment Fund Managers ("AIFM") Directive
In accordance with the Alternative Investment Fund Managers
Directive ("AIFMD"), the Company is an Alternative Investment Fund
("AIF") and has appointed Gabelli Funds, LLC 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.
The Company is categorised as an externally managed European
Economic Area ("EEA") domiciled AIF for the purposes of the AIFMD.
Since the Investment Manager is a non-EEA AIFM, the Investment
Manager is only subject to the AIFMD to the extent that it markets
an EEA AIF in the EEA. Accordingly, the Investment Manager is
required to make only certain financial and nonfinancial
disclosures.
The Company's maximum leverage levels at 31 March 2021 are shown
below:
Leverage Exposure Gross method Commitment method
------------------------- ------------- ------------------
Maximum permitted limit 115% 115%
------------------------- ------------- ------------------
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.
14 Related party transactions
During the year ended 31 March 2021, with the exception of
Investment Management fees, Directors' remuneration, Directors'
shareholdings, secretarial fees, and other administrative fees, the
Company paid brokerage commissions on security trades of GBP43,206
(2020: GBP76,776) to G.research, LLC, an affiliate of the
Investment Manager.
15 Contingent Liabilities and Commitments
As at 31 March 2021, the Company had no contingent liabilities
or commitments (31 March 2020: Nil).
16 Post balance sheet events
On 9 June 2021 the Board declared an interim dividend of 1.2
pence per share. The dividend is payable on 2 July 2021, to
shareholders on the register as at close of business on 18 June
2021.
On 9 June 2021 the Board declared a further interim dividend on
0.2 pence per share in respect of the year ending 31 March 2022.
This dividend is being paid in order to ensure that the Company
meets the distribution requirements to maintain investment trust
status during the period from 1 April 2021 to the date of the
General Meeting. The dividend is payable on 2 July 2021 to
shareholders on the register as at close of business on 18 June
2021.
There are no other significant post balance sheet events to
report.
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END
FR DKCBNABKDOAK
(END) Dow Jones Newswires
June 09, 2021 12:45 ET (16:45 GMT)
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