Job No: 50043 Proof Event: 15 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus+ Trust Plc Annual Report and Accounts 2023
Gabelli Merger Plus
+
Trust plc
Annual Report and Accounts
For the year ended 30 June 2023
Job No: 50043 Proof Event: 15 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
For Professional & Institutional Investor Use Only – Not For Public Distribution
1
● Our Firm’s approach is founded on the principles of Graham & Dodd
• Furthered academically by our founder Mario Gabelli
• Establish values to determine margin of safety
• Invest within circle of competence
• Invest like owners of businesses
●
Intensive proprietary research culture
Our Investment Approach
Continuing a Value Investing Legacy
• Focused and rigorous independent fundamental analysis in
valuing the underlying business using publicly available
information including data from customers, competitors,
products and new technologies
• Announcement of a merger with definitive terms starts the
process
• Merger investing benefits from the Gabelli core fundamental
approach by establishing real world value before initiating
positions
Gabelli supplements the principles of Graham & Dodd through the
implementation of our proprietary
Private Market Value (PMV) with a Catalyst™ approach
Portfolio
Identify
Catalysts
Private Market
Value (PMV)
Gabelli Research
Universe
“We invest like owners. We invest primarily in the equity securities of cash
generating, franchise companies, selling in the public market at a significant
discount to our appraisal of their Private Market Value. We define Private
Market Value (PMV) as the value an informed industrialist would pay
to purchase assets with similar characteristics in a privately negotiated
transaction. We measure PMV by scrutinizing on- and off-balance sheet
assets and liabilities and free cash flow. As a reference check, we examine
valuations and merger transactions in the public domain. Our investment
objective is to achieve a long term annualised return in excess of inflation for
our clients.”
Strategic report Governance Financial statements
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc’s primary
investment objective is to seek to
generate total return consisting of capital
appreciation and current income for the
long term.
Contents
Strategic report
Financial Highlights 02
Chairman’s Statement 03
The Search For Value – Gabelli Merger Plus+ Investment Methodology 05
The Gabelli Investment Process 07
Investment Objective and Policy 08
Portfolio Manager’s Review 09
Portfolio Summary 11
Strategy 12
Key Performance Indicators (KPI) 12
Principal Risks 14
Viability & Going Concern Statement 19
Governance
Board of Directors 18
Directors’ Report 20
Corporate Governance Report 26
Report of the Audit & Risk Committee 31
Directors’ Remuneration Report 34
Statement of Directors’ Responsibilities in respect of the Financial Statements 37
Financial statements
Independent Auditors’ Report 39
Statement of Comprehensive Income 46
Statement of Changes in Equity 47
Statement of Financial Position 48
Statement of Cash Flows 49
Notes to the Financial Statements 50
Regulatory Disclosures 68
Glossary 69
Company Information 73
Annual General Meeting 74
Notes to the Notice of the AGM 76
Appendix – AIFMD Remuneration Disclosures 78
02
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Financial Highlights
Performance
As at
30 June 2023
As at
30 June 2022
Net asset value per share (cum income)
1,2
$10.22 $9.35
Net asset value per share (ex income)
3
$10.52 $9.78
Dividends per share paid during the year
2,4
$0.12 $0.48
Share price $9.00 $9.00
Discount to Net Asset Value
5,6
(11.94)% (3.74)%
Total returns
Year ended
30 June 2023
Year ended
30 June 2022
Net asset value per share
6,7
10.54% (1.37)%
U.S. 3-month Treasury Bill Index 3.80% 1.69%
Share price
6,8
1.33% 29.06%
Income
Year ended
30 June 2023
Year ended
30 June 2022
Revenue return per share $0.39 ($0.09)
Ongoing charges
6,9
Year ended
30 June 2023
Year ended
30 June 2022
Annualised ongoing charges 2.17% 1.67%
Source: Portfolio Manager (Gabelli Funds, LLC), verified by the Administrator (State Street Bank and Trust Company).
1
Net Asset Value (NAV) includes balance sheet adjustments resulting from the Company now being a close company. Such adjustments include deferred tax assets
as per Note 8 and Note 9, pages 55 to 57.
2
Cum-income net asset value includes all income, less the value of any dividends paid together with the value of any dividends which have been declared and marked
ex dividend but not yet paid. Where the cum-income NAV is lower than the ex-income NAV, this reflects the revenue deficit.
3
Ex-Income NAV: Ex-income net asset value is the Cum-income NAV excluding net income (net income being all income, less the value of any dividends paid together
with the value of any dividends which have been declared and marked ex-dividend but not yet paid).
4
The dividend paid during the year ended 30 June 2023 was the fourth interim dividend for the year ended 30 June 2022. Following the Tranche Two Tender Offer
the Board has continued to review and assess the Company’s distribution policy. The Company paid the first interim dividend for the fiscal year ended 30 June 2023
on 8 September 2023.
5
The amount by which the market price per share is lower than the cum-income NAV per share, expressed as a percentage of the cum-income NAV per share. Figures
are inclusive of income and dividends paid, in line with the Association of Investment Companies (the “AIC”) guidance.
6
These key performance indicators are alternative performance measures. Further information regarding the use of alternative performance measures can be found
on page 12 and in the glossary on page 68.
7
Net Asset Value per ordinary share, total return represents the theoretical return on NAV per ordinary share, assuming that dividends paid to shareholders were
reinvested at the NAV per ordinary share at the close of business on the day shares were quoted ex-dividend.
8
Share Price Total Return represents the theoretical return to a shareholder, on a closing market price basis, assuming that all dividends received were reinvested,
without transaction costs, into the ordinary shares of the Company at the close of business on the day the shares were quoted ex-dividend.
9
Ongoing Charges are operating expenses incurred in the running of the Company, whether charged to revenue or capital, but excluding financing costs. These
are expressed as a percentage of the average net asset value during the period and this is calculated in accordance with guidance issued by the Association of
Investment Companies.
03
Strategic report Governance Financial statements
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Chairman’s Statement
We share this Annual Report to
Shareholders, encompassing the period
from July 2022 through June 2023, and
note certain developments post financial
year end. Gabelli Merger Plus+ Trust Plc
(the “Company”) operates globally in the
highly specialised investment discipline
of value investing utilising the Gabelli
Private Market Value with a Catalyst
TM
methodology. The objectives are to
compound and preserve wealth over time,
while remaining non-correlated to the
broad equity and fixed income markets.
The investment programme is global, with
an emphasis on Private Market Value.
The Company’s primary objective is to
seek to generate total return, consisting
of capital appreciation and current income
for the long term. The Company will seek
a secondary objective of the protection of
capital, uncorrelated to equity and fixed
income markets. The Fund utilises the
Gabelli Private Market Value (PMV) with a
Catalyst
TM
investment methodology, and
has built a diversified portfolio using PMV
catalyst event merger arbitrage strategies
to create an optimal risk/reward profile.
The Company’s activities encompass a
broad spectrum of special situation event
driven opportunities with an emphasis
on PMV discount opportunities inclusive
of announced merger transactions. Value
appreciation is derived through the
narrowing of PMV discount spreads as a
function of their catalyst. The value spread
is a function of three primary elements:
the risk free rate, the risk premium
associated with the fundamentals, and
the time value of money. The dynamic
interplay across these components is
evaluated within every investment by the
Portfolio Manager. Position sizing will vary
according to a probabilistic assessment
of the risk and may include minority or
majority controlling operating interests
through the market cycle with an effort to
generate long term shareholder returns.
The manager has broad investment
flexibility to implement the investment
policy. The inherent risk in all PMV with
a CatalystTM investing is a broken deal
rather than the standard deviation or price
variance of the market price movements
over the deal timeline.
Gabelli Funds LLC, the Portfolio Manager,
employs an active approach to analysing
the fundamentals of a merger investment
and has a long history of implementing
such a programme. At its core, this
differentiated investment approach
utilises the Gabelli analytical methodology
to manage risk amongst other inputs and
factors. Further details are available on
the Portfolio Manager’s website at www.
gabelli.com.
The Board is always receptive to feedback
and is available should you have any
questions or comments via the Portfolio
Manager’s Investor Relations group
directly. We thank you, our shareholders,
for your confidence in entrusting a portion
of your assets to our team.
The Investment Environment
We as a society may have moved past
COVID, but its aftereffects are still felt.
Uncertainty surrounding the current
state of the global macroeconomic
environment, taxed supply chains
coupled with inflationary pressures and
rising interest rates against the backdrop
of war has plagued the pace of global
deal making. This adds an element of
uncertainty to capital allocation decisions.
Political, corporate and individual actors
still need to sort through a variety of issues.
Economic and market conditions may
worsen before they improve, and there
may be volatility in currency markets as
Central Banks adjust interest rate policies.
The risks to equity market corrections and
a structural financial crisis have increased
as the US banking system is stressed with
a changing yield curve. The Company is
positioned to pursue opportunities for the
long term in this potentially generationally
changing market environment.
Performance
The Company’s net asset value (NAV) plus
dividends paid delivered a total return to
shareholders during the year under review
of 10.54% in U.S. dollars. This performance
compared to the equivalent 13-week U.S.
Treasury Bill which yielded 5.32% as of
30 June 2023, and also relative to the
IQ Merger Arbitrage ETF, S&P Merger
Arbitrage Index, and Credit Suisse Merger
Arbitrage Liquid Index, which returned
-0.80%, -3.46%, and 5.67%, respectively.
The share price total return with dividends
reinvested was 1.33%. The performance for
shareholders at IPO through the end of
the fiscal year was 31.77% with dividends
reinvested, versus a return of 24.64% for
the Credit Suisse Merger Arbitrage Liquid
Index.
The company may take advantage
of market dislocations and establish
controlling and operating positions
in businesses and may also invest
occasionally in other forms of relative
value investing, such as such as share
class arbitrage and holdco arbitrage.
The Company’s portfolio today is largely
focused on the Catalyst events where the
terms are known and transparent to the
market and the holdings are liquid.
Dividends
In order to allow the Shareholders to realise
a predictable, but not assured, level of
cash flow and some liquidity periodically
on their investment, the Company has
adopted a “managed dividend policy”.
This policy seeks to pay Shareholders a
quarterly dividend in relation to the Net
Asset Value of the Company at the time,
which may be changed at any time by
the Board. Between inception and 30
June 2023, the Company returned $2.39
per share to shareholders, consistent
with its dividend policy. Additionally, the
Company paid the first interim dividend in
respect of the year ended 30 June 2023
on 8 September 2023, in the amount of
$0.12 per Ordinary Share. Dividends are
paid only when declared by the Board
subject to the Board’s assessment of the
Company’s financial position and only
if the Company has sufficient income
and distributable reserves to make the
dividend payment, and the level of
dividend may vary over time. As such,
the portfolio’s managed distribution of
capital through the payment of quarterly
dividends is under review as we enter the
new Fiscal Year.
Organisational Matters
The company completed its Fifth year since
listing on the London Stock Exchange’s
Special Fund Market segment which set
forth certain actions in accordance with its
shareholder Loyalty Programme, including
completing a Fifth Anniversary Tender
Offer, resulting in the single participator
Associated Capital Group, Inc., controlling
over 90% of the shares in issue. The
Company notified shareholders via an
RNS announcement on 19 October 2022
that the Board of Directors determined
that the Company now operates as a Close
Company for the purposes of taxation
and no longer avails itself of investment
trust status, as per Section 1158 of the
Corporation Tax Act 2010. Net Asset Value
(NAV) includes balance sheet adjustments
resulting from the Company now being a
close company. Such adjustments include
deferred tax assets.
This report includes the Fifth Anniversary
Tender Offer for Qualifying Registered
Shares via two tranches beginning in
September 2022 and ending February
2023. Shareholders whose shares were
registered in the Loyalty Programme for
five years were eligible to participate in
the Company’s tender offer. The Company
04
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Chairman’s Statement continued
purchased 3,387,414 shares, resulting
in 6,850,792 shares in issue at 30 June
2023 versus 10,238,206 shares in issue
in July 2022. The Board of Directors
acknowledges that the largest shareholder,
Associated Capital Group, Inc., the legal
and beneficial owner of 6,210,619 shares
at the time of this writing, elected not to
tender and has expressed its view that
the Company should continue. Associated
Capital Group, Inc. also agreed to subscribe
for Special Voting Loyalty Shares, which
will increase its voting interest when
issued, with issuance pending. As a result,
the Company will operate as a Close
investment company, and therefore will be
subject to UK corporate taxes, and thus
no longer avail itself to investment trust
status. The Board of Directors will assess
shareholder considerations and undertake
the analysis of options for the continuing
Company, including operational and
structural alternatives oriented towards
expense and tax savings, as it progresses.
Finally, in accordance with the charter,
remaining registered Loyalty Programme
Five year shareholders are eligible to
receive an additional vote per individual
share held. The Loyalty Programme has
been implemented in accordance with the
offering prospectus. The Board expects a
tender offer to be implemented in 2024,
in the range of approximately 5% of the
Ordinary Shares not owned by Associated
Capital Group, Inc. Any such offer is under
further review and analysis.
The company is expected to implement
its investment policy to also include
the acquisition of shares for control
which may require of the Company to
operate such investments to enhance
its objective of total returns for the long
term while also seeking to enhance
current income. As such in a subsequent
event, the Board has appointed executive
management to help efficiently implement
the company’s growth plans. In context,
in 2022 shareholders authorised the
allotment of additional Ordinary Shares
which can be utilised for acquisitions to
further expand and develop shareholder
value in accordance with the investment
programme.
The Company has elected continued
adherence to the AIC’s SORP. Although no
longer a trust, the Company has elected
to continue to prepare the financial
statements on a basis compliant with
the recommendations of the SORP. The
SORP is issued by the AIC and it sets out
recommendations, intended to represent
current best practice, on the form and
contents of the financial statements
of Investment Companies. Investment
Companies include investment trust
companies that have been, currently are,
or are directing its affairs so as to enable
it to obtain or retain approval under
Section 1158 of the Corporation Tax Act
2010. Although the Company no longer
meets the requirements of Section 1158
of the Corporation Tax Act 2010 to be an
investment trust, it continues to conduct
its affairs as an investment company.
Final Thoughts
We reiterate today’s post World War II
order is facing intense challenges, yet this
Company has performed consistently and
non-correlated to the broader indices since
inception. It has endured COVID-19, the
onset of inflation and higher interest rates,
and a fragile regulatory environment lead
by the geo-political wrangling between
the US and China. The list continues, as will
the Gabelli Merger Plus+ Trust Plc in the
United Kingdom.
John Birch Marc Gabelli
Co-Chairman Co-Chairman
19 October 2023
05
Strategic report Governance Financial statements
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Process in Action
Gabelli Funds approach the global
marketplace in a similar fashion; we invest
like owners. Our clients own businesses
through the fractional interest of a share.
We are not index benchmarked, and
construct portfolios agnostic of market
capitalisation and index weightings. We
seek long term capital appreciation for our
clients relative to inflation over the long
term, regardless of market cycles. We have
invested this way since 1977.
The Gabelli Merger Plus portfolio offers
access to companies that have been
identified to have substantial disconnects
between market price and our estimate
of the business value (PMV), and where
catalyst events exist that may narrow
these discounts for the benefit of GMP
shareholders. We thus establish a “Margin
of Safety” for our investors by identifying
differences between our estimate of
PMV and the stock market price. The
process seeks to identify businesses
undergoing some form of strategic
change, typically with strong organic
cash flow characteristics, balance sheets
reorganizational opportunities, and
strategic operational flexibility accelerated
with the prospect of management capital
allocation actions.
Catalyst merger events can come in
many forms including, but not limited
to, corporate restructurings (such as
demergers and asset sales), operational
improvements, regulatory or managerial
changes, special situations (such
as liquidations), and mergers and
acquisitions. Corporate mergers provide
valuable insights into corporate capital
allocation decisions and therefore help in
our assessment of long term valuations.
Our proprietary research data bases track
thousands of announced deals globally
and utilises that compounded knowledge
in the continued refinement of Private
Market Valuations. PMV’s will change
over time, and while our analysis is long
term, it is through this consistent process
of bottom up stock selection and the
implementation of disciplined portfolio
construction that we expect to create
value for our shareholders annually.
In this process, we do sector-by-sector
analysis, assessing the PMV of a business,
and identifying the catalyst in place to
realise returns. A company’s PMV is not
constant, and changes as a function of
many variables. Our analysis emphasizes
balance sheets, cash flows, and the long
term defendable position of a corporation.
We achieve returns through investing in
businesses utilising our proprietary Private
Market Value (“PMV”) with a Catalyst™
methodology. We PMV is the value that we
believe an informed buyer would be willing
to pay to acquire an entire company in a
private transaction. Our team arrives at a
PMV valuation by a rigorous assessment
of fundamentals from publicly available
information. Further, PMV’s are enhanced
through the analysis of announced
corporate mergers and acquisition activity.
Mergers offer tangible insights into the long
term capital allocation decisions of global
corporations. We focus on the balance
sheet, earnings, free cash flow, and the
management, the stewards of corporates
assets, of prospective companies. The
judgement gained from our comprehensive,
accumulated knowledge across a variety
of sectors is deployed for investors in a
portfolio. Our analysts typically forecast
model company operations 5 years into
the future. Unlike Wall Street’s earnings
momentum players, we do not try
to forecast earnings with accounting
precision and then trade stocks based on
quarterly expectations and realities. We
simply try to position ourselves in front
of long-term earnings trends. Throughout
our research process, the focus is on free
cash flow: earnings before interest, taxes,
depreciation and amortization (“EBITDA”)
minus the capital expendituresnecessary
to grow the business. We believe free cash
The Search For Value – Gabelli Merger Plus+
Investment Methodology
06
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
flow is the best barometer of a business’
value. Deteriorating or rising free cash flow
often foreshadows net earnings changes.
We also look at earnings per share
trends. In addition, we analyse on and off
balance sheet assets and liabilities such as
property, plant and equipment, inventories,
receivables, and legal, environmental
and health care issues. We want to know
everything and anything that will add to,
or detract from, our valuation models. This
method of analysis involves looking at
businesses as a function of their assets and
earnings power. We examine businesses
as if we were owners of those businesses,
and we believe that we can do that in a
rational way by looking at industries on a
global basis. Our investment professionals
visit with hundreds of companies each
year. Our work is proprietary, bottom up,
and involves the full utilisation of public
resources.
Our analysts follow industries on a global
basis, and narrow the universe of potential
investment candidates to a short list of the
most attractive companies. All publicly
available company material is reviewed,
including annual and quarterly reports,
10-Ks, 10-Qs, and proxy statements.
Each analyst develops an operational
understanding of their industry, effectively
becoming an expert in that industry.
The analysts hone this expertise by
continually visiting companies and their
senior managements, and by talking to
competitors, suppliers and customers. They
also develop and maintain government
and trade sources to derive an overall
understanding of their industry. In addition,
our firm hosts a number of industry
seminars, where the top executives of the
leading firms share their insights with the
investment community.
The objective of this process is to identify
companies that trade at significant
differences to their intrinsic or private
market values.
We continually visit the management of
hundreds of companies and integrate their
input with our knowledge base. Our goal is
to understand management’s motivations
and expectations. Given our approach, we
want to know who our partners are and if
they are working to enhance shareholder
value. This process, coupled with our
financial analysis, helps us select the most
attractive investment candidates for our
portfolios.
We employ a three-dimensional approach
to valuation:
• Earnings per share
• Free cash flow
• Private market value
The first step is to analyse the income
statement and cash flow. Cash flow is
viewed as a barometer of financial health,
and often foreshadows earnings trends.
We attempt to forecast the direction and
growth rates of the earnings and cash flow
streams.
The second step is to examine the balance
sheet. The corporate balance sheet is
recast, assessing real-world values of
inventories, property, plant and equipment
and stated book value.
To these two analytical processes, dynamic
forecasting and static asset and liability
valuation, we add our assessment of
the PMV of the business. In other words,
what would this company be worth to an
informed business person attempting to
create or purchase a business with similar
characteristics?
Catalyst: Identification of a mispriced
situation, however, does not necessarily
guarantee a rewarding investment. The next
step is to determine events in businesses
undergoing some form of strategic change
that will help narrow the spread between
a stock’s public market price and our
determination of its PMV. We call these
events catalysts. Catalysts include industry
events such as consolidation, changes in
the regulatory or accounting environment,
new technologies, or be indigenous
to the company itself such as financial
engineering, demergers, acquisitions or
sales.
Results: After we have identified and
selected stocks that qualify as candidates
based on these fundamental and
conceptual considerations, our objective
is to structure a diversified portfolio. This
has been a proven long-term method for
creating wealth, risk adjusted, in the stock
market.
The Search For Value – Gabelli Merger Plus+
Investment Methodology continued
Manager History
The Gabelli organisation, of which
Gabelli Funds, LLC is an affiliate, began
in the U.S. in 1976 as an institutional
value investing research firm. Mario
Gabelli, the firm’s founder, is credited
by the academic community for
establishing the notion of Private
Market Value (“PMV”), the value an
informed industrialist would pay for
an entire business in a negotiated
transaction. This is a long term oriented
bottom-up investment process based
on the fundamental investment
principles first articulated in 1934 by
Graham and Dodd, the founders of
modern security analysis, and further
augmented by Mario Gabelli in 1977
with his introduction of the concepts
of PMV into equity analysis. Gabelli has
added the element of a catalyst event
to generate long term returns. The
Gabelli method, PMV with a Catalyst
TM
,
is part of the Value Investing Curriculum
at many major business schools and is
thus applied in the analysis of public
equity securities by Gabelli Funds for
shareholders.
07
Strategic report Governance Financial statements
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Investment Objective and Policy
Investment objective
The Company’s primary investment objective is to seek to generate total return, consisting of capital appreciation and current
income for the long term. The Company will seek a secondary objective of the protection of capital, uncorrelated to equity and
fixed income markets.
Investment policy
The Company will seek to meet its long term investment objective by utilising the Gabelli Private Market Value (PMV) with a
Catalyst
TM
, investment methodology, maintaining a diversified portfolio of event merger arbitrage strategies to seek to create
an optimal risk/ reward profile for the portfolio. The company invests for the long term as owners with an emphasis on cash
generating, franchise companies, selling at a significant discount to our appraisal of their Private Market Value. We define Private
Market Value (PMV) as the value an informed industrialist would pay to purchase assets with similar characteristics in a privately
negotiated transaction.
“Event Driven Merger Arbitrage” is a highly specialised active investment approach designed principally to profit from the
differences between PMV estimates and public market price with returns realised through the price achieved through corporate
catalyst events. Catalysts are utilised to earn returns independent of the broad markets’ direction. This includes corporate events
such as, but not limited to, management changes, announced mergers, acquisitions, takeovers, tender offers, leveraged buyouts,
restructurings, demergers and other types of reorganisations and corporate actions (“deals”).
The Company will invest and operate globally although it is expected to have an emphasis on predominantly equity securities
issued by companies in the United States of any market capitalisation. The Company is permitted to use a variety of investment
strategies and instruments, including but not limited to: minority or majority controlling operating interests in equity; convertible
and non-convertible debt securities; asset-backed and mortgage-backed securities; fixed interest securities; preferred stock, non-
convertible preferred stock, depositary receipts; shares or units of UCIs or UCITS as an investment or by management contract;
rights qualifying as transferable securities; when issued, delayed delivery transferable securities; forward contracts; swaps; recently
issued transferable securities; repurchase agreements, money market instruments and warrants.
The Company may invest part of its net assets in cash and cash equivalents, money market instruments, bonds, commercial
paper or other debt obligations with banks or other counterparties having at least a single A (or equivalent) credit rating from an
internationally recognised rating agency or government and other public securities, if the Portfolio Manager believes that it would
be in the best interests of the Company and its Shareholders. This may be the case, for example, if the Portfolio Manager believes
that adverse market conditions justify a temporary defensive position. Any cash or surplus assets may also be temporarily invested
in such instruments pending investment in accordance with the Company’s investment policy.
The Company may take both long and short positions in equity and debt securities. For shorting purposes, the Company may
use indices, individual stocks, or fixed income securities. The Company is a long-term investor and does not seek to generate
short-term returns or profits from trading or hedging. While taking a long-term view, the Company will realise opportunities from
hedging or for shorter-term gains when appropriate.
The Company may utilise financial derivative instruments to create both long and synthetic covered short positions with the aim
of maximising positive returns. The Company may use strategies and techniques consisting of options, futures contracts, and
currency transactions and may enter into total rate of return, credit default, or other types of swaps and related derivatives for
various purposes, including to gain economic exposure to an asset or group of assets that may be difficult or impractical to acquire.
The Company may also use derivatives for efficient portfolio management purposes including, without limitation, hedging and risk
management and leverage.
The Company has broad and flexible investment authority and, accordingly, it may at any time have investments in other related
or unrelated areas. Strategies and financial instruments utilised by the Company may include, but are not limited to: (i) purchasing
or writing options (listed or unlisted) of any and all types including options on equity securities, stock market and commodity
indices, debt securities, futures contracts, future contracts on commodities and currencies; (ii) trading in commodity futures
contracts, commodity option contracts and other commodity interests including physical commodities; (iii) borrowing money from
brokerage firms and banks on a demand basis to buy and sell short investments in excess of capital; (iv) entering into agreements
to acquire operating businesses including managing assets for third parties and (v) entering into swap agreements (of any and
all types including commodity swaps, interest rate swaps and currency swaps), forward contracts, currencies, foreign exchange
contracts, warrants, credit default swaps, synthetic derivatives (for example, CDX), collateralised debt obligations tranches, and
other structured or synthetic debt obligations, partnership interests or interests in other investment companies and any other
financial instruments of any and all types which exist now or are hereafter created.
No material change will be made without shareholder approval.
08
Gabelli Merger Plus
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Portfolio Manager’s Review
Methodology and Market Opportunity
In this context, let us outline the
investment landscape during the year to
30 June 2023 and the environment ahead.
We are especially enthusiastic about the
opportunities to grow client wealth in the
decades to come, and we highlight below
several factors that should help drive
results. These include:
• Increased market volatility, which
enhances our ability to establish
positions for the prospect of improved
returns;
• A robust market for corporate deal
making as conditions continue to
provide an accommodative market
for mergers and acquisitions;
• A rising interest rate environment,
providing attractive merger spread
opportunities;
• The Fund’s experienced investment
team, which pursues opportunities
globally through the disciplined
application of the Gabelli investment
methodology.
Global Deal Activity
1
Global deal merger and acquisition
activity (“M&A”) totaled $3.6 trillion
during 2022, a year-over-year decrease
of 37% (30% decrease if SPACs are
excluded). Deal activity began to slow
down in the second half of the year, as the
third quarter was the first in two years that
did not surpass $1 trillion in announced
deal activity. The total number of deals
1
Thomson Reuters M&A Review – Second Half
2022 and First Half 2023
worldwide decreased only 17% compared
to 2021. Mega deals—those greater than
$10 billion—totaled $787 billion, while
deals with values between $1 billion and
$5 billion accounted for $1.0 trillion during
the year, down 31% and 44% year over
year, respectively.
Cross border M&A activity totaled $1.1
trillion for the calendar year, a decrease of
46% from last year’s all-time high. Private
equity deals decreased 36% year over
year; however, these buyouts accounted
for a record 20% of total deal activity.
During the first half of 2023, global M&A
activity totaled $1.3 trillion, a year-over-
year decrease of 37%, the slowest first half
since the COVID pandemic. Deal activity
did start to pick up in the second quarter,
increasing 33% sequentially. Additionally,
the number of deals in the first half was
only down 9% compared to last year.
This dichotomy was driven by the lack
of mega deals—those greater than $10
billion—which totaled $259 billion, down
53% year over year.
Cross border M&A activity totaled $494
billion through June, a decrease of 25%.
Private equity deals decreased 49%
year over year; however, these buyouts
accounted for 21% of total deal activity.
While deals involving United States-
based targets declined 40% in the first
half, they still accounted for 43% of global
deal activity. European M&A tallied $263
billion of transactions over the same
period, a decrease of 49%. Asia Pacific
targets totaled $294 billion in the first half
of 2023, a 35% decrease year over year.
In the first half, the Healthcare sector was
the biggest contributor to merger activity,
totalling $188 billion and accounting for
14% of total announced deal volume.
The Energy and Power and Technology
sectors were also large contributors, each
accounting for 14% of M&A activity.
Portfolio in Review
Marked by stubborn inflation, conflict in
Europe, and the Federal Reserve’s war on
inflation, 2022 was a difficult year for risk
assets, marked. Higher interest rates and
the prospect of a recession spared neither
stocks nor bonds, as the S&P 500 and
investment grade bonds were down 18%
and 13%, respectively. As we have noted in
the past, our merger arbitrage portfolios
generate returns from taking idiosyncratic
deal risk and not market risk, and thus
were able to earn a positive return for
our clients, despite the volatile markets.
Uncertainty in the boardroom, elevated
borrowing costs, and a bid-ask divide—
that often persists until market participants
can digest a sharp decline in asset values—
all contributed to a 30% decline in M&A
volumes (ex-SPACs) in 2022. However,
despite the sharp decline from record 2021
levels, volumes only declined mid-single
digits from more normalized 2018 and
2019 levels. The fourth quarter did enjoy an
uptick in announced M&A with a healthy
$800 billion in deal activity. We expect
M&A to remain fairly robust on a historical
basis. In terms of merger arbitrage
spreads, they remain wide and attractive
compared to recent history. There are
three main reasons for this: (1) market
volatility; (2) perceived regulatory risk; and
(3) interest rates. Deals close in all market
environments, and volatility provides
GMP offers investors access to the Gabelli PMV with a Catalyst methodology, with broad and
flexible investment authority in order to enhance returns and accommodate the changing catalyst
event merger arbitrage landscape
Gabelli catalyst event merger arbitrage offers investors broad and flexible investment authority
• PMV with a Catalyst selection across all
sectors and capitalizations
• Full use of Gabelli organization resources:
proprietary research, portfolio management, risk
control and trading
• Fundamental research-driven investment
process
• Opportunities to maximize returns regardless of
market direction
• Minimize overall market correlation
Margin of Safety
Catalyst Timeline
HighLow
Long TermShort Term
Liquidations Deep Value
Special
Situations
Announced
Deals
Stable,
Cash flow
generators
Enhanced Risk and Return
Gabelli Funds www.Gabelli.com/MergerPlus
13
For Board of Director Use Only – Not For Public Distribution
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us with an opportunity, as it is often
indiscriminate. Mispriced risk allows us to
add to our highest conviction positions
at lower prices—the benefits of which
will be apparent as these transactions
progress towards closing. Regarding
regulatory risk, the aggressive policy
reform rhetoric we have written about
in the past has translated in some cases
into aggressive action. Some deals were
able to close in spite of regulatory action
(Change Healthcare) and some were able
to find alternative, less problematic suitors
(Aerojet Rocketdyne). We feel as though
this regulatory regime has created unique
investment opportunities and an attractive
risk/reward. Lastly, the merger arbitrage
strategy is a beneficiary of rising rates, as
the risk free rate is one of the components
of a deal spread. As rates rise, nominal
spreads should widen, all things being
equal. With the 3 month U.S. Treasury bill
yielding well over 5%, this should continue
to create a more compelling spread
environment going forward. We continue
to find attractive investment opportunities
in newly announced and pipeline deals.
We remain focused on investing in highly
strategic, well-financed deals with an
added focus on near-term catalysts,
and are upbeat about our prospects to
generate absolute returns.
U.S. capital markets rebounded
significantly in the first half of 2023
despite headwinds. The S&P 500 finished
the first half up 16.8% against the backdrop
of a debt ceiling drama, a U.S. banking
crisis, geopolitical uncertainty, and a Fed
that has so far been unwavering in its
commitment to fight inflation.
M&A volumes did not prove as resilient,
as economic uncertainty and combative
regulators contributed to a 37% year-
over-year decline in the first half. Despite
this sharp decrease in dollar volumes, the
number of transactions was only down
9% compared to last year. Deals are still
getting done—albeit, smaller in size. The
second quarter did begin to show some
green shoots, as volumes totaled $750
billion, a 33% sequential improvement.
We expect this momentum to continue
as the year progresses.
The aggressive policy stance of regulators
has persisted in 2023, but companies are
adapting and showing a willingness to
fight back when case law supports their
cause. Regulators’ efforts to bring cases
with more novel theories of harm thus far
have not translated into much success in
court. While this has created volatility in
certain arbitrage spreads, it has provided
unique investment opportunities with an
attractive risk/reward.
A company’s PMV is not constant, and
changes as a function of many variables.
Our analysis emphasizes balance
sheets, cash flows, and the long term
defendable position of a corporation.
We achieve returns through investing
in businesses utilising our proprietary
Private Market Value (“PMV”) with a
Catalyst™ methodology. We PMV is the
value that we believe an informed buyer
would be willing to pay to acquire an
entire company in a private transaction.
Our team arrives at a PMV valuation by
a rigorous assessment of fundamentals
from publicly available information.
Further, PMV’s are enhanced through
the analysis of announced corporate
mergers and acquisition activity.
Mergers offer tangible insights into the
long term capital allocation decisions
of global corporations. We highlight
several investments across sectors which
have offered insights to the corporate
allocation process below.
Notable contributors to performance
include:
Defense Infrastructure
The strategic rational around US defense
spending as a long term investment
continues, notably in the race to develop
hypersonic weapons capabilities as seen
in Aerojet Rocketdyne Holdings, Inc.
(AJRD-NYSE) agreement to be acquired
by L3Harris Technologies, Inc. (LHX-
NYSE). Aerojet Rocketdyne Holdings,
Inc. (AJRDNYSE), which designs and
manufactures specialised power and
propulsion systems for space and defense
applications, agreed to be acquired by
L3Harris Technologies for $58 cash per
share, or about $5 billion. In December
2020, Aerojet agreed to be acquired by
Lockheed Martin for $51 cash per share,
but that deal was terminated in February
2022 after the U.S. Fair Trade Commission
sued to block the transaction, claiming
that Lockheed would be able to raise
the prices the U.S. government pays
for rocket engines, and potentially
deliver a lower quality product Portfolio
Manager’s review continued Half-Yearly
Financial Report (Unaudited) for the six
months ended 31 December 2022 11 to
Lockheed’s rival defense contractors
that utilise Aerojet’s propulsion systems.
We believe the acquisition by L3Harris
provides fewer antitrust risks than the
Lockheed transaction did. L3Harris
primarily produces electronics and
communications systems, so there is no
horizontal overlap with Aerojet’s business
and no benefit from bundling the two
companies’ products. An important
distinction from the Lockheed deal is
that there is also no vertical integration,
as Aerojet does not supply L3Harris with
any products used in L3’s programs, and
Aerojet will become a new business unit
for L3 as a merchant supplier of engines
to prime contractors. We believe shares
of Aerojet Rocketdyne were inexpensive
after the deal with Lockheed Martin was
called off and certain shareholders were
forced to sell their position. At the time,
shares traded at less than 10x EBITDA,
a significant discount to its historical
valuation, and Tony Bancroft, Gabelli’s
defense analyst, thought other buyers for
Aerojet would emerge and that shares
were worth more than $60 in a takeover.
We expect the L3Harris deal to close in
mid-2023.
Food Distribution
The attributes of consumer food
distribution benefits through scale
synergies and as such our investment in
Albertsons Companies, Inc. (ACI- NYSE)
entered a new stage as they agreed to be
acquired by The Kroger Co. (KR-NYSE).
Albertsons operates food and drug retail
stores in the U.S. under banners such as
Albertsons, Safeway, Vons, Tom Thumb,
ACME and more. Under terms of the
agreement Albertsons’ shareholders will
receive $34.10 cash per share (inclusive of
a special dividend and potential spin-off),
valuing the transaction at approximately
$25 billion.
Biotech Pharma
Undervalued and fairly unique and well
positioned business in our portfolio
continued to attract suitors and as
such Dechra Pharmaceuticals plc (DPH
LN-London) agreed to be acquired
by EQT and Abu Dhabi Investment
Authority. Dechra is a global veterinary
pharmaceuticals and products business.
Under terms of the agreement, Dechra
shareholders will receive £38.75 cash
per share, valuing the transaction at
approximately £4.8 billion
Gaming and Entertainment
Fundamentals for the online gaming
industry continued to accelerate as
Activision Blizzard Inc. (ATVI- NASDAQ)
agreed to be acquired by Microsoft Corp.
(MSFT-NASDAQ). Activision Blizzard
develops and publishes interactive
entertainment content and services.
Under the terms of the agreement
Activision shareholders will receive
$95.00 cash per share, valuing the
transaction at approximately $74 billion.
10
Gabelli Merger Plus
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Financial Services
Access to the US financial investor is
increasingly becoming a valuable asset
and as such Focus Financial Partners,
Inc. (FOCS-NASDAQ) received an offer
to be acquired by Clayton, Dubilier
& Rice, LLC. Focus provides wealth
management, investment advice, financial
and tax planning, consulting, tax return
preparation, and family office services to
ultra-high and high net worth individuals,
families, and business entities. Under
terms of the offer, Focus shareholders will
receive $53.00 cash per share, valuing the
transaction at approximately $7 billion.
Biotech Pharma
The rationale for buy vs. build where
developer costs are always increasing
led to Horizon Therapeutics plc (HZNP-
NASDAQ) agreeing to be acquired by
Amgen, Inc. (AMGN-NASDAQ). Horizon
is a biotechnology company that focuses
on the discovery, development, and
commercialization of medicines for rare,
autoimmune, and severe inflammatory
diseases. Under terms of the agreement,
Horizon shareholders will receive $116.50
cash per share, valuing the transaction at
approximately $28 billion.
Energy Infrastructure
US energy PNM Resources, Inc. (PNM-
NYSE) agreed to be acquired by Avangrid,
Inc. (AGR-NYSE). PNM Resources
engages in the energy and energy-related
businesses in the U.S. Under terms of
the agreement, PNM shareholders will
receive $50.30 cash per share, valuing the
transaction at approximately $8 billion.
Infrastructure and Engineering
Our analysis and understanding of PMV
multiples benefit when our portfolio
holdings are subject to bidding wars.
CIRCOR International, Inc. (CIR-NYSE),
which designs, manufactures, and
distributes flow and motion control
products globally, was the subject of a
bidding war. Under terms of the original
agreement, dated June 5, 2023, CIRCOR
shareholders would have received $49.00
cash per share, for approximately $1.4
billion. Later, on June 27, 2023, CIRCOR
agreed to be acquired by KKR under
improved terms of $51.00 cash per share,
after CIRCOR received an unsolicited bid
of $52.65 cash per share from an unnamed
third party. Subsequently, on June 28,
2023, Arcline Investment Management LP
was revealed as the unnamed third party
Portfolio Manager’s Review continued
with an all-cash proposal to buy CIRCOR
for $57.00 cash per share. In response,
on June 29, 2023, CIRCOR entered into
an agreement to be acquired by KKR
for $56.00 cash per share, valuing the
transaction at approximately $1.6 billion.
CIRCOR accepted KKR’s lower price due
to more certain financing and a better
antitrust profile.
Focus on strategic, cash
transactions with financing
secured
Understand all downside risks
including its fundamental basis
Focus on legal and governance,
MAC clauses, financing
conditions, shareholders’ votes
Analyse all deal issues such as
antitrust / regulatory items
Ideas sourced from proprietary database
of Gabelli PMV with Catalyst original
research coupled with rigorous analysis of
valuations provided as corporations
allocate capital through announced
corporate events and M&A transactions
worldwide
Invest Like Owners Corporate Mergers Provide Valuable Insights
Capital Allocation
Rigorous Analysis
Dynamic Management
Fundamental and Active Complement to Long Term Value Investing
Real time monitoring of spreads/positions
Extensive proprietary database
Actively traded as the event progresses
and according to closing
Positions are increased gradually as
transaction hurdles are passed
• Targeted strategy to achieve superior total returns, non correlated to
the broad market
• Preservation and growth of investor capital
• Provides diversification to traditional equity and fixed income
portfolios
Gabelli “PMV with a
Catalyst”
TM
One Process Globally
Merger investing
Merger arbitrage is a highly specialised
component of a portfolio. The investment
approach is designed principally to
profit from corporate events, including
the successful completion of proposed
mergers, acquisitions, takeovers,
tender offers, leveraged buyouts,
restructurings, demergers, and other
types of corporate reorganisations and
other actions. As arbitrageurs, we seek
to earn the differential, or “spread,”
between the market price of our
investments and the value ultimately
realised through deal consummation.
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Portfolio Summary
Largest Portfolio Security holdings (excluding cash and cash equivalents)
As at 30 June 2023
Security
1
Offsetting position
2
% of total
portfolio
6
(gross)
Market value
4
$000
Offsetting market
value
5
$000
% of total
portfolio
3
(net)
Horizon Therapeutics plc 5.4 3,425 5.4
Activision Blizzard Inc 4.4 2,770 4.4
IVERIC Bio Inc 4.3 2,722 4.3
PNM Resources Inc 4.3 2,692 4.3
Univar Solutions Inc 3.9 2,477 3.9
National Instruments Corp 3.9 2,448 3.9
Aerojet Rocketdyne Holdings
Inc 3.6 2,251 3.6
Tegna Inc 2.9 1,821 2.9
Albertsons Companies Inc 2.7 1,733 2.7
Focus Financial Partners LLC 2.7 1,728 2.7
VMWare Inc Broadcom Inc 2.7 1,724 (1,074) 1.0
Tower Semiconductor Ltd 2.1 1,358 2.1
Seagen Inc 2.1 1,299 2.1
Radius Global Infrastructure 2.0 1,293 2.0
Lennar Corp Class B Lennar Corp Class A 1.9 1,221 (1,081) 0.2
Uni-Select Inc 1.9 1,172 1.9
Triton International Ltd Brookfield Infrastructure 1.7 1,064 (113) 1.5
Liberty Media Corp 1.5 981 1.5
NuVasive Inc Globus Medial Inc 1.5 978 (898) 0.1
VectivBio Holding AG 1.5 943 1.5
Sub-total 57.0 36,100 (3,166) 52.0
Other holdings
7
43.0 33,712 (3,340) 48.0
Total holdings 100.0 69,812 (6,506) 100.0
1
Long position.
2
Offsetting position taken, based on the acquirer of the security when acquirer stock is being offered in whole, or in part, to
finance the transaction. Lennar Corp is a share class arbitrage.
3
Represents the total position value (market value plus the offsetting market value) as a percentage of the total portfolio value.
4
Market value of the long position.
5
Market value of the offsetting position.
6
Represents the market value as a percentage of the total portfolio value.
7
Including derivatives and equity short positions and excluding U.S. Treasuries.
12
Gabelli Merger Plus
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Trust Plc Annual Report and Accounts 2023
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategy
Key Performance Indicators (“KPIs”)
Our Key Performance Indicators (“KPIs”)
The Company’s strategy is to generate
returns for its shareholders by pursuing
its investment objective while mitigating
shareholder risk, by investing in a
diversified spread of equity investments.
Through a process of bottom-up stock
selection and the implementation of
disciplined portfolio construction, we
aim to create value for the Company’s
shareholders.
The largest holdings in the Company’s
portfolio are listed on page 11.
Gearing Policy
At the sole discretion of the Portfolio
Manager, the Company may use leverage
as part of its investment programme.
It is anticipated that the Company will
structurally gear and use tactical leverage
or portfolio borrowings in an amount
(calculated at the time of investment) of
around 2 times of the Net Asset Value,
subject to maximum gearing of 2.5 times
the Net Asset Value. Please refer to page
69 in the Glossary for further discussion
of gearing.
Leverage
Leverage is calculated using two methods:
i) Gross method and ii) Commitment
method. For further details please see the
Glossary on page 69.
Business Model
Please see the Methodology in Action on
page 5.
Board Diversity
Please see the “Board Diversity” section
on page 26.
The Board recognises that it is share price
performance that is most important to the
Company’s shareholders. Fundamental
to share price performance is the
performance of the Company’s net asset
value. The central priority is to generate
returns for the Company’s shareholders
through net asset value and share price
total return, and discount management.
For the year ended 30 June 2023, the
Company’s KPIs, as monitored closely
by the Board at each meeting, are listed
below:
Net Asset Value Total Return
Year ended 30 June 2023
1
10.54%
(30 June 2022: (1.34)%)
Share Price Total Return
Year ended 30 June 2023
2
1.33%
(30 June 2022: 29.06%)
Discount to Net Asset Value
Year ended 30 June 2023
3
(11.94)%
(30 June 2022: (3.74)%)
The above table sets out the key KPIs for the Company. These KPIs fall within the definition of ‘Alternative Performance Measures’
(APMs) under guidance issued by the European Securities and Markets Authority (ESMA). Information explaining how these are
calculated is set out in the Glossary. These KPIs including APMs have been carefully selected by the Board on discussion with the
Portfolio Manager, to give the most appropriate overview of performance in the financial year to shareholders and other stakeholders.
Performance measured against various
indices
The Company does not use a benchmark. However, at each meeting the Board reviews
and compares portfolio performance in the context of the performance of the ETF
MNA and Credit Suisse Merger Arb Liquid Indices.
Information on the Company’s performance is given in the Chairman’s Statement and
the Portfolio Manager’s Review.
Share Price Total Return
The Company’s primary investment objective is to seek to generate total return
consisting of capital appreciation and current income for the long term.
In order to allow the Shareholders to realise a predictable, but not assured, level of cash
flow and some liquidity periodically on their investment, the Company has adopted a
“managed dividend policy”. This policy seeks to pay Shareholders a quarterly dividend
in relation to the Net Asset Value of the Company at the time, which may be changed
at any time by the Board. Between inception and 30 June 2023, the Company returned
$2.39 per share to shareholders, consistent with its dividend policy. Dividends are paid
only when declared by the Board subject to the Board’s assessment of the Company’s
financial position and only if the Company has sufficient income and distributable
reserves to make the dividend payment, and the level of dividend may vary over
time. As such, the portfolio’s managed distribution of capital through the payment
of quarterly dividends is under review as we enter the new Fiscal Year. Additional
information can be found in the Glossary on page 71.
1 Net Asset Value per ordinary share, total return represents the theoretical return on NAV per ordinary share, assuming that dividends paid to shareholders were
reinvested at the NAV per ordinary share at the close of business on the day shares were quoted ex-dividend.
2 Share Price Total Return represents the theoretical return to a shareholder, on a closing market price basis, assuming that all dividends received were reinvested,
without transaction costs, into the ordinary shares of the Company at the close of business on the day the shares were quoted ex-dividend.
3 The amount by which the market price per share is lower than the cum-income NAV per share, expressed as a percentage of the cum-income NAV per share.
Figures are inclusive of income and dividends paid, in line with the Association of Investment Companies (“AIC”) guidance.
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Share price discount to net asset value
(NAV) per share
The NAV per share is published on a daily basis on the London Stock Exchange and
The International Stock Exchange. The NAV is calculated in accordance with the
Association of Investment Companies (AIC) formula.
At each Board meeting, the Board monitors the level of the Company’s discount to
NAV, the changes thereto and the reason for such changes. The Directors recognise
the importance to investors that the shares should not trade at a significant discount
to NAV. Accordingly, the Board would consider implementing a share buy back
programme to ensure that the share price does not trade at a significant discount to
the NAV.
In the year under review, the Company’s shares traded at a discount of (3.74)% as of
30 June 2022 and at a discount of (11.94)% as of 30 June 2023.
Performance is assessed on a total return basis for the NAV and share price.
Cumulative Performance Chart (USD) from 19 July 2017
Dividend History
Rate ($) Ex dividend date Record date Payment date
Fourth interim 2022 $0.12 6 April 2023 11 April 2023 25 April 2023
Third interim 2022 0.12 18 April 2022 19 April 2022 28 April 2022
Second interim 2022 0.12 20 January 2022 21 January 2022 03 February 2022
First interim 2022 0.12 18 November 2021 19 November 2021 03 December 2021
Total 0.36
The Company paid the fourth interim dividend for the fiscal year ended 30 June 2022 on 25 April 2023. Following the Tranche Two
Tender Offer the Board has continued to review and assess the Company’s distribution policy. The Company paid the first interim
dividend for the fiscal year ended 30 June 2023 on 8 September 2023.
-12%
-7%
-2%
3%
8%
13%
18%
23%
28%
33%
38%
Credit Suisse Merger Arb Liquid Index +24.6%
Credit Suisse Merger Arb Liquid Index +18.97%
ETF MNA +4.0%
GMP NAV +31.8%
Jul 2017
Oct 2017
Jan 2018
Apr 2018
Jul 2018
Oct 2018
Jan 2019
Apr 2019
Jul 2019
Oct 2019
Jan 2020
Apr 2020
Jul 2020
Oct 2020
Mar 2021
Jun 2021
Dec 2020
Sep 2021
Dec 2021
Mar 2022
Jun 2022
Sep 2022
Dec 2022
Mar 2023
Jun 2023
Cumulative performance from 1 October 2022 includes the deferred tax asset.
14
Gabelli Merger Plus
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The Company continues to have exposure
to a variety of risks and uncertainties, and
the Audit & Risk Committee has focused
attention on identifying and mitigating
key risks likely to crystallise in the current
economic environment. The Board
continues to prioritise a robust system of
controls to minimise exposure to global
macro events in particular, which remains
highlighted as a generic risk as in recent
Annual Reports.
The Directors confirm that they have
carried out a further robust assessment
of the principal risks facing the Company
during the year, including those that would
threaten its investment objective, business
model, future performance, solvency or
liquidity. The Company maintains a risk
register which sets out the risks facing
the Company, the likelihood and potential
impact of each risk and the controls
established for mitigation. The risk register
is reviewed by the Audit & Risk Committee
on a regular basis throughout the financial
year and was specifically refreshed in 2023
to introduce more stringent risk ratings
for each risk and to reflect the impact of
related mitigating controls.
The core principle risks set out in the 2023
Annual Report remain largely unchanged,
however there are some risks that have
emerged which are set out in the following
table with an explanation of how they are
mitigated. On review during the year, the
Board re-rated several principal risks and
considered the adequacy of mitigating
controls in place across the Company’s
operations and those of its key third party
providers. The Audit & Risk Committee
has also specifically considered the risks
associated with the Portfolio Manager’s
use of Contracts for Difference within the
investment strategy which on review, were
felt to continue to be appropriate. The
risk narrative in the table below includes a
summary of the actions taken to position
the Company to withstand the related
effects for markets and investments:
Principal Risks
Risk Mitigation
Investment Portfolio Risks
Decline in the U.S. equity markets.
Excessive Portfolio Concentration
Deal Failure Risk
Counterparty Risk
By investing in a diversified portfolio and adhering to a carefully monitored
series of investment restrictions, enabled by automated pre-trade compliance
features and daily review of trade tickets. These strictures mandate that no
single security purchase can, at the time of investment, account for more
than 15% of the gross assets of the Company. The Board meets the portfolio
management team quarterly at the Board meetings to review the risk factors
and their effects on the portfolio, and a thorough analysis of the investment
strategy is undertaken.
The increased scrutiny by U.S. and UK anti-trust authorities on M&A cross
border transactions represents an additional source of deal failure risk which the
Investment Manager can mitigate via appropriate portfolio diversification and
careful stock picking.
The Board and the Portfolio Manager regularly monitor the Company’s exposure
to its counterparties. This oversight is intended to minimize the likelihood of loss
to the Company resulting from a counterparty’s failure to meet its obligations.
Global Macro Events Risks
Sharp Interest Rate Changes The Portfolio Manager monitors the interest rate environment and how those
changes would potentially impact the Company’s investment strategy.
Operational Risks
Outsourcing
The operational functions of the Company are
outsourced to third parties. Systems disruptions,
control failures, fraud or inadequate disaster
recovery provisions at key service providers
could adversely impact the Company.
All third party service providers report to the Board on a regular basis and their
reports and representations are reviewed by the Board, the AIF Manager and
the Portfolio Manager.
A state-backed cyberattack could also result
in widespread disruption across the financial
industry.
Whilst the Board takes all reasonable endeavours to safeguard the Company
from a cyberattack on this scale, complete mitigation of this external risk
cannot be guaranteed; however the Board, together with its’ service providers
remain vigilant to the likelihood of such an event in the current climate and
have improved the company’s readiness to reduce disruptions to the company’s
activities, in the event of such threat.
Fraud and cybersecurity vulnerability could
increase for key service providers. Such events
are external to the management and beyond
the control of the Company.
The Board relies on assurances from the Company’s key third-party providers
that they have appropriate and adequate cybersecurity policies in place to
mitigate the risk of a cyberattack. The Board keep these policies under review
by receiving regular presentations from the Heads of cybersecurity of its service
providers, who describe in detail the efforts they take to secure the company’s
data and to mitigate the risks of loss or potential damages that could result from
such attacks.
15
Strategic report Governance Financial statements
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London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Risk Mitigation
Unforeseen global events such as geopolitical
crisis, war, act of terrorism or outbreak of
pandemics could lead to dramatically increased
market instability and Company share price
volatility a decline in cross-border M&A activity.
Global economic, geopolitical, and financial conditions are constantly monitored.
Diversification of Company assets is incorporated into the investment strategy
and, if disruptive events occur, the Manager is prepared to adopt a temporary
defensive position and invest some or all of the Company’s portfolio in cash or
cash equivalents, money market instruments, bonds, commercial paper, or other
debt obligations with banks or other counterparties, with appropriate ratings as
determined by an internationally recognised rating agency and approved by the
Board. Another option is the investment in “government and public securities”
as defined for the purposes of the Financial Conduct Authority Handbook.
The Manager continues to carefully manage the Company’s investments to
protect shareholders’ interests and to position the Company to benefit from
future performance of markets in line with its key investment principles.
Equity Market Volatility
Equity Market Volatility, which may cause a
widening of bid-ask spreads and a wider price
discount to NAV.
To address a discount, the Board may consider using share buybacks, through
which shares would be repurchased when trading at a discount from NAV, up to
a maximum percentage of 14.99% of the issued share capital. The Company has
continued its shareholder engagement programmes to increase its visibility and
interaction with existing and potential investors.
Financial Risks
Comprise: (i) share price risk (comprising
interest rate risk, currency risk and other price
related risks); (ii) liquidity risk; (iii) credit risk
and (iv) Derivative risk.
Further details of these risks are disclosed in Note 12 to the financial statements
together with a summary of the policies for managing these risks.
Tax Risks
The Company is no longer eligible to avail
itself of Investment Trust Status as per Section
1158 of the Corporation Tax Act 2010 and is
consequentially exposed to UK corporation tax
payments.
The Company has engaged reputable, external tax consultants with whom the
management team consults with on a regular basis and from whom the Board
now receives periodic updates to ensure the Company remains compliant with
any tax-related payments and disclosures.
Corporate Governance and Regulatory Compliance Risks
Damage to the Company’s reputation through
inadequate corporate governance arrangements.
The Board complies with good governance practices in accordance with the
Association of Investments Companies’’ (“AIC”) Code of Corporate Governance
guidelines which endorse the UK Corporate Governance Code. The Board
and its Committees actively perform self-assessments of compliance through
the annual effectiveness evaluations and receive regular advice from by the
Company Secretary in relation to any regulatory changes within the corporate
governance landscape that may impact the company.
Failure to comply with legal and regulatory
requirements.
The Company receives and responds to guidance from both its external and
internal advisors on compliance with the Listing Rules, the Financial Conduct
Authority’s Disclosure and Transparency Rules, UK Companies Act 2006, and
other applicable regulations.
Emerging Risks Mitigation
Geopolitical Risks
Geopolitical risks have risen with Russia’s
invasion of Ukraine. The impact of sanctions
and the rise in commodity prices are likely
to be primary influences on markets. Rising
commodity prices and further disruption to
supply chains shall exacerbate inflationary
pressure and may also create a negative impact
on global growth, with Europe at particular risk.
The Board is keeping these evolving risks and market pressures under constant
review and will continue to monitor the volatility around investee company
valuations and implications for the Company’s likely future dividend income
stream.
16
Gabelli Merger Plus
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Trust Plc Annual Report and Accounts 2023
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Viability & Going Concern Statement
In accordance with the provisions of the
UK Corporate Governance Code, the
Directors have assessed the prospects of
the Company over a longer period than
the 12 months referred to in the ‘Going
Concern’ guidelines.
The Board conducted this review
focusing on a period of five years. This
period was selected as it is aligned with
the Company’s investment objective
of generating total return, consisting
of capital appreciation and current
income for the long term. In making this
assessment the Board also considered
the Company’s principal risks.
Investment Companies in the UK operate
in a well established and robust regulatory
environment and the Directors have
assumed that:
• Investors will continue to want to
invest in closed-end investment
companies because the fixed
capitalisation structure is suited to
pursuing the Portfolio Manager’s
proprietary long-term PMV with a
Catalyst
TM
investment strategy;
• The Company’s remit of investing
globally with an emphasis on securities
traded in the U.S., and predominantly
equity securities issued by companies
of any market capitalisation will
continue to be attractive to investors.
• The UK’s well established investment
and robust regulatory environment
will continue as such and will remain
an attractive global domicile for the
Company’s remit.
• The recent period of UK political
instability as reflected in the Sterling
exchange rate relative to the US
Dollar, the interplay of parliamentary
politics with the Bank of England, and
the regulatory unravelling of Brexit
relative to the European Union, will
pass in the medium term and return to
a period of marketplace stability and
instill domicile confidence for global
investors.
As with all investment vehicles, there is
a risk that the performance of individual
investments will vary and that capital may
be lost, but this is not regarded as a threat
to the viability of the Company.
Operationally, the Company retains title
to all assets, and cash and securities are
held with a custodian bank approved by
the Portfolio Manager and the Board.
The nature of the Company’s investments
means that solvency and liquidity risks
are low because:
• The Company’s portfolio is invested in
readily realisable, listed securities;
• The closed-end nature of the
Company means that, unlike an
open-ended fund, it does not need to
liquidate positions when shareholders
wish to sell their shares; and
• The expenses of the Company
are predictable and modest in
comparison with the assets and there
are no capital commitments currently
foreseen which would alter that
position.
• The taxation of the Company as a close
investment company is predictable
and modest in comparison with
the return profile of the investment
programme and as a result of regular
consultation with shareholders, an
effort to undertake the mitigation of
such close status taxation, such as a
re-domiciliation, is not expected in the
next 12 months.
• The Company conducted and
completed the Fifth Anniversary
Tender Offer, as set out in the circular
published on 19 August 2022. The
Company purchased 3,387,414 shares,
resulting in 6,850,792 shares in issue
at 30 June 2023 versus 10,238,206
shares in issue in July 2022. The Board
believes that the Company retains
sufficient scale to continue to operate
its Investment Programme.
The Board has closely monitored
the impact of the war in Ukraine.
Those impacts and related continuing
uncertainty have short and potentially
medium term implications for the
Company’s investment strategy. The
Board is continuing to monitor the
implications of the Company no longer
having investment trust status and
its implications on the Company’s
investment return profile over the longer
term. In context, the Board continuously
monitors the Company’s investment
portfolio, liquidity and gearing, along with
levels of market activity, to appropriately
minimise and mitigate consequential
risks to capital and future income such
as geopolitical risks, financial risks etc.
The risks are discussed in more detail
in the Chairman’s Statement and on
pages14to15.
Taking these factors into account, the
Directors confirm that they have a
reasonable expectation that the Company
will continue to operate and meet its
expenses.
The Company’s portfolio consists primarily
of U.S. investments. Accordingly, the
Company believes that the post “Brexit”
arrangements introduced by the U.K.
government and market U.K. government
and market regulators will not materially
affect the prospects for the Company,
but the Board and Portfolio Manager will
continue to keep developments under
review.
This Viability & Going Concern Statement,
the Strategic Report for the year ended
30 June 2023 (on pages 2 to 16 of this
document) and the s172 statement (on
pages 26 to 29) have been approved by
the Board and signed on its behalf by:
John Birch Marc Gabelli
Co-Chairman Co-Chairman
19 October 2023
17
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Board of Directors
Marc Gabelli
Non-executive Director and Co-Chairman
Chair of the Nomination Committee
Marc is a director and President of the
Portfolio Manager’s parent company,
GGCP, a director of Associated Capital
Group “ACG” and is a Senior Portfolio
Manager at Gabelli. As a fund manager, his
focus is global value equity investments.
He has managed several Morningstar five
star mutual funds, and a Lipper #1 ranked
global equity mutual fund. Marc is active
in a variety of charitable educational
efforts in the United States and United
Kingdom. He has lived and worked in the
U.K. at various times, beginning in 1990.
He is a graduate of the Massachusetts
Institute of Technology (M.I.T.) Sloan
School of Management.
Appointed on 28 April 2017.
Marco Bianconi
Independent non-executive Director
Chair of the Audit & Risk Committee,
member of the Conflicts and Remuneration
Committees
Marco is Corporate Development, M&A
and Investor Relations Director at Cementir
Holding N.V. an international Building
Materials manufacturer quoted on the
Italian Stock exchange. He previously served
for five years as CFO of its parent company
Caltagirone SpA. Prior to this he worked
for over eight years at Fidelity Investments
in London as Portfolio Manager and Pan-
European Equity Analyst. Marco holds
a number of non-executive roles within
the Cementir group and is non-executive
director at Henderson European Focus
Trust Plc. Marco holds an MBA at NYU
Stern School of Business, class 1996 and he
is a Chartered Accountant since 1990.
Appointed on 5 June 2017.
John Birch
Non-executive Director and Co-Chairman
Chair of the Management
Engagement and Conflicts Committees,
member of the Remuneration and
Nomination Committees
John is the Managing Partner of The
Cardinal Partners Global S.a.r.l. Previously
he was Chief Operating Officer of
Sentinel Asset Management, Inc. and
Sentinel Administrative Services, Inc.,
both members of National Life Group. He
has also held senior roles in State Street,
American Skandia Investment Services,
Inc., Gabelli Funds, Inc. and Gabelli
International. He has an MA in Tax and over
30 years experience in asset management.
Appointed on 5 June 2017.
The Directors of the Company who were in office during the year and up to the date of the signing of the financial statements were
as follows:
18
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
John Newlands
Independent non-executive Director
Member of the Audit & Risk Committee
John has served more than twenty years
in the City of London, most recently
with Brewin Dolphin Limited as Head of
Investment Companies Research from
2007 to 2017. He was a member of the
Association of Investment Companies
Statistics’ Committee from 2000 to
2017. He has an MBA from Edinburgh
University Business School and is a
Chartered Electrical Engineer. He has
written four books about financial history,
the most recent charting the history
of Dunedin Income Growth Investment
Trust. He is a non executive director of
CQS New City High Yield Fund and Chair
of Develop North PLC and Deputy Chair
of the Investment Committee of Durham
Cathedral.
Appointed on 8 February 2018.
Yuji Sugimoto
Independent non-executive Director
Member of the Nomination, Conflicts and
Management Engagement Committees
Yuji has over 37 years experience in
financial markets. He is a former Executive
Director of Sumitomo Mitsui Banking
Corporation in the US. Prior to this
Yuji co-managed Japanese/Pan-Asian
institutional research sales as a Managing
Director at Lehman Brothers / Barclays.
From 2003 to 2007 he managed a New
York based Japanese equity hedge fund
Sugimoto Capital Management LLC,
which he founded. He started his career
at Salomon Brothers working for 24 years
in New York, London, Hong Kong and
Tokyo in a number of institutional sales
management positions as a Managing
Director. He has a MBA from the University
of Southern California and a B.A. in
Economics from Columbia University.
Appointed on 5 June 2017.
James Wedderburn
Independent non-executive Director
Chair of the Remuneration Committee and
member of the Audit & Risk Committee
James has over 40 years experience in
the investment industry. From 1999 to
2017 he was Director of the family office
of Sir Peter Lampl, founder of the Sutton
Trust social mobility charity, where he
was responsible for all financial and
investment matters and closely involved
with the charity’s finances. He worked
previously at financial group Hamilton
Lunn monitoring the global investments
of ultra high net worth clients and, prior
to that, was a fund manager at Invesco
MIM and Samuel Montagu responsible
for UK pension fund and charity clients.
James spent his early career as a UK
equity research analyst at Cazenove and
Laing & Cruickshank after graduating
from Oxford University.
Appointed on 15 November 2017.
Board of Directors continued
19
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Directors’ Report
The Directors present the annual report and accounts of the
Company for the year ended 30 June 2023. The financial
statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the UK
international accounting standards and have been prepared in
accordance with the requirements of the Companies Act 2006.
The Company
The Company was incorporated in England and Wales on 28
April 2017 with registered number 10747219. The Company is
registered as an investment company as defined by Section 833
of the Companies Act 2006 (the “Companies Act”) and operates
as such.
The Company was admitted to the Specialist Fund Segment of
the Main Market of the London Stock Exchange and trading on
the Official List of the International Stock Exchange on 19 July
2017.
The Company’s Listing Sponsor on the International Stock
Exchange is Ocorian Administration (Guernsey) Limited. The
Company also operates an additional market quote for its ordinary
shares on the London Stock Exchange, denominated in sterling.
Investors should look to the Circular dated 19 August 2022 for
information about the Company, the Loyalty Programme, and the
Tender Offer.
The Company has elected continued adherence to the AIC’s
SORP. Although no longer a trust, the Company has elected to
continue to prepare the financial statements on a basis compliant
with the recommendations of the SORP. The SORP is issued by
the AIC and it sets out recommendations, intended to represent
current best practice, on the form and contents of the financial
statements of Investment Companies. Investment Companies
include investment trust companies that have been, currently are,
or are directing its affairs so as to enable it to obtain or retain
approval under Section 1158 of the Corporation Tax Act 2010.
Although the Company no longer meets the requirements of
Section 1158 of the Corporation Tax Act 2010 to be an investment
trust, it continues to conduct its affairs as an investment company.
Going concern
The Board have closely monitored the impact of the ongoing
COVID-19 pandemic, Brexit uncertainty, and the war in Ukraine.
Those impacts and related continuing uncertainty have short-
and potentially medium-term implications for the Company’s
investment strategy. Additionally, the Board is monitoring the
period ahead on the basis of the Company no longer having
investment trust status and its implications on the Company’s
investment return profile over the longer term. In context, the
Board continuously monitors the Company’s investment portfolio,
liquidity and gearing, along with levels of market activity, to
appropriately minimise and mitigate consequential risks to capital
and future income such as geopolitical risks, financial risks etc.
Taking these factors into account, the Directors confirm that they
have a reasonable expectation that the Company will continue to
operate and meet its expenses as they fall due. For these reasons,
the Directors consider there is reasonable evidence to continue
to adopt the going concern basis in preparing the accounts as at
30 June 2023.
This Going Concern statement should be read in conjunction with
the Company’s Viability & Going Concern Statement which can
be found on page 16.
Directors
The Directors of the Company in office at the date of this report
and their biographies are set out on pages 17 and 18. Details of
Directors’ interests in the shares of the Company are set out in the
Directors’ Remuneration Report.
Directors’ retirements are subject to the Company’s Articles of
Association (the “Articles”). The Articles provide that the directors
may appoint a person who is willing to act as a director and any
director so appointed is required to retire at the next AGM after his
or her appointment and is eligible for reappointment. All directors
who held office at the time of the two preceding AGMs and who
did not retire by rotation at either of them are also required to
retire by rotation and are eligible for reappointment. In addition,
each Director considered to be non-independent will retire and
being eligible offer themselves for re-election on an annual basis.
The Board has agreed to follow the recommendations of the U.K.
and AIC Corporate Governance Codes and ask all Directors of the
Company to offer themselves for re-election annually. Therefore,
all the Directors will retire at the forthcoming AGM and, being
eligible will offer themselves for re-election.
Having considered the Directors’ performance as part of the
annual Board evaluation process the Board believes that it
continues to be effective and that each of the Directors brings
an appropriate level of knowledge, experience, business, financial
and asset management skills. The Board therefore recommends
that shareholders vote in favour of each Director’s proposed
election at the AGM.
Mr. Gabelli, as a Director and President of the Gabelli Group
(“GGCP, Inc.”), the parent company of both Gabelli Funds, LLC
(the “Portfolio Manager”) and Associated Capital Group, the
Company’s largest shareholder, is deemed to be interested in the
Company’s Portfolio Management Agreement, as is Mr. Birch, who
serves on the Boards of other funds in the Gabelli/GAMCO group
of companies.
There were no other contracts subsisting during the year under
review, or up to the date of this report, in which a Director of the
Company is, or was, materially interested and which is, or was,
significant in relation to the Company’s business.
None of the Directors have a service contract with the Company.
The terms of their appointment was provided to them in writing.
No Director is entitled to compensation for loss of office on the
takeover of the Company. The powers of the Directors are set out
in the Corporate Governance Statement.
Directors’ conflicts of interest
Directors have a duty to avoid situations in which they have, or
could have, a direct or indirect interest that conflicts, or may
potentially conflict, with the Company’s interests. This is in
addition to the continuing duty that Directors owe the Company
to disclose to the Board any transaction or arrangement under
consideration by the Company in which they are interested.
Directors are required to disclose any conflicts and potential
conflicts of interest upon appointment. A schedule of these is
maintained by the Company Secretary and provided at each
quarterly Board meeting. Directors are responsible for keeping
these disclosures up to date and in particular to notify any new
potential conflicts of interest, or changes to existing situations, to
the Company Secretary.
20
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
In accordance with the Companies Act 2006 and the Company’s
Articles, the Directors can authorise such conflicts or potential
conflicts of interest. In deciding whether to authorise any conflict,
the Directors must consider their general duties under the
Companies Act 2006, and their overriding obligation to act in a
way they consider, in good faith, will be most likely to promote the
Company’s success.
In addition, the Directors are able to impose limits or conditions
when giving authorisation to a conflict, or potential conflict of
interest, if they think this is appropriate. The authorisation of
any conflict matter, and the terms of any authorisation, may be
reviewed by the Board at any time.
The Board believes that the procedures established to deal with
conflicts of interest operated effectively during the year under
review.
Directors’ Indemnities
In accordance with the provisions of the Companies Act, the
Company’s Articles allow for Directors and officers of the
Company to be indemnified out of the assets of the Company
against all costs, losses, and liabilities incurred for negligence,
default, breach of duty or trust in relation to the Company’s
affairs and activities. The Articles also provide that, subject to the
provisions of the Companies Act 2006, the Board may purchase
and maintain insurance for the benefit of Directors and officers
of the Company against any liability which may incur in relation
to anything done or omitted to be done, or alleged to be done
or omitted to be done, as a Director or officer. The Company has
taken out Directors’ and Officers’ Liability insurance, which covers
the Directors and officers of the Company.
Share Capital
Full details of the Company’s issued share capital are given in
Note 11 to the Financial Statements on page 58. Details of the
voting rights in the Company’s shares as at the date of this report
are also given in Note 6 to the Notice of Annual General Meeting
on page 75.
The ordinary shares carry the right to receive dividends and have
one voting right per share. Voting rights may increase to certain
Loyalty Programme qualifying shareholders in the subsequent
period commencing calendar year end 2023 (see “Loyalty
Programme”). There are no restrictions on the voting rights of
the ordinary shares or any shares which carry specific rights with
regard to the control of the Company.
No shares were issued during the year under review, or up to close
of business on 30 June 2023.
At the year end and at the date of this report there were
accordingly 3,483,374 ordinary shares held in treasury (33.7% of
the issued share capital).
In September 2022, concurrent with the Fifth Anniversary Tender
Offer, the Board of Directors of the Company were authorised
to allot Ordinary Shares of the Company up to an aggregate
nominal value of $511,910.30, with such authority to expire on
the fifth anniversary of the date of the passing of the resolution.
In addition, at the November 2022 AGM, the Board of Directors
was authorised to allot relevant securities in the Company up to
a maximum aggregate nominal amount of $71,822 (being ten
percent of the total number of voting rights of the Company at
the latest practicable date prior to the publication of the Notice
of AGM), with such authority to apply until the conclusion of
this year’s AGM. The resolutions for the 2023 AGM include
authorisation to the Company to allot equity securities up to
an aggregate nominal value of $45,672, that can be utilised for
acquisitions by the company. These transactions may result in
the acquisition of other operating businesses to further expand
and develop shareholder value in accordance with the investment
programme.
Share Repurchase
The Company has authority to buy back shares in the market and
may cancel or hold ordinary shares acquired by way of market
purchase in treasury.
The Directors will consider repurchasing shares in the market
under an extension of the programme if they believe it to be in
shareholders’ interests. It is the Board’s intention that any shares
bought back by the Company will be held in treasury and will
only be sold at prices at or above the prevailing NAV per share
ensuring a positive overall effect for shareholders when shares are
bought back at a discount and then sold at a price at or above the
NAV per share.
The current authorities to buy back and sell shares from treasury
and to issue shares will expire at the conclusion of the 2023
Annual General Meeting. The Directors are proposing that these
authorities be renewed at the forthcoming Annual General
Meeting.
The Board expects a tender offer to be implemented in 2024, in
the range of approximately 5% of the Ordinary Shares not owned
by Associated Capital Group, Inc. Any such offer is under further
review and analysis.
Close Company
As a result of the Fifth Anniversary Tender Offer, the Company has
been operating as an Investment Company with close company
status. The Board has not adjusted the Company’s investment
policy (as detailed in the Charter), as a result of close status. The
Board is examining alternatives to reduce costs on an ongoing
basis and will seek to undertake a comprehensive review during
the 2023-2024 period.
Loyalty Programme
The Company has implemented a loyalty programme to
incentivise long-term share ownership. The loyalty programme is
open to all shareholders, who are entered in the Loyalty Register,
a separate register to allow a shareholder to increase its voting
power after holding shares for a continuous period of at least
five years. Each shareholder so registered will be entitled to
subscribe for one special voting loyalty share in respect of each
ordinary share held. These shares can also be used as a form of
consideration when entering into one or more agreements to
acquire operating businesses in accordance with the Investment
Policy, and subject to approval by shareholders at the AGM, the
articles will be updated to reflect this dynamic.
Each ordinary shareholder and holder of special voting loyalty
shares has the right to receive notice of, to attend, to speak at,
and vote at general meetings of the Company. Each ordinary
shareholder and holder of special voting loyalty shares who is
present in person or by proxy at general meetings has one vote,
whether on a show of hands or on a poll, in respect of each
ordinary and special voting loyalty share held. At any general
meeting ordinary shares and any special voting loyalty shares in
the capital of the Company in issue would vote effectively one
class.
Directors’ Report continued
21
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London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
During the year, the Company authorised the issuance of Special
Voting Loyalty Shares in accordance with the terms specified
in the Loyalty Programme, with Associated Capital Group Inc.
agreeing to subscribe for Special Voting Loyalty Shares, which will
increase its voting interest when issued, with issuance pending.
The ordinary shares carry the right to receive dividends. The
special voting loyalty shares are not entitled to participate in any
dividend or distribution made or declared by the Company except
for a fixed annual dividend equal to 0.00001% of their nominal
value. On a winding up of the Company holders of special voting
loyalty shares would be entitled to be repaid the capital paid up
thereon pari passu with the repayment of the nominal amount
of the ordinary shares. The special voting loyalty shares are not
transferrable without the prior written consent of the Company.
These shares can also be used as a form of consideration when
entering into one or more agreements to acquire operating
businesses in accordance with the Investment Policy, and subject
to approval by shareholders at the AGM, the articles will be
updated to reflect this dynamic.
There are no restrictions on the transfer of ordinary shares or on
the exercise of voting rights attached to them, which are governed
by the Company’s Articles and relevant legislation.
There are no shares which carry specific rights with regard to the
control of the Company.
Activities and Business Review
A review of the business and details of research activities can be
found within the Strategy section of this Annual Report.
Alternative Investment Fund Managers
As an investment company that is managed and marketed in
the United Kingdom, the Company is an Alternative Investment
Fund (“AIF”) falling within the scope of, and subject to the
requirements of, the Alternative Investment Fund Managers
Directive (“AIFMD”). The Company had appointed Carne Global
Fund Managers (Ireland) Limited (“Carne”) as its Alternative
Investment Fund Manager (“AIFM”) pursuant to the AIFMD. As
a result of the United Kingdom’s departure from the European
Union, the Company assigned Gabelli Funds LLC, a US SEC
registered investment advisor as the AIFM in accordance with
such exemptions, effective 14 February 2023.
Carne was responsible for the portfolio management and risk
management functions of the Company until the point Gabelli
Funds LLC was appointed AIFM (on 13 February 2023). Carne
continues to provide the Company AIFM support services and
monitor risks. The Carne Agreement may be terminated by either
party giving not less than 90 days’ written notice.
Carne was entitled to receive from the Company such annual fees,
accrued and payable at such times, as may be agreed in writing
between itself and the Company from time to time. The fees are
to be payable monthly and subject to a minimum monthly fee
of ¤2,500. During the year under review the AIFM fees paid to
Carne were $50,865 (2022: $48,062). Regulatory disclosures
including the Key Investor Information Document are provided on
the website. Gabelli Funds, LLC does not earn a fee for its role as
AIFM; it earned $653,934 in portfolio management fees during
the year ended 30 June 2023 (2022: $841,642). Disclosures on
on Remuneration as required under AIFMD can also be found on
page 77.
Portfolio management and administration
Gabelli Funds, LLC (“Gabelli”) was appointed as Portfolio Manager
with effect from 15 June 2017 under a Portfolio Management
Agreement (the “Agreement”) with the Company under which
portfolio management functions were delegated to Gabelli.
Gabelli receives a management fee, payable monthly within 10
business days calculated at the rate of 0.85% of NAV accrued
daily and calculated on each business day.
Gabelli is entitled to earn a performance fee under the Agreement
in respect of each performance period, ending 30 June each year.
For the year under review Gabelli was entitled to a performance
fee of 20% of any outperformance of the net asset value total
return, capped at 3% of the average NAV. For the year ended
30 June 2023 no performance fee was paid (2022: nil).
Appointment of the Manager
The arrangements for the provision of portfolio management and
other services to the Company is considered by the Board on an
ongoing basis and a formal review is conducted annually.
During the year, the Board considered the performance of Gabelli
as Portfolio Manager by reference to the investment process,
portfolio performance and how it had fulfilled its obligations
under the terms of the Portfolio Management Agreement.
It is the opinion of the Board that the continuing appointment
of Gabelli as Portfolio Manager, on the terms disclosed is in
shareholders’ interests as a whole. Among the reasons for this
view is the depth, experience and investment process of Gabelli.
Facilitating Retail Investments
The Company conducts its affairs so that its shares can be
recommended by independent financial advisers to ordinary retail
investors in accordance with the FCA’s rules in relation to non-
mainstream pooled investments and intends to continue to do so
for the foreseeable future.
The shares are excluded from the FCA’s restrictions which apply
to non-mainstream pooled investments because they are shares
in an investment trust.
Other third party service providers Depositary and Custodian
The Company appointed State Street Trustees Limited as its
Depositary under a Depositary Agreement dated 30 June 2017
between Carne, Gabelli and the Company. The main role of the
Depositary under the AIFMD is to act as a central custodian with
additional duties to monitor the operations of the Company,
including cash flows and to ensure that the Company’s assets are
valued appropriately. The Depositary receives a fee payable at
0.025% per annum of the gross assets of the Company.
Under the Depositary Agreement, custody services in respect of
the Company’s assets have been delegated to State Street Bank
and Trust Company. The Custodian receives a custody fee payable
by the Company at rates depending on the number of trades and
the location of securities held subject to a minimum annual fee
payable of not less than $31,250. Custody fees of $51,569 were
paid during the year under review (2022: $41,736).
The depositary agreement is subject to 90 days’ written notice of
termination by any party.
22
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Registrar
Computershare Investor Services Plc (the “Registrar”) has been
appointed as the Company’s registrar pursuant to the Registrar
Services Agreement. The Registrar is responsible for maintaining
the Company’s register of shareholders and also provides services
in respect of the payment of dividends, provision of shareholder
documentation and compliance with the Common Reporting
Standard. Fees of $17,973 was paid to the Registrar during the
year under review (2022: $13,000). Fees in respect of corporate
actions will be agreed at the time of the corporate action.
Other Service Providers
Kin Company Secretarial Limited was appointed as Company
Secretary in October 2021 and has the responsibility for
overseeing the Governance arrangements of the Company and
assisting the Company fulfil its regulatory compliance obligations.
State Street Bank and Trust Company (“the Administrator”) is
responsible for the day-to-day administration of the Company
including the maintenance of the Company’s financial records
and the calculation of the daily NAV. Kin Company Secretarial
has worked with the Administrator to perform the functions of
Company Secretary for the 2022/2023 financial year.
The Kin Company Secretarial agreement has no minimum term
and is terminable by Kin or the Company on not less than one
month’s notice. Fees of $100,252 were paid for Company
Secretarial services during the year under review (2022: $84,466).
Related Party Transactions
Carne Global Fund Managers (Ireland) Limited is a related party to
the Company as it is considered to have had significant influence
over the Company while it served as AIFM. AIFM fees and AIFM
service fees of $50,865 were paid to Carne during the year ended
30 June 2023 (2022: $48,062).
Gabelli Funds, LLC is a related party to the Company as it is
considered to have significant influence over the Company. Gabelli
Funds, LLC does not earn a fee for its role as AIFM; it earned
$653,934 in portfolio management fees during the year ended 30
June 2023 (2022: $841,642).
Further details of related party transactions are provided in note ·
to the financial statements.
Substantial shareholders
As at 30 June 2023, the Company had been advised by the
following shareholder of its interests of 3% or more in the
Company’s ordinary issued share capital:
Shareholder
% of
Holding
Associated Capital Group Inc 90.73%
Future developments
The Chairman’s Statement and Portfolio Manager’s report within
this Annual Report contain details of likely future developments.
Financial instruments
The financial risk management and internal control processes
and policies, and exposure to the risks associated with financial
instruments can be found in Note · to the financial statements.
Results
The Company generated a revenue gain for the year ended
30 June 2023 of $2,996,000 (2022: $(943,000)).
Disclosure of Information under Listing Rule 9.8.4
The disclosures required by Listing Rule 9.8.4, where relevant to
the Company, are discussed in more detail on page 67.
Dividends and dividend policy
In order to allow the Shareholders to realise a predictable, but
not assured, level of cash flow and some liquidity periodically on
their investment, the Company has adopted a “managed dividend
policy”. This policy seeks to pay Shareholders a quarterly dividend
in relation to the Net Asset Value of the Company at the time,
which may be changed at any time by the Board. Between
inception and 30 June 2023, the Company returned $2.39
per share to shareholders, consistent with its dividend policy.
Dividends are paid only when declared by the Board subject
to the Board’s assessment of the Company’s financial position
and only if the Company has sufficient income and distributable
reserves to make the dividend payment, and the level of dividend
may vary over time. As such, the portfolio’s managed distribution
of capital through the payment of quarterly dividends is under
review as we enter the new Fiscal Year. The Company declared
and paid the final interim dividend of US$0.12 per ordinary share
for the financial year ending 30 June 2022, on 25 April 2023.
Exercise of Voting Rights in Investee Companies
The exercise of voting rights attached to the Company’s portfolio
has been delegated to the Portfolio Manager.
Articles of Association
The Company’s Articles can only be amended by special resolution
at a general meeting of the shareholders. Amendments will be
proposed at the AGM that are deemed immaterial. The articles
are available upon request, on the company website, and will be
provided for at the AGM.
Change of Control
There are no agreements the Company is party to that might
be affected by a change in Control of the Company. There
are no agreements between the Company and its Directors
for compensation for loss of office that occurs as a result of a
takeover bid.
Gabelli approach to voting at shareholder meetings
During the year, the Manager voted on approximately 1,089
proposals at approximately 245 shareholder meetings on
behalf of the Company. At these meetings, the Manager voted
in favour of the majority of resolutions, but voted against
the recommendations of management on approximately 52
resolutions.
Most of the votes against were in respect of resolutions relating
to super dilutive stock option plans, which were deemed by the
Investment Manager not to be in the best interests of shareholders.
Streamlined Energy and Carbon Reporting
The Company is categorised as a lower energy user under the
HMRC Environmental Reporting Guidelines March 2019 and
is therefore not required to make the detailed disclosures of
energy and carbon information set out within the guidelines.
The Company’s energy and carbon information is therefore not
disclosed in this report.
Directors’ Report continued
23
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emissions
producing sources under the Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013.
Modern Slavery Act 2015 (the “MSA”)
The Company is an investment company and has no employees
and does not provide goods and services in the normal course of
business. Accordingly, the Directors consider that the Company is
not required to make a slavery and human trafficking statement
under the MSA.
Employees, Social, Human Rights and Environmental Matters
The Company is an investment company and has no employees and
accordingly it has no direct social, human rights or environmental
impact from its operations. In carrying on its investment activities
and relationship with suppliers the Company aims to conduct
itself responsibly, ethically and fairly.
Board Diversity
As a close – end Investment Company, the Company falls within
scope of LR 9.8.6 R (9) and LR 14.3.33 R (1) which require
companies in-scope to disclose against the following Diversity
targets.
(i) at least 40% of the individuals on its board of directors are
women
(ii) at least one of the following senior positions on its board of
directors is held by a woman:
(A) the chair
(B) the chief executive
(C) the senior independent director
(D) the chief financial officer
(iii) at least one individual on its board of directors is from a
minority ethnic background
As at 30 June 2023, the Company has not met the above targets,
further details of which are set out in the Corporate Governance
Report on page 26.
Political donations
No political contributions or donations were made during the
financial period ended 30 June 2023.
Annual General Meeting
The following information to be discussed at the forthcoming
Annual General Meeting is important and requires your immediate
attention. If you are in any doubt about the action you should take,
you should seek advice from your stockbroker, bank manager,
solicitor, accountant or other financial adviser authorised under
the Financial Services and Markets Act 2000 (as amended).
If you have sold or transferred all of your ordinary shares in the
Company, you should pass this document, together with any
other accompanying documents, including the form of proxy, at
once to the purchaser or transferee, or to the stockbroker, bank or
other agent through whom the sale or transfer was effected, for
onward transmission to the purchaser or transferee.
The Directors currently anticipate that this year’s Annual General
Meeting will be open to shareholders, but reserve the right to
change arrangements for the meeting at short notice. Therefore
shareholders are strongly encouraged to vote by proxy and to
appoint the Chairman as their proxy. The following resolutions
will be proposed to the AGM. Resolutions 13 and 14 are proposed
to the meeting as special business of the meeting as ordinary
resolutions. Resolutions 15-20 are proposed as special resolutions.
Ordinary resolutions require a simple majority vote (above 50%)
to be passed, whereas Special resolutions require at least a 75%
majority vote to be passed.
Resolution 14
In accordance with the Investment Policy and as opportunities
present themselves the Company may take majority and minority
positions which may require management of such investments.
The Articles will be adjusted accordingly in the resolution so that
any such positions might be taken utilising shares including Special
Voting Loyalty Shares so that an issuance and/or allotment could
occur to parties that were not prior shareholders nor members of
the Loyalty Programme.
Resolution 15 Authority to Allot shares
The Directors may only allot shares for cash if authorised to do
so by shareholders in a general meeting. Resolution 15 seeks
authority for the Directors to allot shares for cash up to an
aggregate nominal amount of US$13,701 which represents 20%
of the current issued share capital. The authority will expire at the
conclusion of the 2024 Annual General Meeting unless renewed
prior to that date.
Resolution 19 Authority to buy back shares
Resolution 19 seeks to renew the authority previously granted
to Directors to enable the Company to purchase up to 685,079
ordinary shares being 10% of the issued share capital (excluding
Treasury Shares).
The Directors will only consider repurchasing shares in the market
if they believe it to be in shareholders’ interests and as a means
of correcting any imbalance between supply and demand for
the Company’s shares. Under the Listing Rules of the Financial
Conduct Authority (“FCA”), the maximum price which can be
paid is the higher of
(i) 5% above the average market value of the ordinary shares
for the five business days immediately preceding the date on
which the purchase is made and (ii) the higher of the price
quoted for (a) the last independent trade of, and (b) the
highest current independent bid for, any number of ordinary
shares on the trading venue where the purchase is carried out.
In making purchases, the Company will deal only with member
firms of the London Stock Exchange. The authority will expire
at the conclusion of the 2023 Annual General Meeting unless
renewed prior to that date.
Resolution 20 General Meetings on 14 clear days’ notice
Resolution 20 seeks shareholder authority to call general meetings
other than an AGM on 14 clear days’ notice. The approval will be
effective until the Company’s next AGM, when it is intended that
a similar resolution will be proposed. The Board will utilise this
authority to provide flexibility when merited and would not use it
as a matter of routine.
24
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Recommendation
Your Board recommends all resolutions to shareholders as being
in the best interests of the Company and its shareholders as a
whole. The Directors therefore unanimously recommend that
shareholders vote in favour of each resolution, as they intend to
do in respect of their own beneficial holdings.
Directors’ statement as to the disclosure of information to the
auditors
In accordance with the requirement and definitions under section
418 of the Companies Act 2006, the Directors at the date of
approval of this report confirm that:
• so far as they are aware, there is no relevant audit information
of which the Company’s auditors are unaware; and
• each Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any relevant
audit information and to establish that the Company’s auditors
are aware of that information.
Appointment of independent auditors
PricewaterhouseCoopers LLP, the independent external auditors
of the Company, were appointed in 2017. Resolutions to reappoint
PricewaterhouseCoopers LLP as the Company’s auditors, and
to authorise the Audit & Risk Committee to determine their
remuneration will be proposed at the forthcoming AGM.
The Directors’ Report was approved by the Board on 19 October
2023.
John Birch Marc Gabelli
Co-Chairman Co-Chairman
19 October 2023
Directors’ Report continued
25
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Corporate Governance Report
This Report sets out the role and activities of the Board and
explains how the Company is governed.
Governance
Applicable Corporate Governance Code and compliance in the
year under review
As a company admitted to trading on the Specialist Fund
Segment, the Board has considered the principles and provisions
of the Association of Investment Companies’ Code of Corporate
Governance (the ‘AIC Code’). The AIC Code addresses the
Principles and Provisions set out in the 2018 version of the
Financial Reporting Council’s UK Corporate Governance Code
(the ‘UK Code’), as well as setting out additional provisions
on issues that are of specific relevance to the Company as an
investment company listed on the London Stock Exchange and
in compliance with the FCA’s Listing Rules.
The Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, provides more relevant information
to shareholders.
The Board of Directors also recognise the critical importance of
effective corporate governance to investors, potential investors
and the Company’s stakeholders, and the directors therefore
give priority to high standards of corporate governance.
The Board confirms that it complies with the recommendations
of the AIC Code and the relevant provisions of the UK Code
except as follows:
Summary of AIC Code Provision Compliance Performance in year
Director and Board independence and
independence from the Manager
x A formal policy and procedure ensure Board independence
and the independence of the investment Manager.
The Chair should be independent on
appointment
x Although the Chairman is not deemed independent for
the purposes of the AIC Code, given his qualifications and
investment experience, and the significant commitment being
made by the Gabelli Group to the Company, the Board believes
that his appointment as Chairman is in the best interests of the
Company and the shareholders as a whole.
Appoint a Senior Independent Director
(‘SID’)
x The Board does not deem it necessary to appoint a SID given
the nature of its activities as a listed investment Company.
The key responsibilities of the SID under the UK Code are
completed by the Non-executive Directors. The performance
of the Chairman is appraised annually by the Non-executive
Directors.
Monitor risk management and internal
control systems
x The Company has delegated its operational management to
third party service providers, the Board therefore receives
reports from those parties to satisfy itself that an appropriate
controls environment is maintained. These reports extend to
any relevant instances of whistleblowing at each of the service
providers.
Identification of remuneration consultant
in the Annual Report
x The Remuneration Committee does not deem it necessary to
appoint a remuneration consultant.
The AIC Code is available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies. The UK Code is available
from the Financial Reporting Council’s website at frc.org.uk.
The Board
Overview of the Board
The Board consists of six non-executive Directors. All Directors
have a wide range of other interests and are not dependent
on the Company itself. Their biographical details, which are
set out in detail on pages 17 and 18, demonstrate a breadth of
investment, commercial and professional experience with an
international perspective.
The Board has a formal schedule of matters specifically reserved
for its decision, which are categorised under various headings,
including strategy and management, internal controls and risk
management, strategy and policy considerations, transactions,
and finance.
The provision of the UK Code which relates to the combination
of the roles of the chairman and chief executive does not apply
as the Company has no executive directors.
The Board meets quarterly to review investment performance,
financial reports, discuss strategy and has the overriding
responsibility for assessing and reviewing the company’s risk
appetite. Board or Committee meetings are also held on an ad
hoc basis and as required to consider any other material issues
as they arise.
Representatives of the Portfolio Manager and Company
Secretary attend each meeting. The Board, the AIFM, the
Portfolio Manager, the Company Secretary and other key
services providers operate in a cooperative and constructive
relationship to ensure timely and relevant information flows to
the board.
26
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Chairman
The Board is satisfied that other than his relationship with the
Portfolio Manager, the Chairman, Marc Gabelli, does not have
any appointments or interests which may create a conflict of
interest with the Company’s activities or interests.
The Nomination Committee reviewed the performance of the
Chairman during the year and is comfortable that he continues
to have sufficient time to commit to his duties, and that he
performs effectively in the role. The Board therefore recommends
shareholders vote to re-elect the Chairman at the 2023 Annual
General Meeting.
Board Diversity
When recruiting a new Director, the Board’s policy is to appoint
individuals on merit. The Board believes diversity is important
in bringing an appropriate range of skills, knowledge and
experience to the Board and gives that consideration when
recruiting new Directors.
As at 30 June 2023 there were 6 male Directors, of multiple
nationalities and ethnicities, and no female Directors on the
Board. Whilst all future board appointments will be made on
merit, the Directors have committed to keep the Board’s gender
diversity under review with a view to complying with the FCA’s
approved targets on Board Diversity and in improving the ratio
over time.
In accordance with LR 14.3.33, as at 30 June 2023 (the reference
date) the Board has not met the FCA’s specified targets on
Board Diversity relating to gender or ethnicity.
In accordance with LR 14.3.33 a, whilst the Company is supportive
of the new measures which aim to improve the representation
of women and ethnic minority groups at board level, the Board
also acknowledges the size of the current Board and believes it
remains appropriate to serve the size and stature of the company
at this time. The Nominations Committee, however, is supportive
of ensuring a more diverse pool of Board Level candidates are
assessed for any future Board-Level appointments.
The Board’s Diversity Policy can be found on the company’s
website: https://www.gabelli.co.uk/investment-products/
gabelli-merger-plus/gmp-documents/
The tables below set out the numerical data on the ethnic
background and the gender identity of the Board or Directors.
The Company do not have an Executive Management team or
any Executive Directors on the Board and therefore have not
reported against that target which is non-applicable.
Table A: Gender Diversity Disclosures
Number
of Board
Members
Percentage
of the Board
Number of senior
positions on
the board and
its Committees
(CEO, CFO, SID
and Chair(s))
Men 6 100% 4
Women 0 0% 0
Table B: Ethnic Diversity Disclosures
Number
of Board
Members
Percentage
of the Board
Number of senior
positions on
the board and
its Committees
(CEO, CFO, SID
and Chair(s))
White
British/White
American or
other White
Minority
Groups
5 83.33% 4
Mixed/
Multiple
Ethnic
Groups
0 0.00% 0
Asian/
Asian/British
Asian/
American
1 16.67% 0
Role of the Board
The Board is collectively responsible for the long-term success
of the Company and is accountable to shareholders and
the Company’s wider stakeholders for the performance and
governance of the Company. It is also ultimately responsible for
setting and executing the Company’s strategic aims, its purpose,
culture and values. The authority of the Board in these areas is
subject to the Articles and to such approval of the shareholders
in a general meeting as may be required from time to time.
The Board also ensures that the necessary resources are in place
to enable the Company’s objectives to be met in accordance
with the Company’s investment objective, and that shareholder
value is maximised within a framework of proper controls.
The Directors exercise the powers conferred by the Company’s
Articles of Association and UK Company Law to manage
the Company’s interest for the benefit of shareholders and
stakeholders.
As an investment company the Company’s day to day
responsibilities are delegated to third party service providers. The
Company has no employees and the Directors are non-executive
with the Portfolio Manager represented by the Chairman.
Stakeholder Interests (s.172 statement)
The Companies (Miscellaneous Reporting) Regulations 2018
require directors to explain more fully how they have discharged
their duties under Section 172(1) of the Companies Act 2006
in promoting the success of their companies for the benefit
of members as a whole. This enhanced disclosure covers how
the Board has engaged with and understands the views of
stakeholders and how stakeholders’ needs have been taken into
account, the outcome of this engagement and the impact that it
has had on the Board’s decisions.
Corporate Governance Report continued
27
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
As the Company is an externally managed investment company
and does not have any employees or customers, the Board
considers the main stakeholders in the Company to be the
shareholders and other key service providers. The reasons for
this determination, and the Board’s overarching approach to
engagement with these stakeholders, are set out in the table
below.
Stakeholder Activity or mitigation in the year
Shareholders • The Company operates a Loyalty Programme to reward shareholders who retain their
shares for at least five years. Further information regarding the Programme can be
found on pages 20 and 21;
• As a listed investment Company, the Board operates policies designed to safeguard
the value of shareholders’ investment, in particular the Board may initiate a buyback
programme whenever the Company’s share price represents a discount of 7.5% or
more;
• Shareholders’ rights are also protected under the Company’s Articles of Association
which require any proposal that may materially change those rights to be subject to
prior approval by a majority of shareholders in general meeting; and
• Shareholders are given opportunities to attend meetings with the Board and to also
attend, ask questions and vote at the Annual General Meeting of the Company.
Service Providers The Board regularly evaluates the performance of its key panel of third-party professional
service providers. The appraisals involve an opportunity for those third parties to provide
360° feedback.
Social & Environment Whilst the Company’s key investment objective targets outperformance through exposure
to corporate transactions in the United States, the Investment Manager, Gabelli Funds,
LLC operates a suite of investment policies designed to take account of Environmental,
Social, and Governance (‘ESG’) themes across its investment strategies. These policies
ensure that exposure to ESG risks is minimised for the Company’s stakeholders.
Other Stakeholders • The Board seeks to maintain the highest levels of corporate governance through
compliance with the principles and provisions of both the AIC Code and, to the
maximum extent practicable, the UK Code; and
• The Board is committed to responding promptly and transparently to any reputational
or regulatory matter that might arise affecting the Company, its future prospects or its
investment activities.
Purpose, Values and Culture
The Board takes its responsibilities under the AIC Code seriously
and has accordingly sought to identify and promote each of: a
corporate purpose, distinct values and a culture for the Company.
However, as a listed investment Company, which has appointed
third party service providers to operate its day to day business,
the chosen purpose, values and culture are necessarily focused
on the approach and activities of the Board of Directors.
Nevertheless, the Board prioritises the Company’s primary
investment objective, together with its proprietary Private Market
Value with a Catalyst methodology, in defining its PMV with a
Catalyst purpose. The Company’s values and culture primarily
reflect those of its experienced, independent and diverse
individual board members, combined with the approach and
professionalism of its appointed third party service providers.
The Board regularly monitors both the performance of the
Company against its investment objective and proprietary
methodology; and its individual directors and service providers
to ensure continuing strong performance and integration with
the Board’s values and culture.
Employees, Social, Human Rights and Environmental Matters
As an investment vehicle the Company has no employees and
accordingly it has no direct social or community impact and
limited environmental impact from its operations. However, the
Company believes that it is in shareholders’ interests to consider
human rights issues, together with environmental, social and
governance factors when selecting and retaining investments.
Directors’ Appointment, Retirement and Succession
The rules concerning the appointment, retirement and rotation
of Directors are set out in the Directors’ Report. The Board
believes that it has a reasonable balance of skills and experience.
It recognises the value of the progressive refreshing of, and
succession planning for, company boards, including for the
Chairman. The Board’s tenure and succession policy seeks to
ensure that it maintains the balance of skills and experience
required.
Directors must be able to demonstrate their commitment, in
terms of time, to the Company. The Board is of the view that
length of service does not itself impair a Director’s ability to
act independently or exercise good judgement, rather, a long
serving Director can continue to offer valuable perspectives and
experience.
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When Directors are appointed they go through an induction
programme organised by the Portfolio Manager to familiarise
them with the specifics of the portfolio. Directors are also
provided with key information on the Company’s policies,
regulatory and statutory requirements and internal controls on
a regular basis.
Committees of the Board
The Board has established an Audit & Risk Committee,
Nomination Committee, Remuneration Committee, Management
Engagement Committee and a Conflicts Committee. Each
Committee has defined terms of reference and duties.
Audit & Risk Committee
The Audit & Risk Committee is chaired by Marco Bianconi.
Further details are provided in the report of the Audit & Risk
Committee on pages 30 to 32.
Nomination Committee
The Nomination Committee is chaired by the Chairman of
the Board (who would not chair the Committee when the
Chairman’s successor was being considered) and consists of
Marc Gabelli, John Birch and Yuji Sugimoto. The Nomination
Committee is responsible for reviewing Board succession, the
policy on directors’ tenure, the performance of the Board and
its Committees and the appointment of new Directors. When
voting on candidates for the appointment of new directors, only
independent directors will vote.
Remuneration Committee
The Remuneration Committee is chaired by James Wedderburn
and consists of John Birch and Marco Bianconi. The Remuneration
Committee is responsible for setting the Directors’ remuneration
in conjunction with the Chairman and will take into consideration
the Company’s peer group and the potential to appoint external
remuneration consultants when making decisions.
Management Engagement Committee
The Management Engagement Committee is chaired by
John Birch and consists of John Birch and Yuji Sugimoto. The
Management Engagement Committee is responsible for ensuring
that the provisions of the Portfolio Management Agreement
remain competitive and in the best interest of shareholders and
to review the performance of the Manager, Portfolio Manager
and other third party service providers to the Company. Details
of the management arrangements are set out on page 21.
Conflicts Committee
The Conflicts Committee is chaired by John Birch and consists
of Marco Bianconi and Yuji Sugimoto. The Conflicts Committee
is responsible for considering the potential conflicts of interest
that may arise in relation to the operation of the Company with
regard to the Directors, the AIF Manager, the Portfolio Manager
and other service providers of the Company.
Attendance at scheduled meetings
The table below sets out the number of Board and Committee
meetings held during the year under review to 30 June 2023 and
the number of meetings attended by each Director.
The Audit & Risk Committee will meet at least once per quarter
and all other Committees at least once a year and additionally
as required.
Director Board
Audit
& Risk
Co.
Rem
Co.
M.E
Co.
Nom
Co.
Conficts
Co.
Marc Gabelli 4/4 n/a n/a n/a 1/1 n/a
Marco Bianconi 4/4 7/ 7 1/1 n/a n/a 1/1
John Birch 4/4 n/a 1/1 1/1 1/1 1/1
John Newlands 4/4 7/7 n/a n/a n/a n/a
James Wedderburn 4/4 7/ 7 1/1 n/a n/a n/a
Yuji Sugimoto 4/4 n/a n/a 1/1 1/1 1/1
Board Evaluation
The Board undertook an annual self-evaluation of its performance,
that of its committees and individual Directors, including the
Chairman. The reviews were led by the Chairman, in the case of
the Board, and the Chair of each committee otherwise.
Each Chair, assisted by the Company Secretary, determined the
scope and format for the review, which generally confirmed the
directors’ view that the Board and its governance continued to
function well with some issues identified for further consideration.
Further details of the annual self-assessment of the Audit & Risk
Committee are set out in the Audit & Risk Committee report on
pages 30 to 32.
There were no significant actions arising from the evaluation
process and it was agreed that the composition of the Board,
at that time, reflected a suitable mix of skills and experience,
and that the Board as a whole, the individual Directors and its
committees were performing in accordance with the provisions
of the AIC Code other than where explained in this Report. The
Board determined to keep the composition of the Board under
review to align with the FCA’s specific targets on Board Diversity.
Risk Management Directors’ liability insurance
During the year the Company has renewed and maintained
appropriate Directors & Officers’ insurance on behalf of the Board.
Internal controls
The Board has overall responsibility for the Company’s systems
of internal controls and for reviewing their effectiveness. In
common with the majority of investment Companies, the Board
has determined that the most efficient and effective management
of the Company is achieved by the Directors determining the
investment strategy, and the Portfolio Manager being responsible
for the day-to-day investment management decisions on behalf
of the Company.
Accounting, company secretarial and custodial services have
also been delegated to third party service providers who
specialise in these areas and can provide, because of their size
and specialisation, economies of scale, segregation of duties, and
all that is required to provide proper systems of internal control
within a regulated environment.
Corporate Governance Report continued
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As the Company has no employees and its operational functions
are undertaken by third parties, the Audit & Risk Committee
does not consider it necessary for the Company to establish its
own internal audit function. Instead, the Audit & Risk Committee
examines internal control reports received from its principal
service providers to satisfy itself as to the controls in place.
The internal controls aim to ensure that assets of the Company
are safeguarded, proper accounting records are maintained,
and the financial information used within the business and for
publication is reliable. The need for an internal audit function is
reviewed annually by the Committee.
The system therefore manages rather than eliminates risk
of failure to achieve the Company’s business objectives and
provides reasonable, but not absolute assurance against material
misstatement or loss.
Shareholder Engagement and General Meetings
The primary medium by which the Company communicates with
its shareholders is through the Annual and Half Yearly Reports
which aim to provide shareholders with a clear understanding
of the Company’s activities and results in the relevant financial
period. This information is supplemented by the daily calculation
and publication of the NAV per share to a regulatory information
service.
The Annual and other General Meetings provide an opportunity
for shareholders to engage with the Board of Directors, and
the individual directors and the Investment Manager regularly
communicate with significant shareholders to discuss company
updates and other key events.
Key Stakeholder Outcomes
On 8 September 2022, following the Company’s extraordinary
general meeting, the Company was authorised to buy back
Ordinary Shares in the Company.
Additionally, the results of the 2022 EGM authorised the Company
to allot up to 51 million ordinary shares via a special share issuance
resolution which was passed by a 75% majority vote. Accordingly,
this provides the company with the flexibility required to scale the
business and return value to shareholders in the long term.
All shareholders are ordinarily encouraged to attend and vote at
the Company’s Annual General Meeting. Shareholders are strongly
encouraged to vote by proxy and to appoint the Chairman as
their proxy if they are unable to attend in person. The Board and
representatives of the Portfolio Manager are similarly usually
available at the Annual General Meeting to discuss issues affecting
the Company. They will be happy to answer any questions
provided in writing prior to the meeting this year.
The Notice of Annual General Meeting is set out on pages 73
and 74 and details the business of the meeting. Any item not of
an entirely routine nature is explained in the Directors’ Report
on pages 19 to 24. The Notice of Annual General Meeting and
any related papers are sent to shareholders at least 21 clear days
before the meeting.
Substantial Shareholdings
A summary of the significant shareholders that have been notified
to the Board as at the date of this report can be found on page 22.
Anti-Bribery Policy
The Company has zero tolerance towards bribery and is
committed to carrying out business fairly, honestly and openly.
The Board takes its responsibility to prevent bribery seriously and
its service providers are contacted to regularly confirm their anti-
bribery policies and controls.
Criminal Finances Act 2017
The Board has a zero tolerance approach to the facilitation of tax
evasion.
By order of the Board
John Birch Marc Gabelli
Co-Chairman Co-Chairman
19 October 2023
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Report of the Audit & Risk Committee
Chair of the
Audit & Risk Committee
Marco Bianconi
Members
Marco Bianconi
John Newlands
James Wedderburn
As Chair of the Audit & Risk Committee, I am pleased to present
the Report of the Audit & Risk Committee for the year ended 30
June 2023.
Role of the Committee
The Company has established a separately chaired Audit &
Risk Committee (the “Committee”) to ensure that the interests
of shareholders are properly protected in relation to financial
reporting, internal controls and risk mitigation.
The Committee meets on a quarterly basis in preparation for
the publication of both the annual and half yearly results, and
otherwise as necessary.
The Committee’s terms of reference are available from the
Company’s website at https://www.gabelli.co.uk/docs/pdfs/gmp_
actr.pdf.
Composition of the Committee
The Committee consisted of three Directors during the year
under review whose biographies are on pages 17 and 18 and the
Committee composition was therefore unchanged.
The Committee as a whole has competence relevant to investment
companies and is able to discharge its responsibilities effectively,
with each Director having appropriate financial experience and as
such contributing strongly to the Committee’s operation.
The Company’s Auditors are invited to attend meetings of the
Committee on a regular basis. Representatives of the Portfolio
Manager and other external advisors, including the Administrator,
may also be invited to attend if deemed necessary by the Audit &
Risk Committee.
Committee Responsibilities
The key responsibilities of the Audit & Risk Committee are to
ensure the integrity, clarity and completeness of the Company’s
financial statements, evaluate the robustness of the systems of
internal controls, monitor the quality, effectiveness and objectivity
of the external audit process and monitor the key risks facing the
Company.
During the year the principal activities of the Committee included:
•
A compr
ehensive review of the half yearly report and annual
report and accounts, having considered the disclosures made
therein in relation to internal controls, risk management,
viability, going concern, related parties, whether the report
is fair, balanced and understandable and whether it provides
the information necessary for shareholders to assess the
Company’s position and performance, business model and
strategy;
•
A re
view of the effectiveness of the external audit process,
including the scope, execution, level of materiality, together
with the independence, objectivity and efficiency of the
external auditors and the quality of the audit engagement
team;
•
A re
view and approval of the external audit plan together with
the annual audit fee;
•
A re
view of the risks associated with the loss of Investment
Trust status resulting from the tender offer in October 2022
and of the most appropriate financial statements structure
for the Company. In fact, as a result of the completed Fifth
Anniversary Tender Offer, the Company is now considered
a “close company” from a UK tax perspective, being subject
to UK corporation tax. The Company has elected continued
adherence to the AIC’s SORP and continued to prepare
its financial statements on a basis compliant with the
recommendations of the SORP,
• A review of the appropriateness of the Company’s accounting
policies;
•
R
eceiving from the Company’s main third-party service
providers reassurance on the adequacy and effectiveness
of their internal controls processes and risk management
systems. This initiative included a review of the key technology
risks facing the company and its main service providers,
including, but not limited to policies, practices and safeguards,
cybersecurity and fraud, identification, assessment, monitoring,
mitigation and the overall management of those risks,
•
A re
view of the adequacy and security of the company’s
arrangements with its contractors and external parties to raise
concerns, in confidence, about possible wrongdoing in financial
reporting or other matters. The Committee considered that
the arrangements remained appropriate and proportionate.
The Audit & Risk Committee engaged Kin Company Secretarial
to facilitate an annual effectiveness evaluation and appraise the
performance of the Audit & Risk Committee. The Objective of
the evaluation was to identify areas for improvement, enabling
the Committee to recalibrate their focus and assess the future
and near-term priorities of the Committee. The assessment
took the form of a quantitative questionnaire with qualitative
data reviews and each of the Committee members were invited
and encouraged to participate in the process. The evaluation
reviewed key areas of Committee performance which included:
• Audit Process and Committee Procedures.
• Risk Management & Oversight; and
• The Performance and Contribution to the Committees’
effectiveness from key third party service providers.
Chair
Marco Bianconi
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Significant Issues and Audit Risk
During the year, the Audit & Risk Committee also considered a
number of significant issues and areas of key audit risk in respect
of the Annual Report and Accounts. The Committee reviewed
the external audit plan at an early stage and concluded that the
appropriate areas of audit risk relevant to the Company had been
put in place to obtain a reasonable assurance that the financial
statements as a whole would be free of material misstatement.
The following table sets out the key areas of risk identified and explains how these were addressed.
Significant issue How the issue was addressed
Valuation and existence of investments
The AIFM performs the valuation of the Company’s assets in
accordance with its responsibilities under the AIFMD rules.
Ownership of listed investments is verified by reconciliation
to the Custodian’s records. Ownership of CFDs is verified by
reconciliation to the counterparty’s records.
Recognition of income
Income received is accounted for in line with the Company’s
accounting policies, as set out on page 50.
Maintaining internal controls
The Committee receives regular reports on internal controls from
the Administrator and the Investment Manager and has access
to the relevant personnel of both State Street and Gabelli Funds
who have a responsibility for risk management and internal audit.
Performance fee
The performance fee calculation is prepared by the
Administrator and reviewed by the Manager and the Committee
before recommendation to the Board, all with reference to the
portfolio management agreement.
Resource Risk
The Company has no employees and its day to day activities
are delegated to third party suppliers. The Board monitors the
performance of third-party suppliers on an ongoing basis.
External audit
The Committee conducted a review of PricewaterhouseCoopers
LLP’s independence and audit process effectiveness as part
of its review of the financial reporting for the year ended 30
June 2023 and separately completed a market benchmarking
exercise in respect of the external audit service. In considering
the effectiveness, the Committee reviewed the audit plan, the
level of materiality, key financial reporting risks, and the auditors’
findings.
The Committee also considered the execution of the audit
against the plan, as well as the auditors reporting to the
Committee in respect of the financial statements for the year.
Based on this, the Committee was satisfied with the quality of
the external audit process,with appropriate focus and challenge
on the key audit risks.
The Committee advises the Board on the appointment of the
external auditors and on their remuneration. It keeps under
review the cost effectiveness and the independence and
objectivity of the external auditors, mindful of controls in place
to ensure the latter. To this end, the Committee has implemented
a policy on the engagement of the external auditors to supply
non-audit services.
The Committee was satisfied that the objectivity and
independence of the auditors was not impaired as no non-
audit services were undertaken during the year. Accordingly,
the Committee recommended to the Board that shareholder
approval be sought at the forthcoming AGM for the appointment
of PricewaterhouseCoopers LLP as the Company’s auditors for
the ensuing financial year, and for the Committee to determine
the auditors’ remuneration.
Audit Tendering
PricewaterhouseCoopers LLP was appointed as auditors with
effect from the Company’s launch in July 2017. The Company is
required to put the external audit out to tender at least every ten
years, and at least every twenty years to change the auditors.
The Company will be required to put the audit out to tender, at
the latest following the 2027 year end.
The Audit & Risk Committee will consider annually the need
to tender as a consequence of audit quality or independence.
There are no contractual obligations that restrict the Company’s
choice of auditors.
During the year ended 30 June 2023 £0 was paid to the auditors
for non-audit services (2022: £0). The auditors are required to
rotate the Company’s Lead Engagement Partner every five
years. Kevin Rollo was appointed as the Audit Engagement
Partner in 2021 and has successfully overseen the engagement
with the support of a strengthened audit team for the financial
year under review.
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Internal Audit function
As the Company has no employees and its operational functions
are undertaken by third parties, the Committee does not consider
it necessary for the Company to establish its own internal audit
function. Instead, the Committee examines internal control
reports received from its principal service providers to satisfy
itself as to the controls in place.
The internal controls aim to ensure that assets of the Company
are safeguarded, proper accounting records are maintained,
and the financial information used within the business and for
publication is reliable. The need for an internal audit function is
reviewed annually by the Committee.
Whistleblowing, anti-bribery and corruption
The Company has no employees; therefore no policies relating
to whistleblowing, anti-bribery, or corruption are considered
necessary. Notwithstanding this, the Company seeks at all times
to conduct its business with the highest standards of integrity
and honesty. Gabelli Funds, LLC is committed to complying
with all applicable legal and regulatory requirements relating
to accounting and auditing controls and procedures. Staff
members of Gabelli Funds, LLC are encouraged to report
complaints and concerns regarding accounting or auditing
matters through available channels described in the Portfolio
Manager’s Whistleblower Policy.
Marco Bianconi
Chair of the Audit & Risk Committee
19 October 2023
Report of the Audit & Risk Committee continued
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Strategic report Governance Financial statements
Directors’ Remuneration Report
The Board presents the Directors’ Remuneration Report which
has been prepared in accordance with the requirements of
Sections 420-422 of the Companies Act 2006 and Schedule 8 to
the Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013. The law requires
the Company’s auditors to audit certain of the disclosures
provided. Where disclosures have been audited this is indicated.
Statement from the Chairman
This Report describes how the Board has applied the principles
relating to Directors’ remuneration. The Company’s Remuneration
Policy was originally approved by shareholders at the AGM in
2018 and shareholders approved a version of the Remuneration
Policy with minor further updates at the AGMs in 2019 and in
2020, in accordance with section 439A of the Companies Act
2006. Accordingly, the Company’s Remuneration policy will be
put to Shareholders for approval at this year’s Annual General
Meeting (‘AGM’) to be held on 30 November 2023. Further
information on this resolution is contained with the notice of
AGM.
Director’s Remuneration Policy
In 2020, the Remuneration Policy was updated to increase
the overall aggregate limit on fees payable to Directors from
$150,000 to $180,000. The Company does not propose an
increase to the aggregate limit to Non-Executive Director’s fees
this year and as such will only be seeking shareholder approval
for the current limit of $180,000, which the Company deemed to
be at an appropriate level at this time.
Remuneration Committee
The Company has established a Remuneration Committee which
meets at least once a year. Further details of the membership are
provided in the Corporate Governance Report on page 28.
Policy Table
Fixed fee element
Remuneration consists of a fixed fee each year and the Directors of the Company are
entitled to such rates of annual fees as the Board at its discretion determines.
Discretionary element
In accordance with the Company’s Articles of Association, if a Director is requested
to perform extra or special services, they will be entitled to receive such additional
remuneration as the Board considers appropriate.
Expenses
In accordance with the Company’s Articles of Association the Directors are also entitled
to be reimbursed for out-of-pocket expenses and any other reasonable expenses incurred
in the proper performance of their duties.
Purpose and link to strategy
Directors’ fees are set to:
• be sufficient to attract and retain individuals of a high calibre with suitable knowledge
and experience to promote the long-term success of the Company;
• reflect the time spent by the Directors working on the Company’s behalf and
representing the Company;
• reflect the responsibilities borne by the Directors;
• recognise the greater time commitment and responsibility required for the positions
of Chairman of the Board and the Chairman of the Audit & Risk Committee through
appropriate fee supplements for each role.
Operation
Fees payable to the Directors will be reviewed annually. A number of factors will be
considered to ensure that the fees are set at an appropriate level. These will include
the average rate of inflation during the period since the last fee increase, the level of
Directors’ remuneration for other Investment Companies of a similar size and complexity
of the Directors’ responsibilities.
Maximum
The total remuneration paid to the non-executive Directors is subject to an annual
aggregate limit of $180,000 in accordance with the Company’s Articles of Association,
following approval by shareholders at the AGM in 2020. Any further changes to this limit
will require Shareholder approval by ordinary resolution.
The Company has no employees to consult in drawing up
the policy. There are no performance related elements to the
Directors’ fees and the Company have no Executive Directors.
To ensure fees are set at an appropriate level, the Company
Secretary provides a comparison of the Directors’ remuneration
with other investment trusts of a similar size and/or mandate,
as well as taking into account any data published by the
Association of Investment Companies. This comparison,
together with consideration of any alteration in non-executive
Directors’ responsibilities, is used to review whether any change
in remuneration is necessary. The review of fees is performed on
an annual basis.
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Remuneration
Fees per annum US$
Director of the Board 30,000
Additional fee for the Chairman of the Board 1,000*
Additional fee for the Chairman of the Audit
& Risk Committee 5,000
Additional fee for the members of the Audit
& Risk Committee 1,000
* On 6 October 2023 John Birch was appointed as Co-Chairman of the Board.
Following a review in September 2022, the Committee agreed
that the Directors’ fee would not increase for the year ending
30 June 2023.
Any remuneration arrangements for new directors will
be determined by the Committee in accordance with the
Remuneration Policy, and would also be expected to mirror the
above fee structure.
The additional fees shown in the table above paid to the
Chairman of the Board (albeit Mr Gabelli waived his fee) and the
Chairman and members of the Audit & Risk Committee during
the year ended 30 June 2023 will also remain unchanged for the
year ending 30 June 2024.
Consideration of Shareholders’ Views
Shareholders’ approval for the remuneration report and the
Company’s Remuneration Policy will be sought at the 2023
AGM. Shareholders will have the opportunity to express their
views and raise any queries on the policy either at or in advance
of this meeting.
At the previous AGM held on 30 November 2022, the Director’s
Remuneration Report received 100% votes in favour of the
resolution.
Details of voting on the Remuneration Report and the
Remuneration Policy at the 2023 AGM will be released via RNS
announcement following the meeting and will be provided in the
annual report for the year ending 30 June 2024.
Director’s Remuneration Implementation Report (audited)
Single Total Figure of Remuneration
The single total remuneration figure for each Director who
served during the year to 30 June 2023 is set out below with
prior year comparison. As the Company has no employees
the table below sets out the total remuneration costs paid by
the Company. Mr Gabelli waived the entitlement to his fees as
Chairman. Mr Gabelli devotes a portion of his time employed by
Gabelli to serve as Chairman of the Company. An apportionment
of his remuneration on a time served basis from employment
by an affiliate of the Portfolio Manager would materially equate
to the fees received by the other Directors of the Company for
similar qualifying services.
Directors’ notice periods and payment for loss of office
Directors’ appointments may be terminated without notice. In
this event, the Director will only be entitled to fees accrued at
the date of termination, together with reimbursement of any
expenses properly incurred to that date.
None of the Directors are entitled to post-employment benefits
or termination benefits.
No discretionary payments were made during the year to
30June 2023.
The fees paid to Directors on an annual basis during the year to
30 June 2023 are as follows:
Year to 30 June 2023 Year to 30 June 2022 Year to 30 June 2021
Fees Total Change
over prior
year %
Fees Total Change
over prior
year %
Fees
Shares
1
Total Change
over prior
year %
Marc Gabelli – – – – – – – – – –
Marco Bianconi 35,000 35,000 – 35,000 35,000 (3.2)% 25,000 11,167 36,167 24.0%
John Birch* 30,000 30,000 – 30,000 30,000 (3.7)% 20,000 11,167 31,167 29.0%
John Newlands 31,000 31,000 – 31,000 31,000 (3.6)% 21,000 11,167 32,167 21.1%
Yuji Sugimoto 30,000 30,000 – 30,000 30,000 (3.7)% 20,000 11,167 31,167 28.9%
James Wedderburn 31,000 31,000 – 31,000 31,000 (3.6)% 21,000 11,167 32,167 27.8%
Total 157,000 157,000 – 157,000 157,000 107,000 55,835 162,835
* On 6 October 2023 John Birch was appointed as Co-Chairman of the Board.
1
Represents the fee supplement originally to be paid in shares, on a pro rata basis for the period 1 January to 30 June 2020 following shareholder approval in
2019. Owing to complexities surrounding the share issuance scheme approved at the 2019 Annual General Meeting, and following legal advice, the incremental
compensation was paid in cash, in the amount of $10,000 per annum, per Director. The amount presented for the year ended 30 June 2021 includes cash
payments equivalent to and in lieu of dividends that would have been paid between 1 January 2020 and 30 June 2021, in the amount of $1,167 per Director.
Directors’ Remuneration Report continued
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Strategic report Governance Financial statements
Directors’ Interests
The interests of the Directors (including their connected persons),
who are not required to purchase shares, in the Company’s share
capital are as follows:
Ordinary shares of $0.01
Directors
As at
30 June 2023
As at
30 June 2022
Marc Gabelli 20,100 20,100
Marco Bianconi 1,200 1,200
John Birch 1,000 1,000
John Newlands – –
Yuji Sugimoto – –
James Wedderburn 1,500 1,500
Total 23,800 23,800
None of the Directors has been granted, or exercised, any options
or rights to subscribe for the Ordinary Shares of the Company.
Company Performance
A graph showing the Company’s NAV performance measured
by total shareholder return compared with the Credit Suisse
Merger Arb Liquid Index, the S&P Merger Arb Index, the 13 week
US Treasury Bills, and the IQ Merger Arbitrage ETF (MNA), since
launch, can be found on page 13.
Relative Importance of Spend on Pay
The table below shows the Directors’ remuneration (2022:
$157,000 and 2021: $162,835) in comparison with Portfolio
management fees paid, dividends paid to shareholders and the
Company’s annual revenues.
2023
Directors’ remuneration as a % of $000 %
Directors’ remuneration 157
Dividends to Shareholders 822 19.1
Portfolio management fees 654 24.0
Revenues 1,012 15.5
Statement by the Chairman of the Board
The Directors confirm that the Directors’ Remuneration Report
set out above provides a fair and reasonable summary for the
financial year ended 30 June 2023 of:
a) the major decisions on Directors’ remuneration;
b) any substantial changes relating to Directors’ remuneration
made during the period; and
c) the context in which those changes occurred and the
decisions which have been taken.
The Directors’ Remuneration Report was approved by the Board
on 20 September 2023 and is signed on its behalf by:
John Birch Marc Gabelli
Co-Chairman Co-Chairman
19 October 2023
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Trust Plc Annual Report and Accounts 2023
Statement of Directors’ Responsibilities in respect
of the Financial Statements
We share this Report to Shareholders, encompassing the year
ended 30 June 2023, and note certain developments post
calendar year end. This period included several important
changes for the Gabelli Merger Plus+ Trust Plc (the “Company”),
which include:
• NAV increase of 10.54% against a volatile market backdrop.
• Fifth Anniversary Tender Offer implemented in accordance
with the Loyalty Programme. The Company purchased
3,387,414 shares, resulting in 6,850,792 shares in issue at 30
June 2023 versus 10,238,206 shares in issue in July 2022.
• The Company has elected continued adherence to the AIC’s
SORP. Although no longer a trust, the Company has elected
to continue to prepare the financial statements on a basis
compliant with the recommendations of the SORP. The
SORP is issued by the AIC and it sets out recommendations,
intended to represent current best practice, on the form
and contents of the financial statements of Investment
Companies. Investment Companies include investment trust
companies that have been, currently are, or are directing its
affairs so as to enable it to obtain or retain approval under
Section 1158 of the Corporation Tax Act 2010. Although the
Company no longer meets the requirements of Section 1158
of the Corporation Tax Act 2010 to be an investment trust, it
continues to conduct its affairs as an investment company.
• Confirmation of the Investment Policy in accordance with
the original offering prospectus.
• The allowance to issue Special Voting Loyalty Shares at the
AGM for qualifying shareholders under the terms of the
Loyalty Programme. During the year, the Company authorised
the issuance of Special Voting Loyalty Shares in accordance
with the terms specified in the Loyalty Programme, with
Associated Capital Group Inc. agreeing to subscribe for
Special Voting Loyalty Shares, which will increase its voting
interest when issued, with issuance pending.
Gabelli Merger Plus+ Trust Plc (“GMP”) seeks to achieve long-
term total return from capital appreciation and income utilizing
the Gabelli Private Market Value with a Catalyst
TM
methodology,
primarily investing in the securities of businesses undergoing
some form of strategic change where there are substantial
disconnects between market price and business value, and,
where catalysts exist that may narrow these discounts for the
benefit of shareholders. GMP objectives, operating within this
highly specialised value based catalyst event driven merger
arbitrage discipline, are to compound and preserve shareholder
wealth over time while remaining non-correlated to the broad
equity and fixed income markets.
The GMP investment process begins by focusing on a company’s
balance sheet and underlying fundamentals, looking for changes
in market positions and analyzing the company’s ability to
generate free cash flow relative to competition. The process
continues with the calculation of corporate replacement and
intrinsic values while accounting for sector wide industrial
synergies in the context of profitability and growth. The manager
attempts to understand what an informed industrialist would
pay for a business in its entirety through a negotiated acquisition
process. This element serves as the foundation in determining
what is deemed a business’s Private Market Value (“PMV”).
Lastly, the manager builds a diversified portfolio of companies
in the public market that are selling at discounts to their PMVs,
with a catalyst in place to generate returns. The investment
programme is global, encompassing a broad spectrum of value
based special situations and event driven opportunities, with
an analytical emphasis on announced merger transactions. As
market price dislocations continue, it is expected this programme
will include minority and also majority controlling stakes in
businesses. Controlling stakes may require the management of
operating businesses on behalf of the company’s shareholders
in an effort to deliver the company’s objectives in accordance
with investment policy. Over the long term GMP strives to
achieve superior risk-adjusted annual returns above inflation for
shareholders.
On behalf of the Board of Directors, we thank investors for
entrusting a portion of their assets with the Gabelli Merger Plus+
Trust (“GMP”). We appreciate your confidence in the Gabelli
long-term oriented investment method.
The Portfolio Manager’s Review on pages 8 to 11 provides details
of the important events that have occurred during the period
and their impact on the financial statements.
Company Considerations
Investors should note the difference between book and
accounting value. Deferred tax assets (“DTA”) can be used to
offset certain taxes as applicable in the United Kingdom. And
as such based on a continuing level of activity the DTA are
expected to be utilised over the foreseeable future resulting in
the company not paying UK tax for this year.
As a result of Associated Capital Group Inc’s ownership of 90.7%
of shares in issue, the Company is a consolidated subsidiary for
Associated Capital Group Inc.’s financial reporting purposes.
As such, activities of the Company and of Associated Capital
Group Inc. could be deemed related parties for purposes of this
disclosure.
Investors should note that as a close company with Associated
Capital Group Inc. controlling greater than 90% of shares and
95% of voting shares that Associated Capital Group Inc. may be
able to ensure the passage of shareholder resolutions.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company fall
into the following broad categories: investment portfolio; global
macro events; operational; market and share price; financial;
corporate governance and regulatory compliance; taxation;
emerging and geopolitical risks. The global macro event category
includes specific market and operational risks associated with
the ongoing war in Ukraine and the aftermath of the global
COVID-19 pandemic, which continue to cause uncertainty and
disruption across global economies and markets. Information on
each of these identified risk areas, including mitigating actions
taken by the Company, was provided on pages 14 to 15 in the
Strategic Report in the Company’s Annual Report and Accounts
for the year ended 30 June 2023.
The Directors together with the Manager will continue to monitor
business continuity and resilience processes with the objective
of mitigating any potential for ongoing impact of COVID-19 and
the conflict in Ukraine.
Related Party Disclosure and Transactions
During the financial year, other than fees payable by the Company
in the ordinary course of business, there have been no material
transactions with related parties which have materially affected
the financial position or the performance of the Company.
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
As a result of Associated Capital Group Inc’s ownership in
excess of 90% of shares in issue, the Company is a consolidated
subsidiary for Associated Capital Group Inc.’s financial reporting
purposes. As such, activities of the Company and of Associated
Capital Group Inc. could be deemed related parties for purposes
of this disclosure.
Significant Events
In the year ended 30 June 2023 the Company conducted and
completed the Fifth Anniversary Tender Offer, as set out in the
circular published on 19 August 2022, and purchased 3,387,414
shares, resulting in 6,850,792 shares in issue at 30 June 2023
versus 10,238,206 shares in issue in July 2022. The Company
determined that the post tender remaining Shareholder base has
resulted in the Company being deemed a close company for the
purposes of taxation, and the company no longer avails itself of
investment trust status. The Company is committed to delivering its
investment programme for the long term and Directors, together
with management are in the process of examining alternatives to
minimise taxes, costs and expenses for its Shareholders.
Going Concern
The Board have closely monitored the impact of the ongoing
COVID-19 pandemic, Brexit uncertainty, and the war in Ukraine.
Those impacts and related continuing uncertainty have short-
and potentially medium-term implications for the Company’s
investment strategy. Additionally, the Board is monitoring the
period ahead on the basis of the Company no longer having
investment trust status and its implications on the Company’s
investment return profile over the longer term. In context,
the Board continuously monitors the Company’s investment
portfolio, liquidity and gearing, along with levels of market
activity, to appropriately minimise and mitigate consequential
risks to capital and future income such as geopolitical risks,
financial risks etc. Taking these factors into account, the
Directors confirm that they have a reasonable expectation that
the Company will continue to operate and meet its expenses as
they fall due. For these reasons, the Directors consider there is
reasonable evidence to continue to adopt the going concern
basis in preparing the accounts as at 30 June 2023.
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 UK-
adopted international accounting standards in conformity with
the requirements of the Companies Act 2006. 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 UK-adopted international
accounting standards in conformity with the requirements of
the Companies Act 2006 have been followed, subject to any
material departures disclosed and explained in the financial
statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity
of the Company’s website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Directors’ confirmations
The Directors consider that the annual report and accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
In the case of each Director in office at the date the Director’s
Report is approved:
• so far as the Director is aware, there is no relevant audit
information of which the Company’s auditors are unaware;
and
• they have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Company’s
auditors are aware of that information.
The annual financial report was approved by the Board on
19 October 2023 and the above responsibility statement was
signed on its behalf by the Chairman.
By order of the Board
John Birch Marc Gabelli
Co-Chairman Co-Chairman
19 October 2023
38
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Report on the audit of the financial statements
Opinion
In our opinion, Gabelli Merger Plus+ Trust plc’s financial statements:
• give a true and fair view of the state of the company’s affairs as at 30 June 2023 and of its result and cash flows for the year then
ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise:
the Statement of Financial Position as at 30 June 2023; the Statement of Comprehensive Income, the Statement of Changes in Equity,
and the Statement of Cash Flows for the year then ended; and the notes to the financial statements, which include a description of
the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided.
We have provided no non-audit services to the company in the period under audit.
Our audit approach
Overview
Audit scope
• The company is a standalone Investment trust company and engages Gabelli Funds, LLC (the “Manager”) to manage its assets.
• We conducted our audit of the Financial Statements using information from State Street Global Services (the “Administrator”) to
whom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions.
• We tailored the scope of our audit taking into account the types of investments within the company, the involvement of the third
parties referred to above, the accounting processes and controls, and the industry in which the company operates.
• We obtained an understanding of the control environment in place at both the Manager and the Administrator, and adopted a
fully substantive testing approach using reports obtained from the administrator.
Key audit matters
• Valuation and existence of investments.
• Income from investments.
• Taxation.
Materiality
• Overall materiality: $664,931 (2022: $958,410) based on 1% of net assets.
• Performance materiality: $498,698 (2022: $718,808).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Independent auditors’ report to the members of
Gabelli Merger Plus
+
Trust Plc
39
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Taxation is a new key audit matter this year. Assessment of the appropriateness of the going concern basis of preparation of the
financial statements, which was a key audit matter last year, is no longer included because of the fact that the conditions that existing
in the prior year in relation to the Tender Offers and upcoming Continuation Vote have now passed and are not recurring this year.
Otherwise, the key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Valuation and existence of investments
Refer to Accounting Policies, note 2 (g) and Notes to the
financial statements, Note 3. The company’s investments
have decreased to US$55m.The investment portfolio
at year end consisted of listed equity investments and
derivatives (contracts for difference). We focused on
the valuation and existence of investments because
investments represent the principal element of the net
asset value as disclosed in the Statement of Financial
Position in the financial statements. We also focused on
the accounting policy for the valuation of investments
as set out in the accounting standards as incorrect
application could indicate a misstatement in the
valuation of investments.
• We assessed the accounting policy for the valuation of investments
for compliance with accounting standards and the AIC SORP and
performed testing to check that investments are accounted for in
accordance with this stated accounting policy.
• We tested the valuation of the listed equity investments by agreeing
the prices used in the valuation to independent third party sources.
• We tested the existence of the investment portfolio by agreeing
listed equity investment holdings to an independent custodian
confirmation.
• For derivatives, we tested a sample of the valuation of these
investments using valuation techniques as indicated by our
investment specialists.
• We tested existence of derivatives by using broker statements
obtained through the administrator.
• No material issues were identified.
Income from investments
Income from investments refers to dividend income
and net capital gains from investments. Refer to
Accounting Policies, Note 2(e) and 2(g). The company’s
dividend income for the year is US$1m. Realised gains
on investments for the year is US$4.7m and unrealised
gains on investments is US$0.7m. We focused on the
accuracy, occurrence and completeness of dividend
income, and existence of net capital gains as incomplete
or inaccurate income could have a material impact on
the company’s net asset value and dividend cover.
We also focused on the accounting policy for income
recognition and its presentation in the Statement of
Comprehensive Income as set out in the requirements of
The Association of Investment Companies Statement of
Recommended Practice (the “AIC SORP”) as incorrect
application could indicate a misstatement in income
recognition.
• We assessed the accounting policies implemented were in
accordance with accounting standards and the AIC SORP, and
that income has been accounted for in accordance with the stated
accounting policy.
• We tested the accuracy of dividend receipts by agreeing the
dividend rates from investments to independent market data. To test
for occurrence, we confirmed that a sample of dividends recorded
had occurred in the market. To test for completeness, we tested that
the appropriate dividends had been received in the year by reference
to independent data of dividends declared for all listed investments
during the year.
• We also tested the allocation and presentation of dividend income
between the revenue and capital return columns of the Income
Statement in line with the requirements set out in the AIC SORP by
confirming reasons behind dividend distributions.
• The gains/losses on investments held at fair value comprise realised
and unrealised gains/losses. For unrealised gains and losses, we
tested the valuation of the portfolio at the year end (on a sample
basis for derivatives), together with testing the reconciliation of
opening and closing investments. For realised gains/losses, we tested
a sample of disposals by agreeing the proceeds to bank statements
and we re-performed the calculation of a sample of realised gains/
losses.
• No material issues were identified.
40
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Key audit matter How our audit addressed the key audit matter
Taxation
The Company under its previous status as an Investment
Trust Company was able to benefit from a tax exemption
under s1158 of the Corporation Tax Act (2010). However,
due to the significant uptake by shareholders of the 5th
Anniversary Tender offer and resulting loss of ITC status,
the Company is no longer afforded this exemption. As
a result, tax considerations which the Company was
previously exempt from are now due to be borne in the
current period. Refer Accounting Policies, note 2 (n) and
Notes to the financial statements, Note 8.
We have performed testing over the taxation paid by the Company
and the effect of the loss of s1158 exemption status on the deferred
tax asset. Additionally, as part of our testing, we have assessed the
appropriateness of the recognition of the deferred tax asset. We have
found no issues in relation to this testing.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which it
operates.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain.
The impact of climate risk on our audit
In planning our audit, we made enquiries of the Directors and Manager to understand the extent of the potential impact of climate
change risk on the Company’s financial statements.
In conducting our audit, we made enquiries of the Directors and Manager to understand the extent of the potential impact of the
climate change risk on the Company’s financial statements. Both concluded that the impact on the measurement and disclosures
within the financial statements is not material because the Company’s investment portfolio is primarily made up of Level 1 quoted
securities which are valued at fair value based on market prices. We found this to be consistent with our understanding of the
Company’s investment activities.
We also considered the consistency of the climate change disclosures included in the Strategic Report with the financial statements
and our knowledge from our audit.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall company materiality
$664,931 (2022: $958,410).
How we determined it
1% of net assets
Rationale for benchmark applied
We believe that net assets is the primary measure used by shareholders in assessing
the performance of the company and is a generally accepted auditing benchmark for
investment trust audits.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of
our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to $498,698 (2022:
$718,808) for the company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was
appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $33,247 (2022:
$47,921) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Independent auditors’ report to the members of
Gabelli Merger Plus
+
Trust Plc continued
41
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting
included:
• Evaluating the Directors’ assessment of potential operational impacts of the results of the recent Tender offer and the upcoming
Continuation vote, considering their consistency with other available information and our understanding of the business and
assessed the potential impact on the financial statements;
• Reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected
operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight
of key third-party service providers;
• Assessing the implications of potential significant reductions in Net Asset Value as a result of market performance on the ongoing
ability of the Company to operate;
• Evaluating the legally binding confirmation from the majority shareholder regarding their intention and ability to continue to
support the Company; and
• Assessing the impact of the loss of Investment Trust Company status and the continued operations of the Company.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company’s ability
to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Director’s Report, we also considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Director’s Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Director’s
Report for the year ended 30 June 2023 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and Director’s Report.
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks
and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them, and their identification of any material uncertainties to the company’s ability to continue
to do so over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the company’s prospects, the period this assessment covers and why the
period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation
and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to
any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the company was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the
statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement
is consistent with the financial statements and our knowledge and understanding of the company and its environment obtained in
the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides
the information necessary for the members to assess the company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are
also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Independent auditors’ report to the members of
Gabelli Merger Plus
+
Trust Plc continued
43
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and
regulations related to breaches of the Corporation Tax Act 2010, and we considered the extent to which non-compliance might have
a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial
statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation
of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting
of inappropriate journal entries to increase income or to overstate the value of investments and increase the net asset value of the
company. Audit procedures performed by the engagement team included:
• Discussions with the Directors, the Manager and the Administrator, including consideration of known or suspected instances of
non-compliance with laws and regulation and fraud;
• Evaluation of the controls implemented by the Manager and the Administrator designed to prevent and detect irregularities;
• Assessment of the company’s compliance with the Corporation Tax Act 2010, including recalculation of numerical aspects of the
tax expense; and
• Identifying and testing journal entries, in particular a sample of journals posted as part of the financial year end close process.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.
uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
44
Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 1 July 2017 to audit the financial
statements for the year ended 30 June 2018 and subsequent financial periods. The period of total uninterrupted engagement is 6
years, covering the years ended 30 June 2018 to 30 June 2023.
Kevin Rollo (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
19 October 2023
Independent auditors’ report to the members of
Gabelli Merger Plus
+
Trust Plc continued
45
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Statement of Comprehensive Income
for the year ended 30 June 2023
Year ended 30 June 2023 Year ended 30 June 2022
Income Notes
Revenue
$000
Capital
$000
Total
$000
Revenue
$000
Capital
$000
Total
$000
Investment income 5 1,012 – 1,012 1,076 – 1,076
Total investment income 1,012 – 1,012 1,076 – 1,076
Gains/(losses) on investments
Net realised and unrealised gains/(losses) on
investments 3, 13 – 4,707 4,707 – (460) (460)
Net realised and unrealised currency gains on
investments – 114 114 – 490 490
Net gains on investments – 4,821 4,821 – 30 30
Total income and gains on investments 1,012 4,821 5,833 1,076 30 1,106
Expenses
Portfolio management fee 6 (654) – (654) (842) – (842)
Performance fee 6, 14 – – – – – –
Other expenses 6 (807) (501) (1,308) (1,127) (124) (1,251)
Total expenses (1,461) (501) (1,962) (1,969) (124) (2,093)
Net return on ordinary activities before finance costs
and taxation (449) 4,320 3,871 (893) (94) (987)
Interest expense and similar charges (26) – (26) (1) – (1)
Profit/(loss) before taxation (475) 4,320 3,845 (894) (94) (988)
Taxation on ordinary activities 8 3,471 – 3,471 (49) – (49)
Profit/(loss) for the year 2,996 4,320 7,316 (943) (94) (1,037)
Earnings/(loss) per share (basic and diluted) 9 $0.39 $0.55 $0.94 ($0.09) ($0.01) ($0.10)
The total column of this statement represents the Statement of Comprehensive Income prepared in accordance with UK International
Accounting Standards (UK IAS). The supplementary revenue return and capital return columns are both prepared under guidance
issued by the Association of Investment Companies. All items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year ended 30 June 2023.
The Company does not have any income or expense that is not included in net profit for the year. Accordingly, the net profit for the
period is also the total comprehensive income for the year, as defined in UK IAS.
The notes on pages 49 to 66 form part of these financial statements.
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
46
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Statement of Changes in Equity
for the year ended 30 June 2023
Year ended 30 June 2023
Year ended 30 June 2023 Note
Called up
Share
Capital
$000
Special
Distributable
Reserve*
$000
Capital
Reserve
$000
Revenue
Reserve*
$000
Total
$000
Balance as at 1 July 2022 103 79,062 20,965 (4,356) 95,774
Ordinary shares bought back into treasury – (32,245) – – (32,245)
Profit/(loss) for the period after tax on ordinary activities – – 4,320 2,996 7,316
Dividends paid 7 – (822) – – (822)
Balance as at 30 June 2023 103 45,995 25,285 (1,360) 70,023
Year ended 30 June 2022
Year ended 30 June 2022 Note
Called up
Share
Capital
$000
Special
Distributable
Reserve*
$000
Capital
Reserve
$000
Revenue
Reserve*
$000
Total
$000
Balance as at 1 July 2021 103 83,976 21,059 (3,413) 101,725
Loss for the period after tax on ordinary activities – – (94) (943) (1,037)
Dividends paid 7 – (4,914) – – (4,914)
Balance as at 30 June 2022 103 79,062 20,965 (4,356) 95,774
* The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is
distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2023, the net amount of reserves that
are distributable are $44,635,000 (2022: $74,706,000).
47
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Statement of Financial Position
as at 30 June 2023
As at 30 June 2023 As at 30 June 2022
Note $000 $000 $000 $000
Non-current assets
Investments held at fair value through profit or loss 3 56,514 92,381
Current assets
Cash and cash equivalents 10 9,555 5,911
Receivable for investment sold 1,800 423
Other receivables 15 73 66
Deferred tax asset 8 3,530 –
14,958 6,400
Current liabilities
Portfolio management fee payable (46) (61)
Payable for investment purchased (571) (1,875)
Other payables 15 (349) (212)
Bank overdrafts (106) (391)
Net current assets 13,886 3,861
Non-current liabilities
Investments at fair value through profit or loss 3 (325) (416)
Offering fees payable (52) (52)
Net assets 70,023 95,774
Share capital and reserves
Called-up share capital 11 103 103
Special distributable reserve* 44,635 79,062
Capital reserve 25,285 20,965
Revenue reserve* (1,360) (4,356)
Total shareholders' funds 70,023 95,774
Net asset value per ordinary share $10.22 $9.35
* The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is
distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2023, the net amount of reserves that
are distributable are $44,635,000 (2022: $74,706,000).
Signed by:
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
48
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Statement of Cash Flows
for the year ended 30 June 2023
Year ended
30 June 2023
Year ended
30 June 2022
$000 $000 $000 $000
Cash flows from operating activities
Profit/(loss) before tax 3,845 (988)
Adjustments for:
Gains on investments (4,821) (30)
Cash flows from operating activities
Purchases of investments
1
(140,570) (202,678)
Sales of investments
1
178,372 204,122
Increase in receivables
2
(7) 81
Increase/(decrease) in payables 148 (2,918)
Foreign withholding taxes on dividends (59) (49)
Net cash flows from operating activities 36,908 (2,460)
Cash flows from financing activities
Shares bought back for cash (32,245) –
Dividends paid (822) (4,914)
Interest paid (26) (1)
Net cash flows from financing activities (33,093) (4,915)
Net increase/(decrease) in cash and cash equivalents 3,815 (7,375)
Cash and cash equivalents at the start of the period 5,520 12,405
Effect of foreign exchange rates 114 490
Cash and cash equivalents at the end of the period 9,449
3
5,520
1
Receipts from the sale of, and payments to acquire, investment securities, have been classified as components of cash flows from operating activities because
they form part of the Company’s dealing operations.
2
2022 increase/(decrease) in receivables line has been adjusted to be consistent with the classifications applied in 2023.
3
As at 30 June 2023, $3,942,151 (2022: $5,843,979) was held as collateral at UBS Securities LLC for Contracts for Difference, and was restricted.
Gabelli Merger Plus+ Trust Plc is registered in England and Wales under Company number 10747219.
The financial statements on pages 45 to 48 were approved by the Board of Directors on 19 October 2023 and signed on its behalf by
John Birch Marc Gabelli
Co-Chairman Co-Chairman
19 October 2023
49
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Notes to the Financial Statements
1 General Information
Gabelli Merger Plus+ Trust Plc (the “Company”) is a closed-ended public limited company incorporated in the United Kingdom
on 28 April 2017 with registered number 10747219.
2 Accounting policies
(a) Basis of preparation – The financial statements of Gabelli Merger Plus+ Trust Plc have been prepared in accordance with the UK
adopted International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial
assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss.
The principal accounting policies adopted by the Company are set out below. Where presentational guidance set out in the
Statement of Recommended Practice (‘SORP’) for investment trusts issued by the Association of Investment Companies (‘AIC’)
in October 2019 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a
basis compliant with the recommendations of the SORP.
For the accounting period ended 30 June 2022, the Company met the requirements to be an investment trust under sections
1158 and 1159 of the Corporation Ta x Act of 2010. However, as a result of the Tranche One Tender Offer completed in the third
quarter of 2022, the Company subsequently became a close company due to becoming controlled by a single participator,
Associated Capital Group, Inc.
Although no longer a trust, the Company has elected to continue to prepare the financial statements on a basis compliant with
the recommendations of the SORP. The SORP is issued by the AIC and it sets out recommendations, intended to represent
current best practice, on the form and contents of the financial statements of Investment Companies. Investment Companies
include investment trust companies that have been, currently are, or are directing its affairs so as to enable it to obtain or
retain approval under Section 1158 of the Corporation Tax Act 2010. Although the Company no longer meets the requirements
of Section 1158 of the Corporation Tax Act 2010 to be an investment trust, it continues to conduct its affairs as an investment
company. Further, management of the Company also believes that consistency in presentation will be beneficial to individuals
reviewing the Company’s financial statements.
(b) Presentation of Statement of Comprehensive Income – To better reflect the activities of an investment trust company and
in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive
Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income.
(c) Going concern – The Directors, have taken account of the continuing market regulatory changes affecting investee companies,
investment valuations and the war in Ukraine. Those impacts and related continuing uncertainty have short- and potentially
medium-term implications for the Company’s investment strategy. Additionally, the Board is monitoring the period ahead on the
basis of the Company no longer having investment trust status and its implications on the Company’s investment return profile
over the longer term. In context, the Board continuously monitors the Company’s investment portfolio, liquidity, and gearing,
along with levels of market activity, to appropriately minimise and mitigate consequential risks to capital and future income
such as geopolitical risks and financial risks. Taking these factors into account, the Directors confirm that they have a reasonable
expectation that the Company will continue to operate and meet its expenses as they fall due. For these reasons, the Directors
consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts as at 30 June
2023.
In forming this position, the Directors consulted with shareholders utilizing the tender offer process, considered the Company’s
investment objectives, risk management policies, capital management policies and procedures, the nature of the portfolio and
expenditure projections in detail. These items are discussed in more detail in the Directors’ Report on pages 19 to 24 and the
Chairman’s Statement on pages 3 and 4.
(d) Statement of estimation uncertainty – In the application of the Company’s accounting policies, the Investment Manager is
required to make judgements, estimates, and assumptions about carrying values of assets and liabilities that are not always
readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may vary from these estimates. There have been no significant
judgements, estimates, or assumptions for the period.
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
50
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Notes to the Financial Statements continued
2 Accounting policies (continued)
(e) Income recognition – Revenue from investments (other than special dividends), including taxes deducted at source, is included
in revenue by reference to the date on which the investment is quoted ex-dividend, or where no ex-dividend date is quoted,
when the Company’s right to receive payment is established. Franked investment income is stated net of the relevant tax credit.
Other income includes any taxes deducted at source.
Special dividends are credited to capital or revenue, according to the circumstances. Scrip dividends are treated as unfranked
investment income; any excess in value of the shares received over the amount of the cash dividend is recognised as a capital
item in the Statement of Comprehensive Income.
Interest income is accounted for on an accrual basis by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to that asset’s net carrying amount.
(f) Expenses – The management fees are allocated to revenue in the Statement of Comprehensive Income. Interest receivable and
payable and management expenses are treated on an accruals basis. 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. Starting with the year ended 30 June 2023, transaction and finance charges related to
contracts for difference are charged to capital.
The formation and initial expenses of the Company are allocated to capital.
(g) 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 applicable International
Financial Standards.
Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Company becomes a
party to the contractual provisions of the instrument. The Company shall offset financial assets and financial liabilities if it has
a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis. Financial assets
and liabilities are derecognised when the Company settles its obligations relating to the instrument.
Contracts for Difference (CFDs)
CFDs are recognised in the Statement of Financial Position at the accumulated unrealised gain or loss as an asset or liability,
respectively. This represents the difference between the nominal book cost and market value of each position held. Movements
in the unrealised gains/losses are taken to the Statement of Comprehensive Income as capital items.
(h) Cash and cash equivalents – The Company may invest part of its net assets in cash and cash equivalents, money market
instruments, bonds, commercial papers or other debt obligations with banks or other counterparties, having at least a single-A
(or equivalent) credit rating from an internationally recognised rating agency or government and other public securities, if the
Portfolio Manager believes that it would be in the best interests of the Company and its shareholders. This may be the case, for
example, where the Portfolio Manager believes that adverse market conditions justify a temporary defensive position. Any cash
or surplus assets may also be temporarily invested in such instruments pending investment in accordance with the Company’s
investment policy. Cash balances are marked to market based on the prevailing exchange rate as of the valuation date. US
Treasuries are valued at their amortised cost.
(i) Transaction costs – Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in
the Statement of Comprehensive Income.
(j) Foreign currency – Foreign currencies are translated at the rates of exchange ruling on the period end date. Revenue received/
receivable and expenses paid/payable in foreign currencies are translated at the rates of exchange ruling at the transaction date.
(k) Fair value – All financial assets and liabilities are recognised in the financial statements at fair value.
(l) Dividends payable – Interim and final dividends are recognised in the period in which they are declared.
(m) Capital reserve – Capital distributions received, realised gains or losses on investments that are readily convertible to cash, and
capital expenses are transferred to the capital reserve. Share buybacks are funded through the capital reserve, with details of
buybacks disclosed in note 11.
51
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
(n) Taxation – The tax effect of different items of income/gains and expenditure/losses is allocated between revenue and capital
on the same basis as the particular item to which it relates, under the marginal method, using the Company’s effective rate of
tax. Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the period end
date where transactions of events that result in an obligation to pay more or a right to pay less tax in future have occurred at
the period end date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets
only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of
the underlying timing differences can be deducted. Timing differences are differences arising between the Company’s taxable
profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods.
GMP has historically been authorized as an Investment Trust under Sections 1158 and 1159 Corporation Ta x Act 2010 and the
Investment Trust (Approved Company) (Tax) Regulations 2011 (S.I.2011/2999).
Following a share buy-back offer from 19 August 2022 to 22 September 2022, GMP became a close company due to becoming
controlled by a single participator, Associated Capital Group Inc. This constituted a “serious” breach of the Investment Trust
rules.
Accordingly, GMP notified HMRC of this development in December 2022 and requested confirmation that GMP’s authorization
as an Investment Trust should be withdrawn from the commencement of the current accounting period (being 1 July 2022).
The primary benefit associated with the Investment Trust regime is that capital gains income realized by a qualifying Investment
Trust company is exempt from UK Corporation Tax. Therefore, loss of Investment Trust status for a UK company can have
potentially significant consequences for its tax profile moving forwards, as it would be subject to tax on any capital gains
realized thereafter at the main rate of UK Corporation Tax (currently 19%, but rising to 25% with effect from 1 April 2023).
At the year ended 30 June 2023, after offset against income taxable on receipt, there was a deferred tax asset (“DTA”) of
$3,530,045 (2022: Unrecognised Potential DTA $2,354,232) in relation to surplus tax reliefs.
After the loss of its Investment Trust Status it is now possible for GMP to utilise this DTA in order to shelter capital gains from UK
Corporation Tax. In order for the DTA to remain available, GMP must maintain its investment business moving forwards. GMP’s
activities are such that it will have an investment business for UK tax purposes.
In particular, the Investment Trust rules require that “substantially all of the business of the Investment Trust company consists of
investing its funds in shares, land or other assets with the aim of spreading investment risk and giving members of the company
the benefit of the results of the management of its funds”. This may be considered analogous to having an investment business.
Therefore, given (i) GMP previously received approval from HMRC that this requirement was met, and (ii) the activity of the
company is not intended to change, GMP will continue having an investment business and will meet the conditions to carry
forward and use its excess management expenses in current and future periods. As such GMP has now included the DTA in the
financial statements.
(o) Functional and presentation currency – The functional and presentation currency of the Company is the U.S. dollar.
Gabelli Merger Plus
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Trust Plc Annual Report and Accounts 2023
52
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
3 Investments at fair value through profit or loss
The financial assets measured at fair value through profit or loss in the financial statements are grouped into the fair value
hierarchy as follows:
As at 30 June 2023
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
Financial assets at fair value through profit or loss
Equities 55,219 903 – 56,122
Contingent value rights – 257 – 257
Derivatives – 135 – 135
Gross fair value 56,514
Derivatives – (326) – (326)
Net fair value 55,219 969 – 56,188
As at 30 June 2022
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
Financial assets at fair value through profit or loss
Quoted equities 89,577 1,782 – 91,359
Contingent value rights – 132 5 137
Derivatives – 885 – 885
Gross fair value 92,381
Derivatives – (416) – (416)
Net fair value 89,577 2,383 5 91,965
Analysis of changes in market value and book cost of portfolio investments in year
Year ended
30 June 2023
$000
Year ended
30 June 2022
$000
Opening book cost 99,687 93,078
Opening investment holding losses (7,722) (1,461)
Opening market value 91,965 91,617
Additions at cost 139,266 202,731
Disposals proceeds received (179,749) (201,923)
Gains/(losses) on investments 4,707 (460)
Market value of investments 56,189 91,965
Closing book cost 63,218 99,687
Closing investment holding losses (7,029) (7,722)
Closing market value 56,189 91,965
The company received $179,749,000 (2022: $201,923,000) from investments sold in the year. The book cost of these investments
when they were purchased was $175,735,000 (2022: $196,122,000). Further explanation of the disposal proceeds received in the
year can be found in the Net realised and unrealised gains/(losses) on investments section on page 53.
Notes to the Financial Statements continued
53
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Fair value hierarchy
IFRS 13 requires the Company to classify its financial instruments held at fair value using a hierarchy that reflects the significance
of the inputs used in the valuation methodologies. These are as follows:
• Level 1 - quoted prices in active markets for identical investments;
• Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments,
credit risk, etc.); and
• Level 3 - significant unobservable inputs.
Valuation process and techniques for Level 3 valuations
The investments in contingent value rights are reviewed regularly to ensure that the initial classification remains correct given
each asset’s characteristics and the Company’s investment policies. The contingent value rights are initially recognised using the
transaction price as the best evidence of fair value at acquisition, and are subsequently measured at fair value. At 30 June 2023,
the quantitative inputs used to value the level 3 contingent value rights were the last sale price and the merger price for each.
Level 2 financial assets at fair value through profit or loss
The investments in contracts for difference are marked at the price of the underlying equity. Contingent value rights in Level 2
are marked using broker quotes.
Level 3 financial assets at fair value through profit or loss
Year ended
30 June 2023
$000
Year ended
30 June 2022
$000
Opening valuation 5 –
Assets acquired during the year – –
Assets disposed during the year (5) –
Total profit or loss included in net profit on investments in the Statement
of Comprehensive Income – 5
Closing valuation – 5
Net realised gains/(losses) and unrealised gains/(losses) on investments
Year ended
30 June 2023
$000
Year ended
30 June 2022
$000
Realised gains on investments 4,014 5,801
Movement in unrealised on investments 693 (6,261)
Net realised gains/(losses) and unrealised gains/(losses) on investments 4,707 (460)
4 Transactions costs
During the year commissions and other expenses were incurred in acquiring within gains in the Statement of Comprehensive
Income. The total costs were as follows:
Year ended
30 June 2023
$000
Year ended
30 June 2022
$000
Purchases 54 68
Sales 34 33
Total 88 101
Gabelli Merger Plus
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Trust Plc Annual Report and Accounts 2023
54
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
5 Income
Year ended
30 June 2023
$000
Year ended
30 June 2022
$000
Income from investments
Overseas equities 423 530
Income on short-term investments
1
387 3
Other income 202 543
Total income 1,012 1,076
1
Income on short-term investments represents the return on cash and cash equivalents, primarily U.S. Treasury Bills. Further information can be found in Note
10 on page 57.
6 Expenses
Year ended
30 June 2023
$000
Year ended
30 June 2022
$000
Revenue expenses
Portfolio Management Fee (654) (842)
Directors’ Remuneration (157) (157)
Audit Fees – PwC
1
(145) (70)
Legal Fees
2
(122) (110)
Company Secretary Fees
2
(100) (94)
Administration Fees – State Street (55) (44)
Custodian/Depositary Fees – State Street (52) (42)
Former AIFM – Carne (51) (60)
Other (34) (17)
Printing (28) (4)
Registrar – Computershare (18) (33)
Regulatory Filing Fees – AIFMD (14) (13)
Directors’ Expenses (11) (13)
Ongoing LSE and UKLA Fees (10) (15)
LSE RNS fees (10) (14)
Contracts for Difference – (429)
Dividend Expense on Securities Sold Short – (8)
Marketing expenses – (4)
Total revenue expenses (1,461) (1,969)
Capital expenses
Contracts for Difference
3
(317) –
Transaction costs on derivatives (92) (73)
Transaction Charges – State Street (92) (51)
Total capital expenses (501) (124)
1
Audit fees for the year ended 30 June 2023 include $34,808 related to the prior fiscal year.
2
Legal Fees and Company Secretary Fees include approximately $39,000 and $4,000 of tender offer related fees that will not recur.
3
Beginning with the year ended 30 June 2023 expenses related to Contracts for Difference are treated as capital expenses. In prior years these expenses were
treated as revenue expenses.
Notes to the Financial Statements continued
55
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Portfolio Management Fee
Under the terms of the Portfolio Management Agreement, the Portfolio Manager will be entitled to a management fee
(“Management Fee”), together with reimbursement of reasonable expenses incurred by it in the performance of its duties under
the Portfolio Management Agreement, other than the salaries of its employees and general overhead expenses attributable to the
provision of the services under the Portfolio Management Agreement. The Management Fee shall be accrued daily and calculated
on each Business Day at a rate equivalent to 0.85% of NAV per annum.
AIFM fees
The Company previously appointed Carne Global Fund Managers (Ireland) Limited (“Carne”) as its former Alternative Investment
Fund Manager pursuant to the AIFMD. Carne is entitled to receive from the Company such annual fees, accrued and payable at
such times, as may be agreed in writing between itself and the Company from time to time. The fees are payable monthly and
subject to a minimum monthly fee of ¤2,500. The Company appointed Gabelli Funds, LLC to serve as AIFM effective 14 February
2023. Gabelli Funds, LLC does not earn a fee for its role as AIFM; it earned $653,934 in portfolio management fees during the
year ended 30 June 2023 (2022: $841,642).
7 Equity dividends
Year ended
30 June 2023
$000
Year ended
30 June 2022
$000
Dividends paid 822 4,914
During the year ended 30 June 2023 dividends paid per share totaled $0.12 (30 June 2022: $0.48 per share). More detailed
information can also be found in the Dividend History table on page 13.
8 Taxation on ordinary activities
Deferred Tax Assets
At 30 June 2023 the Company has excess expenses of $7,284,611 carried forward. This sum, which is net of the amount set
against current period provides, had arisen due to the cumulative deductible expenses having exceeded taxable income over
the life of the Company when it was authorized as an Investment Trust for tax purposes. Now that it is no longer a trust and
therefore subject to capital gains tax, the Company believes it is more likely than not that it will have sufficient taxable profits
against which these expenses can be offset. Therefore, a deferred tax asset of $1,821,153 has now been recognized. Provided the
Company continues to maintain its current investment profile, it is likely that this deferred tax asset will be utilised to offset future
taxable income subject to the normal corporate tax loss restriction rules for carried forward losses which restrict their use for any
particular period to £5 million plus 50% of profits in excess of that initial £5 million. The Company has also recognised a deferred
tax asset of $1,709,699 on the unrealised losses on the value of its equity investments. At 30 June 2023 total deferred tax assets
recognised was $3,530,045, or $0.52 per Ordinary Share.
Year ended 30 June 2023
Analysis of the charge in the year
Revenue
$000
Capital
$000
Total
$000
Deferred tax asset 3,530 – 3,530
Current tax expense – – –
Irrecoverable overseas tax (59) – (59)
Total 3,471 – 3,471
Year ended 30 June 2022
Analysis of the charge in the year
Revenue
$000
Capital
$000
Total
$000
Irrecoverable overseas tax (49) – (49)
Total (49) – (49)
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
56
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Year ended 30 June 2023
Factors affecting the tax charge for the year
Revenue
$000
Capital
$000
Total
$000
(Loss)/profit before taxation (475) 4,320 3,845
UK Corporation tax at effective rate of 20.5% 97 (886) (789)
Effects of:
Non taxable overseas dividends – – –
Losses on investments held at fair value through profit or loss – – –
Deferred tax benefit 3,530 – 3,530
Current tax expense – – –
Irrecoverable overseas tax (59) – (59)
Expenses not deductible for tax purposes – – –
Losses on foreign currencies – – –
Movement in excess management expenses – – –
Total 3,471 – 3,471
Total tax charge for the year 3,568 (886) 2,682
Year ended 30 June 2022
Factors affecting the tax charge for the year
Revenue
$000
Capital
$000
Total
$000
Loss before taxation (894) (94) (988)
UK Corporation tax at effective rate of 19% 170 18 188
Effects of:
Non taxable overseas dividends 98 – 98
Gains on investments held at fair value through profit or loss – (87) (87)
Irrecoverable overseas tax (49) – (49)
Expenses not deductible for tax purposes (1) (10) (11)
Losses on foreign currencies – 93 93
Movement in excess management expenses (352) (18) (370)
Movement in deferred tax rate on excess management expenses 85 4 89
Total (219) (18) (237)
Total tax charge for the year (49) – (49)
At the year end after offset against income taxable on receipt, there is a deferred tax asset of $3,530,281 (2022: Unrecognised
Potential DTA $2,354,232) in relation to surplus tax reliefs.
Note: the difference between book and accounting value. Deferred tax assets (“DTA”) can be used to offset certain taxes as
applicable in the United Kingdom. As such based on a continuing level of activity the Company’s DTA are expected to be utilised
over the foreseeable future resulting in the company not paying UK tax for this year.
8 Taxation on ordinary activities (continued)
Notes to the Financial Statements continued
57
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
9 Earnings per share
Earnings per ordinary share is calculated with reference to the following amounts:
Year ended
30 June 2023
Year ended
30 June 2022
Revenue return
Revenue return attributable to ordinary shareholders ($000) 2,996 (943)
Weighted average number of shares in issue during year 7,797,333 10,238,206
Total revenue return per ordinary share $0.39 ($0.09)
Capital return
Capital return attributable to ordinary shareholders ($000) 4,320 (94)
Weighted average number of shares in issue during year 7,797,333 10,238,206
Total capital return per ordinary share $0.55 ($0.01)
Total return per ordinary share $0.94 ($0.10)
Net asset value per share
As at
30 June 2023
As at
30 June 2022
Net assets attributable to shareholders ($000) 70,023 95,774
Number of shares in issue at year end 6,850,792 10,238,206
Net asset value per share $10.22 $9.35
The Company continues to report according to SORP standards as provided by the AIC. As such, the net asset value per share
is provided in accordance with IFRS standards inclusive of the Deferred Tax Asset of $0.52 per share, or $3.53 million, as a result
of the Company having Close status and no longer availing itself of Section Investment Trust status under Section 1158 of the
Corporation Tax Act 2010. Furthermore, net asset value cum-income, which includes the Revenue Reserves, is for illustrative
purposes.
10 Cash and cash equivalents
As at
30 June 2023
$000
As at
30 June 2022
$000
Cash 6,090 5,911
U.S. Treasuries 3,465 –
Total 9,555 5,911
The Board and Investment Manager oversee investments held in cash and cash equivalents in accordance with the Investment
Policy.
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
58
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
11 Called up share capital
As at
30 June 2023
$000
As at
30 June 2022
$000
Allotted, called up and fully paid:
6,850,792 (2022: 10,238,206) Ordinary shares of $ 0.01 each – equity 68 102
Treasury shares:
3,483,374 (2022: 95,960) Ordinary shares of $ 0.01 each – equity 35 1
Total shares 103 103
In September 2022, concurrent with the Fifth Anniversary Tender Offer, the Board of Directors of the Company were authorised
to allot Ordinary Shares of the Company up to an aggregate nominal value of $511,910.30, with such authority to expire on the
fifth anniversary of the date of the passing of the resolution. In addition, at the November 2022 AGM, the Board of Directors was
authorised to allot relevant securities in the Company up to a maximum aggregate nominal amount of $71,822 (being ten percent
of the total number of voting rights of the Company at the latest practicable date prior to the publication of the Notice of AGM),
with such authority to apply until the conclusion of this year’s AGM. The resolutions for the 2023 AGM include authorisation
to the Company to allot equity securities up to an aggregate nominal value of $45,672, that can be utilised for acquisitions by
the company. These transactions may result in the acquisition of other operating businesses to further expand and develop
shareholder value in accordance with the investment programme.
12 Financial risk management
The Company’s financial instruments comprise securities and other investments, cash balances, receivables, and payables that
arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and receivables for accrued
income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts,
futures, and options, for the purpose of managing currency and market risks arising from the Company’s activities.
The main risks the Company faces from its financial instruments are (i) market price risk (comprising interest rate risk, currency
risk, and other price risk), (ii) liquidity risk, and (iii) credit risk.
The Board regularly reviews, and agrees upon, policies for managing each of these risks. The Portfolio Manager’s policies for
managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short
term receivables and payables, other than for currency disclosures.
(i) Market price risk
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market
prices. This market risk comprises three elements – interest rate risk, currency risk, and other price risk.
Interest rate risk
Interest rate movements may affect the level of income receivable and payable on cash deposits.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account
when making investment decisions.
Notes to the Financial Statements continued
59
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Interest risk profile
The interest rate risk profile of the portfolio of financial assets and liabilities at the year-end date was as follows:
As at 30 June 2023
Interest
rate
%
Local
currency
000
Foreign
exchange
rate
US Dollar
equivalent
$000
Assets:
US dollar 1.52 9,469 1.00 9,469
Australian dollar 0.42 (53) 1.50 (35)
Canadian dollar 0.48 99 1.32 75
Danish krone 0.00 (1) 6.82 –
Euro currency 0.60 (5) 0.92 (6)
GBP Sterling 0.51 (44) 0.79 (56)
Hong Kong dollar 0.00 1 7.84 *
New Zealand dollar 0.15 3 1.63 2
Total 9,449
* Less than $500.
As at 30 June 2022
Interest
rate
%
Local
currency
000
Foreign
exchange
rate
US Dollar
equivalent
$000
Assets:
US dollar 0.24 5,585 1.00 5,585
Australian dollar 0.12 (48) 1.45 (33)
Canadian dollar 0.15 15 1.29 12
Euro currency (0.75) (8) 0.96 (8)
GBP Sterling 0.12 (24) 0.82 (29)
Hong Kong dollar 0.00 1 7.85 *
New Zealand dollar 0.10 5 1.61 3
Norwegian krone 0.00 (5) 9.88 (1)
South African rand 0.00 (13) 16.38 (1)
Swedish krona (0.75) (80) 10.25 (8)
Total 5,520
* Less than $500.
Interest rate sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative
instruments at the year-end date and the stipulated change taking place at the beginning of the financial year and held constant
throughout the reporting period in the case of instruments that have floating rates.
If interest rates had been 10 (2022: 10) basis points higher or lower and all other variables were held constant, the Company’s profit
or loss for the reporting year to 30 June 2023 would increase/decrease by $9,000 (2022: $6,000). This is mainly attributable to
the Company’s exposure to interest rates on its floating rate cash balances.
Currency risk
The Company’s investment portfolio is invested predominantly in foreign securities and the year end can be significantly affected
by movements in foreign exchange rates. It is not the Company’s policy to hedge this risk on a continuing basis but the Company
may, from time to time, match specific overseas investments with foreign currency borrowings.
The revenue account is subject to currency fluctuation arising from overseas income.
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
60
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
12 Financial risk management (continued)
Currency risk exposure by currency of denomination:
As at 30 June 2023
Net
Investments
$000
Net monetary
assets
$000
Total currency
exposure
$000
Australian dollar 226 465 691
Canadian dollar 1,645 (1,664) (19)
Danish krone – (7) (7)
Euro currency – (30) (30)
GBP Sterling 371 1,208 1,579
Hong Kong dollar – (1) (1)
Japanese yen – (1) (1)
New Zealand dollar – 2 2
Norwegian krone – (10) (10)
Polish zloty – 1 1
Swedish krona – (7) (7)
Swiss franc – 6 6
Total non US Investments 2,242 (38) 2,204
US dollar 57,602 10,217 67,819
Total 59,844 10,179 70,023
As at 30 June 2022
Net
Investments
$000
Net monetary
assets
$000
Total currency
exposure
$000
Australian dollar – (55) (55)
Canadian dollar 5,295 (5,222) 73
Euro currency 98 (55) 43
GBP Sterling 937 (805) 132
Hong Kong dollar – 2 2
New Zealand dollar – 3 3
South African rand – (7) (7)
Swedish krona – 108 108
Swiss franc 2,442 – 2,442
Total non US Investments 8,772 (6,031) 2,741
US dollar 82,724 10,309 93,033
Total 91,496 4,278 95,774
Notes to the Financial Statements continued
61
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Currency sensitivity
The following table details the Company’s sensitivity to a 10% increase and decrease in US dollars against the relevant foreign
currencies and the resultant impact that any such increase or decrease would have on net return before tax and equity
shareholders’ funds. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts
their translation at the year end for a 10% change in foreign currency rates.
As at
30 June 2023
$000
As at
30 June 2022
$000
Australian dollar 69 (6)
Canadian dollar (2) 8
Danish krone (1) –
Euro currency (3) 5
GBP Sterling 158 13
Norwegian krone (1) –
South African rand – (1)
Swedish krona (1) 11
Swiss franc 1 244
The relevant US dollar exchange rates as at 30 June 2023 were: Australian dollar (1: 1.5023); Canadian dollar (1: 1.3233); Danish krone (1: 0.9166); Euro currency
(1: 6.8249); GBP Sterling (1: 0.7866); Norwegian krone (1: 10.7136); Swedish krona (1: 10.8013); Swiss franc (1: 0.8947).
Other price risk
Other price risks, i.e., changes in market prices other than those arising from interest rate or currency risk, may affect the value
of the quoted investments.
The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in
order to review investment strategy. The investments held by the Company are listed on a recognised stock exchange.
Other price risk sensitivity
If market prices at the year-end date had been 15% higher or lower while all other variables remained constant, the return
attributable to ordinary shareholders for the year ended 30 June 2023 would have increased/decreased by $8,428,000. The
calculations are based on the portfolio valuations as at the year-end date, and are not representative of the year as a whole.
(ii) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. All creditors
are payable within 3 months.
Liquidity risk is not considered to be significant as the Company’s assets comprise mainly readily realisable securities, which can
be sold to meet funding commitments if necessary.
(iii) Credit risk
This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result
in the Company suffering a loss.
The table below shows the counterparty risk as at the Balance Sheet date:
Derivative
exposure: CFDs
$000
Collateral posted
$000
Net exposure
$000
Counterparty
UBS Securities, LLC 191 (4,053) (3,862)
Total 191 (4,053) (3,862)
Net exposure represents the mark-to-market value of derivative contracts less any cash collateral held. Negative exposure
represents the Fund’s exposure to that counterparty. Positive amounts are not an exposure to the Fund.
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
62
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
12 Financial risk management (continued)
The risk is managed as follows:
• Investment transactions are carried out mainly with brokers whose credit ratings are reviewed periodically by the Portfolio
Manager.
• Most transactions are made delivery versus payment on recognised exchanges.
• Cash is held at State Street Bank and Trust which has a credit rating by Standard and Poor’s on short-term deposits of A-1+
and long-term deposits AA-.
The maximum credit risk exposure as at 30 June 2023 was $14,958,000 (2022: $6,400,000). This was due to cash and receivables
as per note (10) ‘Cash & cash equivalents’, note (15) ‘Total other receivables’ and Statement of Financial Position Receivable for
investment sold.
Capital management policies and procedures
The Company’s capital management objectives are:
• to ensure that the Company will be able to continue as a going concern; and
• to maximise the revenue and capital return to its equity shareholders through an appropriate balance of equity capital and
debt.
The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. The Board considers
the Company’s capital requirements in the context of both the Special Distributable and Revenue reserves being treated as
distributable, as permitted by current accounting standards for listed investment companies. The distributable reserves can be
used to fund dividends and share repurchase programmes. This review includes the nature and planned level of gearing, which
takes account of the Portfolio Manager’s views on the market and the extent to which revenue in excess of that which is required
to be distributed under the investment trust rules should be retained.
The analysis of shareholders’ funds is as follows:
As at
30 June 2023
$000
As at
30 June 2022
$000
Called-up share capital 103 103
Special distributable reserve
1
(45,995) 79,062
Capital reserve 25,602 20,965
Revenue reserve* (1,677) (4,356)
Total shareholders' funds 70,023 95,774
1
The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is
distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2023, the net amount of reserves
that are distributable are $45,995,000 (2022: $74,706,000).
Alternative Investment Fund Managers’ (‘AIFM’) Directive
In accordance with the Alternative Investment Fund Managers’ Directive (“AIFMD”), the Company has appointed Gabelli Funds,
LLC as its Alternative Investment Fund Manager (the “AIFM”), effective 14 February 2023, to provide portfolio management and
risk management services to the Company in accordance with the investment management agreement.
Leverage
Leverage is calculated using two methods: i) Gross method and ii) Commitment method. For further details please see the
Glossary on page 69.
The Company’s maximum leverage levels at 30 June 2023 are shown below:
Leverage Exposure
Gross
method
Commitment
method
Maximum permitted limit 500% 250%
Actual 115% 131%
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.
Notes to the Financial Statements continued
63
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
13 Derivatives risk
The Company’s investment policy may involve the use of derivatives (including, without limitation, forward foreign exchange
contracts, equity contracts for difference swap agreements (“CFDs”), securities sold short and/or structured financial instruments).
The Company may use both exchange-traded and over-the-counter derivatives as part of its investment activity. The cost of
investing utilising derivatives may be higher than investing in securities (whether directly or through nominees) as the Company
will have to bear the additional costs of purchasing and holding such derivatives, which could have a material adverse effect
on the Company’s returns. The low initial margin deposits normally required to establish a position in such instruments permit a
high degree of leverage. As a result, depending on the type of instrument, a relatively small movement in the price of a contract
may result in a profit or a loss which is high in proportion to the amount of funds actually placed as initial margin and may result
in unquantifiable further losses exceeding any margin deposited. In addition, daily limits on price fluctuations and speculative
position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses.
The use of derivatives may expose the Company to a higher degree of risk. These risks may include credit risk with regard
to counterparties with whom the Company trades, the risk of settlement default, lack of liquidity of the derivative, imperfect
tracking between the change in value of the derivative and the change in value of the underlying asset that the Company is
seeking to track and greater transaction costs than investing in the underlying assets directly. Additional risks associated with
investing in derivatives may include a counterparty breaching its obligations to provide collateral, or, due to operational issues
(such as time gaps between the calculation of risk exposure to a counterparty’s provision of additional collateral or substitutions
of collateral or the sale of collateral in the event of a default by a counterparty), there may be instances where credit exposure
to its counterparty under a derivative contract is not fully collateralised. The use of derivatives may also expose the Company to
legal risk, which is the risk of loss due to the unexpected application of a law or regulation, or because a court declares a contract
not legally enforceable.
The use of CFDs is a highly specialised activity that involves investment techniques and risks different from those associated
with ordinary portfolio security transactions. In a CFD, a set of future cash flows is exchanged between two counterparties. One
of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional
value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state
of short-term interest rates and the returns on the Company’s portfolio securities at the time a CFD transaction reaches its
scheduled termination date, there is a risk that the Company will not be able to obtain a replacement transaction or that terms
of the replacement will not be as favourable as on the expiring transaction. At 30 June 2023 the Company held CFDs, as shown
in the following table.
Security name
Trade
currency
Shares
(000)
Nominal
($000)
As at
30 June 2023
Unrealised
gain/(loss)
$000
ADVA Optical Networking SE USD 1 30 1
Allfunds Group plc EUR 4 30 (4)
Alliance Aviation Service AUD 60 111 7
Arlington Asset Investment Corp USD 34 151 7
Black Knight Inc USD 3 188 10
Broadcom Inc USD (1) (1,054) (20)
Brookfield Infrastructure Partners USD (2) (117) 4
Chevron Corp USD (3) (436) 1
Chr. Hansen A/S DKK 6 406 (28)
Curtis Banks Group plc GBP 16 64 **
Dechra Pharmaceuticals plc GBP 34 1,546 15
Disruptive Capital GP GBP 1 8 (8)
Egetis Therapeutics AB SEK 68 34 (7)
Ellington Financial Inc USD (13) (172) (3)
Emis Group plc GBP 20 336 1
Entain plc GBP 25 387 18
Essential Metals Ltd AUD 248 74 (4)
Extra Space Storage Inc USD (2) (286) (6)
Fox Corp USD (3) (115) (2)
Gabelli Merger Plus
+
Trust Plc Annual Report and Accounts 2023
64
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
13 Derivatives risk (continued)
Security name
Trade
currency
Shares
(000)
Nominal
($000)
As at
30 June 2023
Unrealised
gain/(loss)
$000
Genkyotex SA EUR 7 ** **
Globus Medical Inc USD (15) (850) (48)
Grifols SA USD (12) (149) (11)
Heico Corp USD (2) (369) (27)
Intercontinental Exchange Inc USD * (41) (2)
Iveco Group NV EUR 3 27 2
John Wood Group plc GBP 23 38 1
Lennar Corp USD (9) (1,000) (80)
Link Admin AUD 20 27 (3)
Livent Corp USD (7) (204) **
Lookers plc GBP 274 409 3
Magellan Midstream Partners USD 6 338 17
Majorel Group Luxembourg SA EUR 26 808 (4)
Maxlinear Inc USD (1) (34) (1)
Meltwater Holding NV NOK 113 201 (10)
Network International Holdings plc GBP 254 1,227 1
Newcrest Mining Ltd USD 37 666 (9)
Newmont Corp USD (13) (551) **
Novozymes A/S DKK (8) (413) 25
Numis Corporation plc GBP 35 147 **
ONEOK Inc USD (4) (229) (5)
Orange Belgium SA EUR 5 81 (3)
Ordina NV EUR 34 210 1
Origin Energy Ltd AUD 248 1,416 (2)
PDC Energy Inc USD 5 324 (3)
PEXA Group Ltd AUD 3 24 1
Praemium Ltd AUD 121 49 6
Ramsay Health Care Ltd AUD 1 24 (1)
Randall & Quilter Investment Holdings Ltd GBP 32 18 3
Regency Centers Corp USD (5) (301) (6)
Rovio Entertainment Oyj EUR 108 1,065 (4)
Siltronic AG EUR 2 183 (19)
SimCorp A/S DKK 9 949 (3)
Softwareone Holding AG CHF 1 25 **
SOHO China Ltd HKD 437 66 (1)
Spear Investment Group EUR 39 9 **
Spire Healthcare plc GBP 29 78 1
STS Holding SA PLN 25 145 1
Telecom Italia EUR 285 76 4
Telenet Group Holding NV EUR 21 467 3
Notes to the Financial Statements continued
65
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Strategic report Governance Financial statements
Security name
Trade
currency
Shares
(000)
Nominal
($000)
As at
30 June 2023
Unrealised
gain/(loss)
$000
Toshiba Corp JPY 28 914 (1)
Vivendi SE EUR 4 34 1
Total unrealised loss on derivatives (191)
* Fewer than 500 shares.
** Less than $500.
14 Performance fee
Subject to the satisfaction of the Performance Conditions, the Portfolio Manager shall be entitled under the Portfolio Management
Agreement, in respect of each Performance Period, to receive 20% of the Total Return relating to such Performance Period,
provided that such amount shall not exceed 3% of the Average NAV.
Performance Conditions
The Portfolio Manager’s entitlement to a Performance fee in respect of any Performance Period shall be conditional on the
Closing NAV per Share in respect of the Performance Period (adjusted for any changes to the NAV per Share through dividend
payments, Share repurchases (howsoever effected) and Share issuances since Admission) being in excess of the Performance
Hurdle and High Water Mark. The Performance Hurdle is equal to the Starting NAV per Share increased by two times the rate of
return on 13 week Treasury Bills published by the US Department of the Treasury over the Performance Period, less the Starting
NAV per Share; multiplied by the weighted average of the number of Shares in issue (excluding any Shares held in treasury) at
the end of each day during the Performance Period. For the year ended 30 June 2023, no Performance fee was paid. As at 30
June 2023, no amount was outstanding to the Portfolio Manager in respect of the performance fee, reflecting the performance
period matching the Company’s financial year (2022: $nil).
15 Other Assets and Liabilities
The categories of other receivables and other payables include:
As at 30 June
2023
$000
As at 30 June
2022
$000
Other receivables
FX currency purchased 3 –
FX currency sold – 12
All other receivables* 70 54
Total other receivables 73 66
Other payables
FX currency sold 6 –
Custodian fees 15 7
Accounting fees 26 17
Audit fees 86 70
All other payables 216 118
Total other payables 349 212
* As at 30 June 2023, all other receivables included prepaid expenses and dividend and swap income.
Gabelli Merger Plus
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16 Related party disclosure: Directors
Each of the Directors is entitled to receive a fee from the Company at such rate as may be determined in accordance with the
Articles of Incorporation. The Directors’ remuneration is $30,000 per annum for each Director, other than:
• the Chairman, who will receive an additional $1,000 per annum *;
• the Chairman of the Audit & Risk Committee, who will receive an additional $5,000 per annum; and
• the Members of the Audit & Risk Committee, who will receive an additional $1,000 per annum.
Each of the Directors is also entitled to be paid all reasonable expenses properly incurred by them in connection with the
performance of their duties. These expenses will include those associated with attending general meetings, Board or committee
meetings and legal fees. The Board may determine that additional remuneration may be paid, from time to time, to any one or
more Directors in the event such Director or Directors are requested by the Board to perform extra or special services on behalf
of the Company.
Carne Global Fund Managers (Ireland) Limited, was considered a related party to the Company as it was considered to have
significant influence over the Company while in its role as AIFM. During the financial year ended 30 June 2023, Carne earned fees
of US$39,926, of which US$12,708 was payable at year end. Carne Global Financial Services Limited, the parent Company of the
AIFM, earned fees amounting to US$12,173 during the financial year ended 30 June 2023 in respect of other fund governance
services to the Company, of which US$5,458 was payable at year end. The related party transactions with the Directors are set
out on pages 36 and 37 and on page 22.
Related parties disclosure: other
The Portfolio management fee for the period ended 30 June 2023 paid by the Company to the Portfolio Manager is presented in
the Statement of Comprehensive Income. Details of the Portfolio Management fee paid during the period is disclosed in Note 6.
Details of Performance fee paid during the year are disclosed in Note 14.
As at 30 June 2023, Associated Capital Group Inc., an affiliate of the AIFM and Portfolio Manager, held 6,210,619 Ordinary Shares
in the Company. Associated Capital Group Inc. also agreed to subscribe for Special Voting Loyalty Shares, which will increase its
voting interest when issued, with issuance pending.
Investors should note that as a close company with Associated Capital Group Inc. controlling greater than 90% of shares and
greater than 90% of voting shares Associated Capital Group Inc. may be able to ensure the passage of shareholder resolutions.
Further details of related parties and transactions, including with the Company’s AIFM Gabelli Funds, LLC, are disclosed in the
Directors’ Report on page 22.
Connected party transactions
All connected party transactions are carried out at arm’s length. There were no such transactions during the year ended 30 June
2023.
17 Contingent Liabilities and Commitments
As at 30 June 2023, the Company had no contingent liabilities or commitments (30 June 2022: nil).
18 Historical Share and NAV information
30 June 2023 30 June 2022 30 June 2021
Total Shares
1
6,850,792 10,238,206 10,238,206
Total NAV ($000) 70,023 95,774 101,725
NAV per share $10.22 $9.35 $9.94
1
Data excludes 3,484,374 shares held in treasury as of 30 June 2023.
* Mr Gabelli has waived his fees since appointment as Chairman.
19 Significant events
Events arising in Ukraine, as a result of military action being undertaken by Russia, may impact on securities directly or indirectly
related to companies domiciled in Russia and/or listed on exchanges located in Russia (“Russian Securities”). As at 30 June
2023, the Company did not have direct exposure to Russian securities. The Directors are monitoring developments related to this
military action, including economic sanctions and actions of foreign governments.
The Company appointed Gabelli Funds, LLC to serve as AIFM effective 14 February 2023.
20 Post balance sheet events
The Company paid the first interim dividend for the fiscal year ended 30 June 2023 on 8 September 2023. On 5 October 2023
the Company named John Birch as non-executive Co-Chairman.
Notes to the Financial Statements continued
67
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Strategic report Governance Financial statements
Regulatory Disclosures
Information to be disclosed in accordance with Listing Rule 9.8.4
The disclosures below are made in compliance with the requirements of Listing Rule 9.8.4.
9.8.4 (1) The Company has not capitalised any interest in the year under review.
9.8.4 (2) The Company has not published any unaudited financial information in a class 1 circular or prospectus or any profit forecast
or profit estimate.
9.8.4 (4) The Company does not have any long term incentive schemes in operation.
9.8.4 (5) and (6) The Chairman Mr Gabelli has waived or agreed to waive any current or future emoluments from the Company.
9.8.4 (7) During the year to 30 June 2023, the Company has not issued shares.
9.8.4 (8) and 9.8.4 (9) are not applicable.
9.8.4 (10) As President of the Portfolio Manager’s parent company, GGCP, and an employee of the Portfolio Manager, Mr Gabelli is/
was deemed to be interested in the Company’s portfolio management agreement. There were no other contracts of significance
subsisting during the year under review to which the Company is a party and in which a Director of the Company is or was materially
interested; or between the Company and a controlling shareholder.
9.8.4 (11) This provision is not applicable to the Company.
9.8.4 (12) and (13) There were no arrangements under which a shareholder has waived or agreed to waive any dividends or future
dividends.
9.8.4 (14) This provision is not applicable to the Company.
Gabelli Merger Plus
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Trust Plc Annual Report and Accounts 2023
68
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Glossary
Alternative Investment Fund Managers Directive (“AIFMD”)
Agreed by the European Parliament and the Council of the European Union and adopted into UK legislation, the AIFMD classifies
certain investment vehicles, including investment companies, as Alternative Investment Funds (“AIFS”) and requires them to appoint
an Alternative Investment Fund Manager (“AIFM”) and Depositary to manage and oversee the operations of the investment vehicle.
The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to
shareholders.
Alternative Performance Measures
Net Asset Value total return, which is calculated based on the net asset value per share at 30 June 2023, compared to the Net Asset
Value per share as at 30 June 2022, adjusted for dividends paid, and assumes that dividends are reinvested.
Share price total return, which is calculated based on the share price as at 30 June 2023, compared to the share price as at 30 June
2022, adjusted for dividends paid, and assumes that all dividends are reinvested.
Discount to net asset value, which is calculated by dividing the difference between the share price and net asset value per share, by
the net asset value per share.
Association of Investment Companies (“AIC”)
The Company is a member of the AIC which is the trade body for investment companies and represents the industry in relation to
various matters which impact the regulation of such entities.
Capital Return per Share
The capital return per share is the capital profit for the year (see Statement of Comprehensive Income) divided by the weighted
average number of ordinary shares in issue during the year.
Close Company
Subject to certain exceptions, a close company is broadly a company which is under the control of five or fewer participators or any
number of participators if those participators are directors, or more than half the assets of which would be distributed to five or fewer
participators, or to participators who are directors, in the event of the winding up of the company.
Connected Party
A connected party to the Company includes the Administrator, the Depositary, the AIFM, the Portfolio Managers of the relevant
sub-funds of the Company, the Board and the respective holding companies (if any), subsidiaries and affiliates of each (each a
“Connected Party”).
Contract for Difference (“CFD”)
A financial instrument in which a set of future cash flows is exchanged between two counterparties. One of these cash flow streams
will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other
will be based on the performance of the shares of a stock. CFDs are open-ended with no fixed termination date, in contrast to swaps,
which utilise fixed termination dates.
Cum-income NAV
Cum-income net asset value includes all income, less the value of any dividends paid together with the value of any dividends which
have been declared and marked ex-dividend but not yet paid. When the cum-income NAV is lower than the ex-income NAV, this
reflects the revenue deficit.
Custodian
The Custodian is responsible for ensuring the safe custody of the Company’s assets and that all transactions in the underlying
holdings are transacted in an accurate and timely manner.
Depositary
From July 2014 all AIFs were required to appoint a Depositary who has responsibility for overseeing the operations of the Company
including safekeeping, cash monitoring and verification of ownership and valuation of the underlying holdings and is responsible for
the appointment of a custodian. The Depositary is strictly liable for the loss of any investments or other assets in its custody unless
it has notified that it has discharged its liability in certain markets.
The Depositary has confirmed that it has not discharged liability in relation to any of the Company’s assets.
Dividend Dates
When declared or recommended, each dividend will have three key dates applied to it. The payment date is the date on which
shareholders will receive their dividend, either by BACS transfer or by receipt of a dividend cheque. The record date applied to the
dividend is used as a cut-off for the Company’s registrars to know which shareholders should be paid a dividend. Only shareholders
on the register of members at the close of business on the record date will receive the dividend. The ex-dividend date is the business
day before the record date and is the date upon which the Company’s net asset value will be disclosed ex-dividend.
69
Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
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Strategic report Governance Financial statements
Dividend Yield
The annual dividend expressed as a percentage of the share price.
Ex-Income NAV
Ex-income net asset value is the cum-income NAV excluding income (net income being all current year income, less the value of
any dividends paid together with the value of any dividends which have been declared and marked ex-dividend but not yet paid).
Fifth Anniversary Tender Offer
The tender offer to purchase certain of the Company’s Ordinary Shares from Shareholders whose names were entered into the
Loyalty Register on Admission and who continuously remained on the Loyalty Register from Admission to the launch of the Fifth
Anniversary Tender Offer.
Additional Fifth Anniversary Tender Offer
The tender offer to purchase certain of the Company’s Ordinary Shares from Shareholders whose names were entered into the
Loyalty Register at the time of the November 2017 Tap Admission and who continuously remained on the Loyalty Register from the
November 2017 Tap Admission to the launch of the Additional Fifth Anniversary Tender Offer.
Gearing (including Actual and Nominal Gearing)
The net gearing percentage reflects the amount of borrowings (i.e. bank loans or overdrafts) the Company has used to invest in
the market less cash and investments in cash funds, divided by net assets. Nominal gearing is the total notional amount of assets
plus total notional amount of liabilities, divided by equity. Actual gearing is calculated under two methodologies: the gross method,
which includes the market value of positions and the gross exposure of derivatives, and excludes cash and cash equivalents; and the
commitment method, which includes the value of cash and cash equivalents. Nominal CFD gearing is the gross nominal value of CFD
positions, as a percentage of shareholders’ equity.
High Water Mark
The closing Net Asset Value (NAV) per share in respect of the last performance period in respect of which a performance fee was
payable to the Portfolio Manager (adjusted for any changes to the NAV per share through dividend payments, share repurchases,
and share issuances from admission to the end of such performance period).
Leverage
Leverage is the ratio between a fund’s Total Exposure and its Net Asset Value, expressed as a percentage. For the purposes of the
AIFM Directive, leverage can be calculated using two methods: (i) the gross method; and (ii) the commitment method. Under the gross
method, Total Exposure is the algebraic sum of all investment positions (long and short), excluding cash and cash equivalents and
converting derivative instruments into the equivalent position in the underlying asset. Under the commitment method, Total Exposure
is the algebraic sum of all investment positions (long and short), plus cash and cash equivalents, minus hedging arrangements and
offsetting instruments between eligible assets.
Liquidity
In the context of the liquidity of shares in the stock market, this refers to the availability of buyers in the market for the share in
question. Where the market in a particular share is described as liquid, that share will be in demand and holders wishing to sell their
shares should find ready buyers. Conversely, where the market in a share is illiquid the difficulty of finding a buyer will tend to depress
the price that might be negotiated for a sale.
Loyalty Programme
The Company has implemented a loyalty programme to incentivise long-term share ownership. The loyalty programme is open
to all shareholders, who are entered in the Loyalty Register, a separate register maintained by the registrar to allow a shareholder
to increase its voting power after holding shares for a continuous period of at least five years. Each shareholder so registered will
be entitled to subscribe for one special voting loyalty share in respect of each ordinary share held. These shares can also be used
as a form of consideration when entering into one or more agreements to acquire operating businesses in accordance with the
Investment Policy, and subject to approval by shareholders at the AGM, the articles will be updated to reflect this dynamic.
Loyalty Register
The register of Qualifying Registered Shareholders maintained by the Registrars in accordance with the Company’s loyalty programme.
Net Asset Value (“NAV”) per ordinary share
The value of the Company’s assets (i.e. investments, cash held and debtors) less any liabilities (i.e. bank borrowings, debt securities
and creditors) for which the Company is responsible, divided by the number of shares in issue. The aggregate NAV is also referred to
as total shareholders’ funds on the Statement of Financial Position. The NAV is published daily.
Gabelli Merger Plus
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Trust Plc Annual Report and Accounts 2023
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Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Glossary continued
Net Asset Value per ordinary share, total return represents the theoretical return on the cum-income NAV per ordinary share,
assuming that dividends paid to shareholders were reinvested at the cum-income NAV per ordinary share at the close of business on
the day shares were quoted ex-dividend.
2023 2022
NAV at start of year 9.35 9.93
NAV at end of year 10.22 9.35
Effect of dividends
1
0.12 0.46
NAV at end of year including effect of dividends 10.35 9.81
NAV total return 10.54% (1.37)%
1
Assumed reinvested at the time of shares going ex-dividend.
Ongoing Charges are operating expenses incurred in the running of the Company, whether charged to revenue or capital, but
excluding financing costs. These are expressed as a percentage of the average net asset value during the year and this is calculated
in accordance with guidance issued by the Association of Investment Companies.
2023
$000
2022
$000
Regular recurring expenses a 1,645 1,592
Average Shareholders’ funds b 75,684 99,579
Ongoing Charge Calculation a/b 2.17% 1.60%
Performance Fee
A detailed explanation of the calculation methodology for the Performance Fee payable to the Investment Manager can be found
in Note 14.
Performance Hurdle
In relation to each performance period, the hurdle is represented by “A” multiplied by “B”, where: “A” is equal to the starting NAV per
share increased by two times the rate of return on 13 week Treasury Bills published by the US Department of the Treasury over the
performance period, less the starting NAV per share; and “B” is the weighted average of the number of shares in issue (excluding any
shares held in treasury) at the end of each day during the performance period. The Remuneration Committee has determined that
this is the most appropriate means of benchmarking the Manager’s performance.
Premium/(Discount)
The amount by which the market price per share of an investment trust is either higher premium or lower (discount) than the NAV
per share, expressed as a percentage of the NAV per share.
Prospectus
The prospectus published by the Company on 15 June 2017 in connection with the placing of up to 20,000,000 Ordinary Shares at
$10 per Ordinary Share.
Related Party
Related party disclosures are required under International Financial Reporting Standards (IAS 24). A common definition of a related
party is if one party has the ability to control the other party or exercise significant influence over the other party in making financial
or operational decisions and defined as:
(i) Two or more parties are related parties when at any time during the financial period:
(ii) one party has direct or indirect control of the other party; or the parties are subject to common control from the same source; or
(iii) one party has influence over the financial and operating policies of the other party to an extent that that other party might be
inhibited from pursuing at all times its own separate interests; or
(iv) the parties, in entering a transaction, are subject to influence from the same source to such an extent that one of the parties to
the transaction has subordinated its own separate interests.
Revenue Return per ordinary share
The revenue return per ordinary share is the revenue return profit for the year divided by the weighted average number of ordinary
shares in issue during the year.
71
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Strategic report Governance Financial statements
Share Price Total Return represents the theoretical return to a shareholder, on a closing market price basis, assuming that all dividends
received were reinvested, without transaction costs, into the ordinary shares of the Company at the close of business on the day the
shares were quoted ex-dividend.
2023 2022
Share price at start of year 9.00 7.40
Share price at end of year 9.00 9.00
Effect of dividends* 0.12 0.55
Share price at end of year including effect of dividends 9.12 9.55
Share price total return 1.33% 29.06%
* Assumed reinvested at the time of the shares going ex-dividend.
Shareholder
Owner of the Company’s Ordinary Shares.
Special Voting Loyalty Shares
Redeemable non-participating voting shares of a nominal value of $0.01 each in the capital of the Company (if any) having the
rights and privileges and being subject to the restrictions contained in the Articles. Each Registered Holder of an ordinary share who
remains registered in the Loyalty Register in respect such Ordinary Share for a continuous uninterrupted period of at least five years
(the “Qualifying Period”) and is not an ineligible shareholder and or is not disqualified shall be entitled to subscribe for one Special
Voting Loyalty Share in respect of such ordinary share.
(1) As to voting: The holders of Special Voting Loyalty Shares shall have the right to receive notice of, to attend, and to vote at all
general meetings of the Company.
(2) As to dividends and distributions: The Special Voting Loyalty Shares are not entitled to participate in any dividend or distribution
made or declared by the Company, except for a fixed annual dividend equal to 0.00001 per cent. of their nominal value.
(3) On a winding up or other return of capital: On a winding up of the Company, the holder of a Special Voting Loyalty Share shall be
entitled to be repaid the capital paid up thereon pari passu with the repayment of the nominal amount of the ordinary shares.
Total Return Performance
This is the return on the share price or NAV taking into account both the rise and fall of share prices and the dividends paid to
shareholders. Any dividends received by a shareholder are assumed to have been reinvested in either additional shares (for share
price total return) or the Company’s assets (for NAV total return).
Gabelli Merger Plus
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Trust Plc Annual Report and Accounts 2023
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Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
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Company Information
Registered Name
Gabelli Merger Plus+ Trust Plc
Registered Office
3 St. James’s Place,
London SW1A 1NP
United Kingdom
Board of Directors
Marc Gabelli
Marco Bianconi
John Birch
John Newlands
Yuji Sugimoto
James Wedderburn
Portfolio Manager
Gabelli Funds, LLC
One Corporate Center
Rye, NY 10580-1422
United States
Company Secretary
Kin Company Secretarial
Hyde Park House
5 Manfred Road
London SW15 2RS
United Kingdom
Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
United Kingdom
Administrator and Custodian
State Street Bank and Trust Company
20 Churchill Place
Canary Wharf
London E14 5HJ
United Kingdom
Depositary
State Street Trustees Ltd
20 Churchill Place
Canary Wharf
London E14 5HJ
United Kingdom
Alternative Investment Fund Manager
Gabelli Funds, LLC (from 14 February 2023)
One Corporate Center
Rye, NY 10580 USA
Carne Global Fund Managers (Ireland) Limited
(through 13 February 2023)
2nd Floor, Block E
Iveagh Court, Harcourt Road
Dublin 2
Ireland
Registrar and Receiving Agent
Computershare Investment Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
United Kingdom
Legal & Financial Advisers to the Company
Dickson Minto W.S.
16 Charlotte Square
Edinburgh
EH2 4DF
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
22 Bishopsgate
London
EC2N 4BQ
The Company is a member of The Association of Investment Companies
(“AIC”), which publishes a number of useful fact sheets and email updates
for investors interested in investment companies.
The AIC
9th Floor
24 Chiswell Street
London
EC1Y 4YY
0207 282 5555
www.theaic.co.uk
Information to Shareholders
Contact Information and Website
Please visit us on the Internet. Our homepage at www.gabelli.co.uk
includes useful information about the Company, such as daily prices,
factsheets, announcements, and current and historic half year and annual
reports.
We welcome your comments and questions at +44 (0) 20 3206 2100 or
via e-mail at info@gabelli.co.uk.
General Information
SEDOL/ISIN: BD8P074/GB00BD8P0741
London Stock Exchange (TIDM) Code: GMP
Legal Entity Identifier (LEI): 5493006X09N8HK0V1U37
The Company’s registrar is Computershare Investor Services PLC.
Computershare’s website address is investorcentre.co.uk and certain
details relating to your holding can be checked through this website.
Alternatively, Computershare can be contacted on 0370 707 1390.
Change of name or address must be notified through the website or sent
to The Pavilions, Bridgwater Road, Bristol BS99 6ZZ.
The Company is a member of The Association of Investment Companies
(“AIC”), which publishes a number of useful fact sheets and email updates
for investors interested in investment companies www.theaic.co.uk.
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Strategic report Governance Financial statements
Annual General Meeting
Notice of Annual General Meeting
Notice is hereby given that the sixth Annual General Meeting
(the “AGM”) of the Company will be held at GAMCO (UK), 3 St.
James’s Place London SW1A 1NP United Kingdom on Thursday
30 November 2023 at 16:00 (GMT) to consider and, if thought
fit, pass the following resolutions, of which resolutions numbered
1 to 14 (inclusive) will be proposed as Ordinary Resolutions, and
resolutions numbered 15 to 20 (inclusive) will be proposed as
Special Resolutions.
The Directors currently anticipate that this year’s Annual General
Meeting will be open to shareholders, but reserve the right to
change arrangements for the meeting at short notice. Therefore
shareholders are strongly encouraged to vote by proxy and to
appoint the Chairman as their proxy.
Ordinary Business
1. To receive the Company’s audited financial statements,
the Strategic Report and the reports of the Directors of
the Company (the “Directors”) for the year ended 30 June
2023 (the “Annual Report”) together with the report of the
auditors.
2. To approve the Directors’ Remuneration Report for the year
ended 30 June 2023.
3. To approve the directors’ remuneration policy, as set out
in the Directors’ Remuneration Report, which takes effect
immediately after the end of the annual general meeting.
4. To approve the Company’s dividend policy to continue to
pay interim dividends. The dividends declared in respect
of the financial year ended 30 June 2023 totaled $0.12 per
share.
5. To re-elect Marc Gabelli as a Director.
6. To re-elect Marco Bianconi as a Director.
7. To re-elect John Birch as a Director.
8. To re-elect John Newlands as a Director.
9. To re-elect Yuji Sugimoto as a Director.
10. To re-elect James Wedderburn as a Director.
11. To re-appoint PricewaterhouseCoopers LLP as auditors of
the Company to hold office until the conclusion of the next
AGM of the Company.
12. To authorise the Audit & Risk Committee to determine the
remuneration of the auditors.
Special Business
Ordinary Resolution
13. THAT in addition to all existing authorities:
a. the Directors of the Company be and are hereby generally
and unconditionally authorised in accordance with section
551 of the Companies Act 2006 (the “Act ”) to exercise all
the powers of the Company to allot ordinary shares in
the capital of the Company (the “Ordinary Shares”) up to
an aggregate nominal value of $45,672, such authority to
expire at the conclusion of next year’s AGM (unless the
authority is previously revoked, varied or extended by the
Company in general meeting) but so that this authority
shall allow the Company to make, before the expiry of
this authority, offers or agreements which would or
might require equity securities to be allotted after such
expiry and the Directors of the Company may allot equity
securities pursuant to any such offer or agreement as if
the authority had not expired; and
b. the Directors of the Company be and are hereby generally
and unconditionally authorised in accordance with section
551 of the Act to exercise all the powers of the Company
to allot Ordinary Shares up to an aggregate nominal
value of $511,910.30, such authority to expire on the fifth
anniversary of the date of the passing of this resolution
(unless the authority is previously revoked, varied or
extended by the Company in general meeting) but so that
this authority shall allow the Company to make, before
the expiry of this authority, offers or agreements which
would or might require equity securities to be allotted
after such expiry and the Directors of the Company
may allot equity securities pursuant to any such offer or
agreement as if the authority had not expired.
c. the Directors of the Company be and are hereby
generally and unconditionally authorised in accordance
with section 551 of the Act to exercise all the powers
of the Company to allot Special Voting Loyalty Shares
up to an aggregate nominal value of $511,910.30, such
authority to expire on the fifth anniversary of the date
of the passing of this resolution (unless the authority is
previously revoked, varied or extended by the Company
in general meeting).
14. THAT the Directors of the Company be and are hereby
authorised to exercise all powers of the Company, as granted
by all existing authorities (including by resolution 13 above),
to allot new Ordinary Shares and Special Voting Loyalty
shares for purposes of making acquisitions.
Special Resolutions
15. THAT, in addition to all existing authorities, the Directors of
the Company be and are hereby empowered in accordance
with section 570 of the Act, to allot equity securities
(as defined in section 560 of the Act) for cash under the
authority given by resolution 13(a) and, in accordance with
section 573 of the Act, to sell any Ordinary Shares held by
the Company as treasury shares (“treasury shares”) for cash,
in each case, as if section 561 of the Act did not apply to any
such allotment or sale, such power in respect of the authority
given by resolution 13(a) to be limited:
a. to the allotment of equity securities and sale of treasury
shares in connection with an offer of, or invitation to
apply for, equity securities:
i. to holders of Ordinary Shares in the capital of
the Company in proportion (as nearly as may be
practicable) to their existing holdings; and
ii. to holders of other equity securities in the capital
of the Company, as required by the rights of those
securities or, subject to such rights, as the Directors
otherwise considers necessary, and so that the
Directors may impose any limits or restrictions and
make any arrangements which it considers necessary
or appropriate to deal with treasury shares, fractional
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entitlements, record dates, legal, regulatory or
practical problems in or under the laws of any
territory or the requirements of any regulatory body
or stock exchange; and
b. otherwise than pursuant to resolution 15(a) above, to the
allotment of equity securities and sale of treasury shares
up to an aggregate nominal amount of $13,701 (being
20% of the total number of voting rights of the Company
at the latest practicable date prior to the publication of
this Notice);
c. such that no allotment of securities shall be made which
would result in Ordinary Shares being issued or sold
from treasury at a price which is less than the higher of
the Company’s cum or ex income net asset value per
Ordinary Share at the latest practicable date before
such allotment of equity securities as determined by the
Directors in their reasonable discretion; and
d. such power, unless renewed, to apply until the expiry of
the powers in resolution 13(a) but, in each case, during
this period the Company may make offers, and enter
into agreements, which would, or might, require equity
securities to be allotted (and treasury shares to be sold)
after the power ends and the Directors may allot equity
securities (and sell treasury shares) under any such offer
or agreement as if the power had not ended.
16. THAT, in addition to all existing authorities, the Directors of
the Company be and are hereby empowered, pursuant to
sections 570 and 573 of the Act, to allot or make offers or
agreements to allot equity securities (as defined in section
560 of the Act) for cash pursuant to the authority referred to
in resolution 13(b) above as if section 561 of the Act did not
apply to any allotment which is the subject of, and provided
that this power shall expire upon the expiry of, the authority
conferred by resolution 13(b) above (unless the authority
is previously revoked, varied or extended by the Company
in general meeting), but so that this authority shall allow
the Company to make, before the expiry of this authority,
offers or agreements which would or might require equity
securities to be allotted after such expiry and the Directors
of the Company may allot equity securities pursuant to any
such offer or agreement as if the authority had not expired.
17. THAT, with effect from the conclusion of the meeting, the
changes to the Company’s Investment Policy be approved.
These changes are deemed to be immaterial and are
proposed to enable the management team to implement the
Company’s Investment Policy as a closed company. A copy of
the existing investment policy and the proposed immaterial
amendments to the policy marked to show all changes are
available for inspection on the Company’s website from the
date of this notice of meeting. The proposed Investment
Policy as amended will also be available for inspection at the
AGM at least 15 minutes prior to the start of the meeting and
up until the close of the meeting.
18. THAT, with effect from the conclusion of the meeting, the
draft articles of association produced to the meeting be
adopted as the Articles of Association of the Company
in substitution for, and to the exclusion of, the Company’s
existing articles of association. A copy of the Company’s
existing articles of association and the proposed new articles
of association marked to show all the changes is available for
inspection on the Company’s website from the date of this
notice of meeting. The proposed new articles of association
will also be available for inspection at the AGM at least 15
minutes prior to the start of the meeting and up until the
close of the meeting.
19. THAT, in addition to all existing authorities, the Company be
authorised for the purposes of section 701 of the Act to make
one or more market purchases (as defined in section 693(4)
of the Act) of its Ordinary Shares, provided that:
a. the maximum number of Ordinary Shares hereby
authorised to be purchased is 685,079 (being 10% of
the total number of voting rights of the Company at the
latest practicable date prior to the publication of this
Notice);
b. the minimum price (exclusive of expenses) which may be
paid for an Ordinary Share is the nominal amount of that
share; and
c. the maximum price (exclusive of expenses) which may
be paid for an Ordinary Share is the higher of:
i. an amount equal to 5% above the average of the
middle market quotations for an Ordinary Share as
derived from the Daily Official List of the London Stock
Exchange plc for the five business days immediately
preceding the day on which that Ordinary Share is
contracted to be purchased; and
ii. an amount equal to the higher of the price of the
last independent trade and the highest current
independent bid on the trading venues where the
purchase is carried out at the relevant time, such
authority, unless renewed or extended, to apply
until the conclusion of next year’s AGM but during
this period the Company may enter into a contract
to purchase Ordinary Shares, which would, or might,
be completed or executed wholly or partly after
the authority ends and the Company may purchase
Ordinary Shares pursuant to any such contract as if
the authority had not ended.
20. THAT a general meeting of the Company other than an
Annual General Meeting may be called on not less than 14
clear days’ notice.
By order of the Board
John Birch Marc Gabelli
Co-Chairman Co-Chairman
19 October 2023
Registered Office:
3 St. James’s Place
London
England
SW1A 1NP
Annual General Meeting
Notice of Annual General Meeting continued
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Strategic report Governance Financial statements
Notes to the Notice of the AGM
The Annual General Meeting is currently anticipated to be open
to members this year. All members are entitled to vote at the
meeting by providing a form of proxy. Members are strongly
advised to appoint the Chairman of the meeting as their proxy.
Proxy appointment
1 A member is entitled to appoint another person as his proxy
to exercise all or any of his rights to attend and to speak and
vote at the AGM, or any adjournment thereof. A proxy need
not be a shareholder of the Company. A shareholder may
appoint more than one proxy in relation to the AGM provided
that each proxy is appointed to exercise the rights attached
to a different share or shares held by that shareholder.
2 A form of proxy is enclosed. The appointment of a proxy
will not prevent a member from subsequently attending and
voting at the meeting in person.
3 To appoint a proxy, the form of proxy and any power of
attorney or other authority (if any) under which it is executed
(or a duly certified copy of any such power or authority), must
be either (a) sent to the Company’s Registrar, Computershare
Investor Services PLC, at The Pavilions, Bridgwater Road,
Bristol, BS99 6ZY, or (b) the proxy appointment must be
lodged using the CREST Proxy Voting Service in accordance
with Note 8 below, in either case so as to be received no
later than 4.00pm (GMT) on 28 November 2023 (or, if the
meeting is adjourned, no later than 48 hours (excluding any
part of a day that is not a working day) before the time of
any adjourned meeting).
Joint shareholders
4 In the case of joint holders of a share the vote of the senior
who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the votes of the other joint
holders, and for this purpose seniority shall be determined
by the order in which the names appear in the register of
members in respect of the share.
Nominated persons
5 The right to appoint a proxy does not apply to persons
whose shares are held on their behalf by another person
and who have been nominated to receive communications
from the Company in accordance with section 146 of the Act
(“Nominated Persons”). Nominated Persons may have a right
under an agreement with the member who holds the shares
on their behalf to be appointed (or to have someone else
appointed) as a proxy. Alternatively, if Nominated Persons do
not have such a right or do not wish to exercise it, they may
have a right under such an agreement to give instructions
to the person holding the shares as to the exercise of voting
rights.
Information about shares and voting
6 Holders of Ordinary Shares are entitled to attend and vote
at general meetings of the Company. The total number of
issued Ordinary Shares in the Company on 5 October 2023,
which is the latest practicable date before the publication
of this Notice is 6,850,792 Shares (excluding shares held in
treasury).
Right to attend and vote
7 Entitlement to attend and vote at the meeting, and the
number of votes which may be cast at the meeting, will
be determined by reference to the Company’s register
of members as at the close of business on 27 November
2023, or, if the meeting is adjourned, no later than 48 hours
(excluding any part of a day that is not a working day) before
the time fixed for the adjourned meeting (as the case may
be). In each case, changes to the register of members after
such time will be disregarded.
CREST members
8 CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so for the meeting (and any adjournment of the
meeting) by following the procedures described in the
CREST Manual available on the website of Euroclear UK and
Ireland Limited (“Euroclear”) at www.euroclear.com. CREST
Personal Members or other CREST sponsored members (and
those CREST members who have appointed a voting service
provider) should refer to their CREST sponsor or voting
service provider, who will be able to take the appropriate
action on their behalf.
In order for a proxy appointment or instruction made
by means of CREST to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly
authenticated in accordance with Euroclear’s specifications
and must contain the information required for such
instructions, as described in the CREST Manual. The message
(regardless of whether it constitutes the appointment
of a proxy or an amendment to the instruction given to a
previously appointed proxy) must, in order to be valid, be
transmitted so as to be received by Computershare Investor
Services PLC Participant ID 3RA50 by the latest time(s) for
receipt of proxy appointments specified in Note 3 above. For
this purpose, the time of receipt will be taken to be the time
(as determined by the timestamp applied to the message by
the CREST Applications Host) from which the issuer’s agent
is able to retrieve the message by enquiry to CREST in the
manner prescribed by CREST. After this time any change of
instructions to a proxy appointed through CREST should be
communicated to him by other means.
CREST members (and, where applicable, their CREST
sponsors or voting service providers) should note that
Euroclear does not make available special procedures in
CREST for any particular messages. Normal system timings
and limitations will therefore apply in relation to the input
of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member
is a CREST personal member or sponsored member or has
appointed a voting service provider, to procure that his
CREST sponsor or voting service provider takes) such action
as shall be necessary to ensure that a message is transmitted
by means of the CREST system by any particular time. In this
connection, CREST members (and, where applicable, their
CREST sponsors or voting service providers) are referred, in
particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings. The
Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5) (a) of the
Uncertificated Securities Regulations 2001.
Corporate representatives
9 Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all
of its powers as a member provided that they do not do so
in relation to the same shares.
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Audit concerns
10 Shareholders should note that, under section 527 of the Act,
members meeting the threshold requirements set out in that
section have the right to require the Company to publish on
a website a statement setting out any matter relating to: (i)
the audit of the Company’s accounts (including the auditors
report and the conduct of the audit) that are to be laid before
the AGM for the financial year ended 30 June 2023; or (ii)
any circumstance connected with auditors of the Company
appointed for the financial year ended 30 June 2023
ceasing to hold office since the previous meeting at which
annual accounts and reports were laid. The Company may
not require the shareholders requesting any such website
publication to pay its expenses in complying with sections
527 or 528 (requirements as to website availability) of the
Act. Where the Company is required to place a statement on
a website under section 527 of the Act, it must forward the
statement to the Company’s auditors not later than the time
when it makes the statement available on the website. The
business which may be dealt with at the AGM for the relevant
financial year includes any statement that the Company has
been required under section 527 of the Act to publish on a
website.
Questions
11 Any member attending the AGM has the right to ask
questions. The Company must cause to be answered any
such question relating to the business being dealt with at
the meeting but no such answer need be given if (a) to do so
would interfere unduly with the preparation for the meeting
or involve the disclosure of confidential information, (b) the
answer has already been given on a website in the form of an
answer to a question, or (c) it is undesirable in the interests
of the Company or the good order of the meeting that the
question be answered.
Members’ right to request a resolution to be proposed at the
Meeting
12 Under sections 338 and 338A of the Companies Act 2006,
members meeting the threshold requirements in those
sections have the right to require the Company:
i. to give, to members of the Company entitled to receive
notice of the meeting, notice of a resolution which may
properly be moved and is intended to be moved at the
meeting; and/or
ii. to include in the business to be dealt with at the meeting
any matter (other than a proposed resolution) which may
be properly included in the business.
A resolution may properly be moved or a matter may
properly be included in the business unless:
a. (in the case of a resolution only) it would, if passed, be
ineffective (whether by reason of inconsistency with any
enactment or the Company’s constitution or otherwise);
b. it is defamatory of any person; or
c. it is frivolous or vexatious.
Such a request may be in hard copy form or in electronic form,
and must identify the resolution of which notice is to be given
or the matter to be included in the business, must be authorised
by the person or persons making it, must be received by the
Company not later than four weeks before the AGM, and (in the
case of a matter to be included in the business only) must be
accompanied by a statement setting out the grounds for the
request.
Website information
13 A copy of this notice and other information required by
section 311A of the Act can be found at www.gabelli.co.uk/
investment-products/gabelli-merger-plus/.
Use of electronic address
14 Members may not use any electronic address provided
in either this notice of meeting or any related documents
(including the enclosed form of proxy) to communicate with
the Company for any purposes other than those expressly
stated.
Documents available for inspection
15 Copies of the letters of appointment of the non-executive
Directors may be inspected during normal business hours
on any weekday (Saturdays, Sundays and public holidays
excepted) at the registered office of the Company at 3 St.
James’s Place, London SW1A 1NP, United Kingdom, up to and
including the date of the AGM, and, if possible, on the date
itself at the AGM venue 15 minutes before the meeting until it
ends.
Communication
16 Except as provided above, shareholders who have general
queries about the AGM should use the following means of
communication (no other methods of communication will be
accepted):
• by calling the Registrar’s helpline on: +44 (0)370 707
1390, or
• by writing to the Registrar, Computershare Investor
Services PLC, The Pavilions, Bridgwater Road, Bristol
BS99 6ZZ, or
• by email to the Registrar web.queries@computershare.co.uk
Gabelli Merger Plus+ Loyalty Programme
The Company has a Loyalty Programme in place for its long
term shareholders. Please see pages 20 and 21 for benefits and
eligibility requirements.
Contact the Company
www.gabelli.com/mergerplus
gmpassist@gabelli.com
+44 20 3206 2100
+1 914 921 5135
+39 02 3057 8299
Notes to the Notice of the AGM continued
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Strategic report Governance Financial statements
Appendix
AIFMD Remuneration Disclosures
Carne Global Fund Managers (Ireland) Limited
The European Union Directive 2011/61/EU as implemented in Ireland by S.I. No. 257/2013 European Union (Alternative Investment
Fund Managers) Regulations 2013, requires alternative investment fund managers (“AIFMs”) to establish and apply remuneration
policies and practices that promote sound and effective risk management, and do not encourage risk taking which is inconsistent
with the risk profile of the Fund.
To that effect, Carne Global Fund Managers (Ireland) Limited (“the Manager”), has implemented a remuneration policy that applies
to all alternative investment funds (“AIFs”) for which the Manager acts as AIFM (the “Remuneration Policy”) and covers all staff
whose professional activities have a material impact on the risk profile of the Manager or the AIFs it manages (“Identified Staff of the
Manager”). The Remuneration Policy also applies to all UCITS funds for which the Manager acts as manager. In accordance with the
Remuneration Policy, all remuneration paid to Identified Staff of the Manager can be divided into:
• Fixed remuneration (payments or benefits without consideration of any performance criteria); and
• Variable remuneration (additional payments or benefits depending on performance or, in certain cases, other contractual criteria)
which is not based on the performance of the Fund.
The Manager has designated the following persons as Identified Staff of the Manager:
1. The Designated Persons;
2. Each of the Manager’s directors;
3. Head of Compliance;
4. Risk Officer;
5. Head of Anti-Money Laundering and Counter Terrorist Financing Compliance;
6. Money Laundering Reporting Officer;
7. Chief Executive Officer;
8. Chief Operating Officer; and
9. All members of the investment committee.
The Manager has a business model, policies, and procedures which by their nature do not promote excessive risk taking and take
account of the nature, scale and complexity of the Manager and the Fund. The Remuneration Policy is designed to discourage risk
taking that is inconsistent with the risk profile of the Fund and the Manager is not incentivised or rewarded for taking excessive risk.
The Manager has determined not to constitute a separate remuneration committee and for remuneration matters to be determined
through the Manager’s Compliance and AML Committee, a Committee of the Manager’s Board.
The Compliance and AML Committee is responsible for the ongoing implementation of the Manager’s remuneration matters and will
assess, oversee, and review the remuneration arrangements of the Manager as well as that of the delegates as relevant, in line with
the provisions of the applicable remuneration requirements.
The Manager has a number of directly employed staff. The Manager’s parent company is Carne Global Financial Services Limited
(“Carne”). In addition, Carne also operates through a shared services organisational model which provides that Carne employs the
majority of staff and enters into inter-group agreements with other Carne Group entities within the group to ensure such entities are
resourced appropriately. As at 31 December 2022, 10 of the Identified Staff are employed directly by the Manager. The remainder of
the Identified Staff are employees of Carne, or employees of another entity within the Carne Group, and are remunerated directly
based on their contribution to Carne Group as a whole. In return for the services of each of the Carne Identified Staff, the Manager
pays an annual staff recharge to Carne (the “Staff Recharge”).
The independent non-executive directors are paid a fixed remuneration. The Other Identified Staff member’s remuneration is linked
to their overall individual contribution to the Manager or the Carne Group, with reference to both financial and non-financial criteria
and not directly linked to the performance of specific business units or targets reached or the performance of the Fund.
The aggregate of the total Staff Recharge, remuneration of the directly employed identified staff of the Manager and the remuneration
of the independent non-executive directors is E2,502,802 paid to 16 Identified Staff* for the year ended 31 December 2022.
The Manager has also determined that, on the basis of number of sub-funds / net asset value of the Fund relative to the number of
sub-funds / assets under management, the portion of this figure attributable to the Fund is E2,204.
The Fund does not pay any fixed or variable remuneration to identified staff of the Investment Manager.
Gabelli Funds, LLC
In accordance with the AIFMD and FCA Rules, Gabelli Funds, LLC’s remuneration policy and remuneration disclosures in respect of
the year ended 30 June 2023 are available from Gabelli Funds, LLC on request.
* This number represents the number of Identified Staff as at 31 December 2022.
Gabelli Merger Plus
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Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
This announcement is neither an offer to sell nor a solicitation of an offer to buy these securities.
The offer is made by the prospectus only.
$100,111,000
Gabelli Merger Plus
+
Trust Plc
10,011,100
Ordinary Shares
Price $10 per Share
19 July 2017
Job No: 50043 Proof Event: 15 Park Communications Ltd Alpine Way
London E6 6LA
Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Printed by Park Communications on FSC® certified paper.
Park works to the EMAS standard and its Environmental Management System is certified to ISO 14001.
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This document is printed on Galerie Satin paper made of material from well-managed, FSC®-certified forests and other
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Job No: 50043 Proof Event: 15 Park Communications Ltd Alpine Way
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Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600
Gabelli Merger Plus+ Trust Plc
www.gabelli.com/mergerplus
gmpassist@gabelli.com
Gabelli Merger Plus+ Trust Plc Annual Report and Accounts 2023