TIDMMMIT
RNS Number : 3806Q
Mobius Investment Trust PLC
25 February 2021
MOBIUS INVESTMENT TRUST
ANNUAL REPORT OF MOBIUS INVESTMENT TRUST PLC
FOR THE YEARED 30 NOVEMBER 2020
Mobius Investment Trust plc (the "Company") today announces
audited results
for the year ended 30 November 2020
FINANCIAL HIGHLIGHTS
As at As at
30 November 30 November
2020 2019 % change
----------------------------------- ----------- ----------- --------
Net Asset Value per Ordinary share 105.9p 91.4p 15.9
Share price 103.0p 83.0p 24.1
Discount to net asset value* 2.7% 9.2% -
----------------------------------- ----------- ----------- --------
UK GAAP measure
* Alternative performance measure, see Glossary.
Year ended Period ended
30 November 30 November
2020 2019
----------------------------------------- ----------- ------------
Net Asset Value per share total return*^ +16.3% -6.7%
Share price total return*^ +24.7% -17.0%
Ongoing charges* 1.5% 1.7%
Dividend per share - final - 0.30p
----------------------------------------- ----------- ------------
* Alternative performance measure, see Glossary.
^ Source: Morningstar.
CHAIRMAN'S STATEMENT
Introduction
Dear Shareholder,
As we close our second year of operations, on behalf of the
Board I would like to express my gratitude to all our shareholders
for the continued support we received during the last 12
challenging and extraordinary months. 2020 has been a year of
uncertainties and extremes. Market volatility was experienced as
drastic lockdown measures and unprecedented policy moves were
effected across the globe. Healthcare systems were put under
unparalleled pressure and the world was faced with an unexpectedly
high and tragic death toll linked to Covid-19.
Emerging markets ("EM") were particularly hard hit by the
risk-averse sentiment in the wake of the pandemic which drove
investors to withdraw more than $50 billion from EM equities in
March alone. However, we saw a slow reversal of this trend in Q3,
picking up strongly in November 2020 following the positive vaccine
news-flow and the Biden victory, which was coupled with the
expectation of further stimulus action in the U.S.
Overall, governments and central banks in the EM sector reacted
well and swiftly to the pandemic by taking decisive action aimed at
supporting the most vulnerable people and businesses. Markets have
seen a strong recovery with the MSCI EM Index, rallying 70% at the
end of 2020 from the lows in March.
However, there were geographic differences within EM to contain
the virus. Similarly, some sectors were particularly hard hit while
others benefited from the transformative shifts in the wake of the
pandemic. The pace of recovery will therefore vary by region and by
sector.
Crises are a stress test: I am glad to say that the Company's
concentrated, active strategy has passed this test. During the
reporting period, the NAV and share price of MMIT rose 16.3% and
24.7% respectively on a total return basis. A further recognition
of the resilience and appeal of MMIT's strategy was its addition to
Interactive Investor's "Super 60" list in October, replacing the
Templeton Emerging Markets Smaller Companies Fund.
The Manager Commentary will provide more detail on portfolio
positioning, attribution as well as individual investment
decisions, engagement and strategy. Nonetheless, I would like to
highlight three points which demonstrate the benefits of the many
years of experience the investment team brings to the strategy as
well as what the concentrated and active ownership approach offers
to investors.
Stock Picking
When markets crashed back in March, the investment team at
Mobius Capital Partners LLP ("MCP") acted swiftly and utilised
MMIT's 14.3% cash position to add to a range of existing holdings
during the downturn as well as building new positions which had
reached compelling entry level valuations. A number of these new
holdings have already significantly contributed to the strong
performance of the Mobius Investment Trust in 2020. As of 30
November 2020, MMIT was almost fully invested with a cash position
of 1.3% of Net Asset Value.
Engagement
A core part of MMIT's strategy is the engagement with companies
to improve operational and ESG factors with the aim of driving the
stock valuations. This requires an intense and regular dialogue
with companies as well as an in-depth knowledge of the companies'
management teams and the challenges and opportunities they are
facing. Throughout the year, the MCP investment team has been in
close dialogue with all investee companies and was able to consult
and encourage the swift and robust actions taken by their
management teams. These decisive actions helped mitigate any
potential repercussions on the respective businesses in the wake of
the lockdowns. The close and beneficial exchange was made possible
by the concentrated nature of the portfolio and the existing,
strong relationships with the investee companies' executives, which
is at the core of MCP's engagement strategy.
ESG
Finally, the focus on improving Environmental, Social and
particularly Governance factors ("ESG") as well as Culture
("ESG+C") served as a risk management tool for the portfolio during
the pandemic. The primary goal of corporate governance is to ensure
that management and directors make good business decisions to
maintain and support sustainable growth. Robust, transparent, and
exemplary governance from all senior leaders is even more important
in times of crisis. We have found the majority of companies in
MMIT's portfolio have risen to the challenge and taken robust
action. Boards have performed their supervisory function diligently
and management teams have taken the necessary measures to secure
the survival of the company while setting solid ground for
recovery. Ultimately, strong governance is a prerequisite for
emerging as a leader in the post-pandemic world. The Investment
Manager's customised engagement is an on-going process and is a
pivotal part of the team's approach throughout the holding period.
It involves extensive contact with portfolio companies and includes
face-to-face meetings, video calls and email correspondence. The
investment team individually tailors engagement on ESG+C issues to
each company and its respective sector. It also assists companies
in disclosing ESG+C information by introducing them to the most
relevant reporting standards (Global Reporting Initiative and Task
Force on Climate - Related Financial Disclosure) and helping them
prioritise which ESG+C factors are material to their business.
Performance
The Net Asset Value (NAV) per share of MMIT increased by 16.3%,
on a total return basis over the 12-month period to 30 November
2020, reaching a high of 109.6p on 13 October 2020 and closing at
105.9p. Since the end of the reporting period, performance has
continued to be strong, and at the time of writing the NAV per
share stood at 120.5p (as at 23 February 2021, this being the
latest practicable date before publication).
The share price performed even stronger over the reporting
period increasing by 24.7%, on a total return basis and closing at
103.0p on 30 November 2020. In line with the NAV, the share price
continued to perform strongly since the end of the reporting
period. At the time of writing, the price per share stood at
112.0p. While MMIT traded at an average discount to NAV of 9.8%
during the year under review, the discount continuously narrowed
reaching a low of 2.7% on 30 November 2020. At the time of writing,
the discount stands at 7.1%. However, in accordance with the
discount management policy, MMIT's Board continues to closely
monitor the monthly average discount and will take action to reduce
the discount if it concludes it is in shareholders' interests.
Dividend
The Board has not recommended a dividend this year and does not
expect to do so in the near future as the portfolio continues to
generate a modest yield. The Investment Manager's style is one that
focuses on uncovering long-term value, much of which will be
realised through capital gains or distributions and as such the
Company will pay a dividend only if the need arises in order to
comply with investment trust status.
The Board and Management Teams
I would like to thank my Board colleagues as well as all our
service providers for their help and support during an
unprecedented time.
The Board has kept in close contact with the Investment Managers
during the year as some organizational changes were implemented to
reflect the new working environment and the rotation of some
personnel. Also it has kept an open line of communication with the
marketing and administration teams, receiving regular performance
and compliance updates and ensuring that the day-to-day business of
the Company was running smoothly despite restrictions on daily life
imposed by the pandemic.
Exceptionally, the Company's 2020 Annual General Meeting ("AGM")
had to be held without shareholders attending due to safety
regulations during the initial phase of Covid-19. However, many
shareholders made use of their voting rights to let us know their
agreement with the AGM resolutions. The Board hopes that very soon
it will be possible to meet again in person with shareholders.
As announced earlier this year, Greg Konieczny retired from the
Investment Managers' Team in November for personal reasons. The
Board would like to thank him for his valuable contribution in
launching the Company.
Service Providers
I would also like to thank our Investment Managers, Mobius
Capital Partners LLP, as well as our Company Secretary, Managers
and Administrators, Frostrow Capital LLP, for keeping their
employees as safe as possible in these troubling times. Whilst
offices have been kept open for those who needed access to them,
working remotely from home has been encouraged and made possible
for everyone thanks to the incredible progress that technology has
given us. In fact, all our service providers have invoked business
continuity procedures which would have been unthinkable only a few
years ago, but which now ensure everyone can work safely and with
the necessary physical distance. The Board warmly supports all
these measures and monitors IT and cyber security regularly.
Board Governance
There were no changes to the membership of the Board during the
year, but following the year-end, Dr Robé was appointed as Senior
Independent Director and I look forward to working with her in that
capacity. In line with good corporate governance practice, an
annual review of the effectiveness of the Board and its Committees
was performed. This is described in more detail in the Corporate
Governance Report. The Board also pays close attention to the
capacity of individual directors to carry out their work on behalf
of the Company. To this end, all proposed external appointments are
submitted to the Board for scrutiny and approval. In accordance
with the Company's policy of all Directors standing for re-election
annually, shareholders will find the appropriate resolutions in the
Notice of the AGM. In recommending individual Directors to
shareholders for re-election, we considered their other board
positions and their time commitments. The Board is satisfied that
each Director has the capacity to be fully engaged with the
Company's business.
Annual General Meeting in 2021
The second AGM of the Company will take place at 12.00 noon on
Wednesday, 28 April 2021. At the time of writing, it is still hoped
that it will be possible to hold the AGM at 25 Southampton
Buildings, London WC2A 1AL although this seems more unlikely
following the latest announcement by the Government. The Notice
convening the AGM together with explanations of the proposed
resolutions can be found at the end of this document.
The Board will keep the impact of the Covid-19 pandemic under
review and will make necessary changes to the arrangements for the
AGM should infection levels or continuing government restrictions
dictate. In that case, the Board may decide to hold a truncated
meeting or postpone the meeting to a later date. The situation will
be kept under constant review and any changes to the AGM
arrangements will be communicated on the Company's website.
Shareholders are encouraged to consult the website at
www.mobiusinvestmenttrust.com for any final arrangements.
In case no physical AGM will be possible, the Board intends to
host a webinar in addition to the AGM to enable the Investment
Managers to give a presentation online about the Company and
expectations for the future. Shareholders should send any questions
they may have to the Company Secretary at info@frostrow.com.
Further details will be made available nearer the time.
The Board strongly encourages all shareholders to exercise their
votes in respect of the AGM in advance. Voting by proxy will ensure
that your votes are registered in the event that attendance at the
AGM is not possible or restricted, or if the meeting is postponed
(your votes will be valid when the meeting is eventually held). The
Board will continue to monitor the Government's advice and urges
all shareholders to comply with any restrictions in place at the
time of the AGM.
Outlook
We are entering the new year full of hopes and expectation,
eager to see the end of the Covid-19 pandemic. There are a number
of factors that are boding well for emerging markets. First of all,
the roll-out of an effective vaccine against Covid--19 should lead
to the normalisation of the emerging markets consumer and export
themes. Capital markets in our countries have seen a strong rebound
since the lows in March and we believe the economic recovery will
follow. The IMF has forecast emerging markets to grow by 6% in
2021: growth that will benefit companies and investors. Whilst the
pace of the recovery will vary by region, China and Asia will lead,
but other markets will follow. Furthermore, certain sectors will
continue to outperform. Technology and healthcare are the prime
beneficiaries of the changed consumer behaviour in the wake of the
pandemic.
We believe that investors will continue to view emerging markets
positively: companies which have learned lessons during the
pandemic and have been able to embed efficiency gains by turning to
technology improvements are expected to out-perform. The signed
second stimulus package in the US and further expected stimulus
action under the Biden administration is likely to keep the Dollar
relatively weak. This will benefit emerging markets as investors
look for yield elsewhere. Experience has shown that emerging
markets equities generally tend to outperform developed markets
during periods of US dollar weakness. Furthermore, valuations in
emerging markets continue to be low compared to their developed
markets peers, offering access to innovative companies at
attractive prices and in markets which will experience high and
faster rates of real GDP growth.
Mobius Investment Trust plc with its bias towards Asian equities
and the health care and technology sectors is well positioned to
profit from these developments. This is why the Board and the MCP
team look with confidence to the next year and are cautiously
optimistic that emerging markets are entering a phase of
outperformance.
Maria Luisa Cicognani
Chairman
25 February 2021
INVESTMENT OBJECTIVE AND POLICY
Investment objective
The Company's investment objective is to achieve long-term
capital growth and income returns predominantly through investment
in a diversified portfolio of companies exposed directly or
indirectly to emerging or frontier markets.
Investment policy
Asset allocation
The Company seeks to meet its investment objective by investing
in a diversified portfolio of companies exposed directly or
indirectly to emerging or frontier markets. The Company invests
predominantly in:
-- companies incorporated in and/or traded on stock exchanges
located in emerging or frontier markets; or
-- companies which have the majority of their operations, or
earn a significant amount of their revenues in, emerging or
frontier markets but are traded on stock exchanges located in
developed countries.
The Company focuses on small to mid-cap companies. The Company
may invest in pre-IPO and unlisted companies subject to the
investment restrictions detailed below.
In pursuing its investment objective, the Company may:
-- invest in equity or equity related securities (including
preference shares, convertible unsecured loan stock, warrants and
other similar securities);
-- hedge against directional risk using index futures and/or cash;
-- hold bonds and warrants on transferable securities;
-- utilise options and futures for hedging purposes and for efficient portfolio management;
-- enter into contracts for differences;
-- hold participation notes;
-- use forward currency contracts; and
-- hold liquid assets.
Notwithstanding the above, the Company does not intend to
utilise derivatives or other financial instruments to take short
positions, nor to increase the Company's leverage in excess of the
limit set out in the borrowing policy.
The Company does not track or mirror any index or benchmark and,
accordingly, the Company is frequently overweight or underweight in
certain investments, or concentrated in a more limited number of
sectors, geographical areas or countries, when compared with a
particular index or benchmark.
The Company focuses on companies that have:
-- a resilient business model and sound management;
-- the possibility for operational and environmental, social and
governance ("ESG") improvements;
-- the potential to improve competitive advantages and cash flow generation; and
-- stakeholders that are open to, and have an interest in, positive change.
The Company, through its Investment Manager, seeks to unlock
value in investee companies by actively partnering with them
through a governance-oriented approach, seeking to act as a
catalyst for broader ESG improvements.
The Company does not expect to take controlling interests in
investee companies.
The Company seeks to provide shareholders with exposure to a
portfolio which is appropriately diversified by geography and
sector to achieve an appropriate balance of risk over the long
term. The Company's portfolio typically comprises approximately 20
to 30 investments. The Company at all times invests and manages its
assets in a manner which is consistent with the objective of
spreading and mitigating investment risk.
Investment restrictions
The Company observes the following investment restrictions, each
calculated at the time of investment:
-- no more than 10 per cent of Gross Assets are invested in a single company;
-- no more than 35 per cent of Gross Assets are invested in
companies incorporated in or traded on an exchange in or otherwise
primarily exposed to a single emerging or frontier market; and
-- no more than 15 per cent of Gross Assets are invested in
companies that are not traded on a stock exchange.
In compliance with the Listing Rules, no more than 10 per cent,
in aggregate, of Gross Assets may be invested in other investment
companies which are listed on the Official List.
Borrowing policy
The Company may deploy leverage of up to 20 per cent of Net
Asset Value (calculated at the time of borrowing) to seek to
enhance long-term capital growth and income returns and for the
purpose of capital flexibility. The Company's leverage is expected
to primarily comprise bank borrowings but may include the use of
derivative instruments and such other methods as the Board may
determine.
There was no borrowing during the year under review or after the
year end.
Hedging
The Company's reporting currency and share price quotation is
Sterling. However, the Company makes investments denominated in
currencies other than Sterling. In addition, the majority of the
income from the Company's investments is generated in currencies
other than Sterling.
The Company does not intend to hedge currency risk in respect of
the capital value of its portfolio or in respect of its Sterling
distributions. However, the Company reviews its hedging strategy on
a regular basis. The Company does not engage in currency trading
for speculative purposes.
Cash management
Whilst it is the intention of the Company to be fully or near
fully invested in normal market conditions, the Company may hold
cash on deposit and may invest in cash equivalent investments,
which may include short-term investments in money market type funds
and tradeable debt securities ("Cash and Cash Equivalents").
There is no restriction on the amount of Cash and Cash
Equivalents that the Company may hold and there may be times when
it is appropriate for the Company to have a significant cash or
cash equivalent position instead of being fully or near fully
invested.
Changes to the investment policy
No material change will be made to the investment policy without
the approval of shareholders by ordinary resolution.
In the event of a breach of the investment policy set out above
and the investment and leverage restrictions set out therein, the
Investment Manager shall inform the Board upon becoming aware of
the same and if the Board considers the breach to be material,
notification will be made to a Regulatory Information Service.
INVESTMENT PORTFOLIO
as at 30 November 2020
Fair value % of
Company Country GBP'000 net assets
-------------------------------------------- ------------- ---------- ----------
eMemory Technology Taiwan 9,652 8.7
Persistent Systems India 8,866 8.0
APL Apollo Tubes India 8,582 7.7
Yum China China 7,010 6.3
Fleury Brazil 6,071 5.5
Hugel South Korea 5,551 5.0
Polycab India India 5,244 4.7
Safaricom Kenya 4,900 4.4
LEENO Industrial South Korea 4,879 4.4
Mail.Ru Russia 4,389 3.9
TOTVS Brazil 4,132 3.7
Clicks Group South Africa 3,794 3.4
Mavi Giyim Sanayi Ve Ticaret Turkey 3,695 3.3
NICE Holdings South Korea 3,543 3.2
Pentamaster Malaysia 2,870 2.6
Logo Turkey 2,809 2.5
B2W Cia Digital Brazil 2,777 2.5
Metropolis Healthcare India 2,614 2.3
Vietnam Dairy Products Vietnam 2,332 2.1
AK Medical Holdings China 2,317 2.1
Union Medical Healthcare China 2,195 2.0
Kangji Medical Holdings China 2,075 1.9
Lojas Americanas Brazil 1,750 1.6
Rayence South Korea 1,595 1.4
Goodbaby International Holdings China 1,303 1.2
WIN Semiconductors Taiwan 1,269 1.1
YDUQS Participacoes Brazil 933 0.8
China Kepei Education China 809 0.7
Cogna Educacao Brazil 736 0.7
Sinbon Electronics Taiwan 563 0.5
Cairo Investments & Real Estate Development Egypt 553 0.5
-------------------------------------------- ------------- ---------- ----------
Total Investments 109,808 98.7
----------------------------------------------------------- ---------- ----------
Net Current Assets 1,429 1.3
----------------------------------------------------------- ---------- ----------
Net Assets 111,237 100.0
----------------------------------------------------------- ---------- ----------
Portfolio Distribution - Sector Breakdown
30 November 2020
Technology 31.5%
Healthcare 20.1%
------
Consumer Discretionary 17.6%
------
Industrials 12.4%
------
Communications 8.4%
------
Consumer Staples 5.5%
------
Financials 3.2%
------
Cash 1.3%
------
30 November 2019
Technology 11.1%
Healthcare 16.2%
------
Consumer Discretionary 26.8%
------
Industrials 9.6%
------
Communications 5.4%
------
Consumer Staples 9.4%
------
Financials 4.9%
------
Cash 16.6%
------
Portfolio Distribution - Geographical Breakdown
30 November 2020
India 22.7%
Brazil 14.8%
------
China 14.2%
------
South Korea 14.0%
------
Taiwan* 10.9%
------
Turkey 5.8%
------
Kenya 4.4%
------
Russia 3.9%
------
South Africa 3.4%
------
Malaysia 2.6%
------
Vietnam 2.1%
------
Egypt 0.5%
------
UK* 0.7%
------
30 November 2019
India 17.0%
Brazil 15.0%
------
China 19.5%
------
South Korea 8.9%
------
Taiwan 4.6%
------
Turkey 3.6%
------
Kenya 1.0%
------
Russia 4.4%
------
Mexico 4.7%
------
Poland 4.7%
------
UK* 16.6%
------
*includes uninvested cash
INVESTMENT MANAGERS' REVIEW
Introduction of the Management Team
Investment Committee
Mobius Capital Partners LLP has been appointed as the Company's
Investment Manager. The Investment Manager's Investment Committee
makes all investment and disinvestment decisions in respect of the
Company.
Dr Mark Mobius is a pioneering investor and has actively managed
emerging market funds since 1987. Prior to launching Mobius Capital
Partners, Dr Mobius was at Franklin Templeton Investments for more
than 30 years, most recently as Executive Chairman of the Templeton
Emerging Markets Group. During his tenure, the group expanded
assets under management from US$100 million to over US$40 billion
and launched a number of emerging market and frontier funds
focusing on Asia, Latin America, Africa and Eastern Europe. His
career and influence have earned him numerous industry awards. Dr
Mobius has also been a key figure in developing the international
policy for emerging markets.
Carlos Hardenberg is a well-known emerging markets fund manager
with more than 20 years' experience having lived in Warsaw,
Singapore, Istanbul and London. For a decade he managed Templeton
Frontier Markets Fund, one of the largest frontier markets funds in
the industry, as well as a number of global emerging markets funds,
including Templeton Emerging Markets Investment Trust (TEMIT), a
GBP2.2 billion London listed investment trust.
Greg Konieczny has over 25 years of experience in research and
portfolio management with a strong focus on emerging Europe. He was
the fund manager of Fondul, the London and Bucharest listed US$2.7
billion Romanian fund, as well as an open-ended Eastern European
fund. In addition, he led a private equity GEM strategy and
Franklin Templeton's EM Active Ownership Group.
Greg retired from Mobius Capital Partners LLP on 3 November
2020.
Introduction
We are ending a year of uncertainties which have caused hefty
market reactions across all asset classes including Emerging
Markets which we addressed in the interim report. While it will not
be the last year of volatility, it will certainly be remembered as
one of the most unusual. It is now time to look ahead and prepare
for a gradual recovery, driven by a normalisation of global trade,
consumption, and investment. Emerging and Frontier markets look
well positioned to benefit from a normalisation, further supported
by loose monetary conditions and a wide range of fiscal support and
reforms. Emerging markets are to a large extent particularly
dependent on global trade, on exports but also on tourism. As
global conditions improve, so will sentiment in Emerging
Markets.
We have taken advantage of the volatility in 2020 and ensured
that the strategy is fully invested and geared towards a recovery.
We have disposed of several investments which we believe to be
negatively impacted by the crisis for a much longer time and
simultaneously added new positions at attractive valuations;
investments which we had followed for a while and believe to be
strong addition to the strategy. Furthermore, we increased exposure
to existing positions in which we have the highest conviction.
The strategy remains concentrated with the largest regional
exposure to India, which we believe is on a path to global
leadership in manufacturing and innovation, fuelled by exports and
domestic consumption as well as a wide-reaching reform agenda by
the government. Above cost related advantages, the market offers a
deep pool of skilled labour and a very dynamic entrepreneurial
environment, for example. One new investment is a leading domestic
healthcare business offering diagnostic services.
Korea and Taiwan present us with the widest and to some degree
most exciting opportunities in the fields of technology and
innovation. We believe both of these countries are a true cradle
for active investors.
While Asia clearly dominates the strategy, we also have built
significant exposure to Brazil and Turkey, two markets that offer
plenty of opportunities among medium sized enterprises of a unique
nature. We have investments in the technology sector (Software and
Consulting and E-commerce) the consumer sector and the healthcare
sector in these two markets. Both markets have a large and very
young domestic consumer market and are open economies with export
opportunities.
Our engagement with portfolio companies continues to mature and
gain effectiveness. We have begun a unique reporting series
alongside the factsheets in Q1 2021 covering a wide measure of ESG
and in particular, corporate culture factors. The year 2020 has
shown how technology can help to build bridges. Despite the
restrictions on travel and in-person meetings with portfolio
companies, we had the chance to e-meet our investment holdings just
as frequently via video calls.
Performance
Mobius Investment Trust has had a strong year. The Net Asset
Value (NAV) per share and share price increased by 16.3% and 24.7%
respectively on a total return basis, over the 12-month period to
30 November 2020, with the NAV per share reaching a high of 109.6p
on 13 October 2020 and closing at 105.9p. Since the end of the
reporting period, the strong performance of the Mobius Investment
Trust has continued and at the time of writing, the NAV per share
stood at 120.5p.
MMIT traded at an average discount to NAV per share of 9.8%
during the year under review, which driven by investor interest,
had narrowed to 2.7% at close on 30 November 2020.
In October, Mobius Investment Trust plc was added to Interactive
Investor's "Super 60" list replacing the Templeton Emerging Markets
Smaller Companies fund. Interactive Investor is one of the largest
retail investment platforms in the UK.
Stock selection was an important driver of performance across
geographies. Over the year, the top three largest contributors to
performance were AK Medical (+5.3%), a market leader in orthopaedic
implants in China, which has very successfully expanded the
business towards new categories (spine and 3D printed implants) and
profits from the growing demand for orthopaedic implants in China;
eMemory Technology (+5.0%), a Taiwan-based technology company,
which has seen a surge in demand for its services with the work
from home drive and reaped the benefits of the on-going roll-out of
5G; and APL Apollo Tubes (+5.0%), the leading branded steel
products manufacturer in India, whose strategic actions taken
during the pandemic resulted in significant market share gains.
Brazilian education company Cogna Educacao (-3.2%), Indian
finance company Magma Fincorp (-1.8%) and Chinese durable juvenile
products company Goodbaby International (-1.4%) were the main
detractors as they suffered from the repercussions of the
pandemic.
Portfolio Overview
As of 30 November 2020, the MMIT had invested 98.7% of capital,
with 31 holdings across 12 countries. The largest geographic
exposure was India (23%), followed by Brazil (15%), China (14%) and
South Korea (14%). The largest sector exposure was Technology
(32%), followed by Health Care (20%), Consumer Discretionary (18%)
and Industrials (12%).
During the year under review, we acquired 14 new holdings, some
of which were already mentioned in the half-yearly report:
Leeno Industrial is a leading semiconductor testing business
based in South Korea. Revenues are focused around two central
products (accounting for 90% revenues): pins and logic test
sockets. Leeno has been operating for 40 years, developing a widely
diversified client base and products supplied to around 2,800
companies including Qualcomm, Apple, TSMC and Samsung. It is a cash
generative business with a strong balance sheet.
Logo Yazilim is a Turkish business that develops and markets
enterprise resource planning systems (ERP). With a 24% market
share, Logo is the second biggest player in Turkey (after SAP), and
the fastest growing IT company with more than 800 dealers and a
broad distribution network. Logo has two business primary areas
(software and services) and a number of recent acquisitions have
increased exposure to Romania, which like Turkey is an
underpenetrated market.
Clicks Group owns and manages a chain of retail stores and
pharmacies across South Africa. It operates in a large and
structurally growing end market, and we are excited about
opportunities to further expand into Namibia, Swaziland &
Botswana. Clicks' established brand, differentiated offering and
supply chain efficiency all act as natural moats against
competitors.
TOTVS is a Brazilian technology company that specialises in
software and consulting, with a focus on integrating the core
processes of a firm (e.g. finance, procurement, sales etc) into a
single platform. The company is one of the leading providers for
small and medium businesses in Brazil and also has operations in
the rest of Latin America and the US. We started building our
position with the share price down 45% from its peak in February,
which we felt was an attractive entry point given the structural
growth profile of the business.
YDUQS operates in the Brazilian educational sector with a focus
on higher education. The company is in the process of consolidating
the fastest growing and the most profitable segment of the market -
medical schools.
In addition, the following companies have now reached target
weight:
Metropolis Healthcare Limited provides pathology and related
healthcare services in India. The company offers clinical
laboratory tests, and profiles and support services to patients,
smaller labs, nursing homes, and hospitals. It offers diagnostic
services for oncology, neurology, gynaecology, and nephrology, as
well as various health check-up packages. The diagnostics industry
in India is a high growth industry which is expected to grow at
above 10% per annum. Engagement focuses on ESG reporting
improvements and strategic communication on digitalization
projects.
Kangji Medical is the largest domestic supplier of minimally
invasive surgical instruments and accessories in the rapidly
growing medical market in China. The company listed on the Hong
Kong Stock Exchange in June 2020. In 2020, the company added a new
product line to their offering with the manufacturing of ultrasonic
scalpels, thus providing a further opportunity for growth. We are
focusing on setting clear ESG targets in our regular
engagement.
Vinamilk , also known as Vietnam Dairy Products Joint Stock
Company sells dairy products in Vietnam and internationally, and
has dominated the domestic market for over 40 years. The company is
currently building an international presence in 45 countries
through mergers and exports. We invested with valuations at an
attractive entry point and the international expansion plan
provides strong growth potential.
MMIT also built a position in CIRA (Cairo Investment and Real
Estate), Egypt's largest fully integrated education provider,
operating in K-12 and higher education segments. The company is
aggressively expanding capacity through a scalable and repeatable
business model. They benefit from the relatively low cost of land
and a favourable regulatory environment, while maintaining an
excellent relationship with the regulators. A seasoned management
team with first-class execution and operational expertise, as well
as an openness to our engagement were further reasons for this
addition to the portfolio.
During the reporting period, we exited Mexico based Grupo Lala
due to significant under-delivery of the business turnaround plan
and the departure of the CEO who was an instrumental element of our
engagement strategy as well as the corporate governance
improvements in the company.
We also sold our stake in IMAX China due to concerns around the
outlook for structural growth in the entertainment (cinema) sector,
as well as a profit warning issued under Covid-19-related
pressures. The team also decided to sell our investment in Magma
Fincorp, an Indian asset finance company, as the microfinancing
sector had been heavily hit by deteriorating macroeconomic
conditions in India.
Engagement
With international travel heavily restricted due to the Covid-19
pandemic, physical meetings with management teams have not been
possible. However, we were very pleased by the effectiveness of
virtual meetings. During the year, we had regular calls with
management teams to monitor how they were dealing with the crisis
and to follow-up on engagement. Faced with the extraordinary
situation, the companies in our portfolio rose to the challenge and
took robust actions. Furthermore, they reported good progress on a
number of action points particularly with regards to ESG
improvements. This was acknowledged by the wider market with the
inclusion of Brazilian medical company Fleury, Taiwanese technology
company Win Semiconductors and Chinese food company Yum China in
the Dow Jones Sustainability Index EM, recognising both companies'
achievements in the area of sustainability.
Outlook
Emerging Markets have gone through a very volatile period over
the past several years. Generally, there have been concerns with
regards to currencies and political risks. The COVID-19 related
impact and associated fear exacerbated the scepticism towards the
asset class. However, we see that due to the spreads in valuations
between Developed Markets and Emerging Markets (see chart below) as
well as the continued out-performance in growth, coupled with
earning improvements, the heavy underweight position of investors
in emerging markets will not last much longer. We expect a sharp
improvement of sentiment towards emerging markets over the coming
quarters, in particular due to the introduction of vaccinations and
a return to a more regular business environment. Ongoing monetary
and fiscal stimulus globally should support a recovery in trade and
growth - this should especially benefit Emerging Markets.
Under a Biden administration's likely larger deficit, we expect
a weaker dollar to support the performance of EM Equities.
Furthermore, as mentioned in the interim report, central banks
in many emerging markets acted swiftly and pragmatically with
sometimes significant interest rate cuts (see chart below). This
will aid the recovery. After an estimated contraction of -3.3% this
year, we expect positive economic growth of +6.0% for EM in 2021,
led by China (+8.2%) and India (+8.8%).
No doubt, there remain some risks as the discovery of more
aggressive variants of the virus and the renewed lockdowns in a
number of countries have shown. A swift and well-organised vaccine
roll-out will be essential, as will the actual efficacy of the
respective vaccines.
However, in summary, we look with confidence to the next year.
Mobius Investment Trust plc is well positioned to benefit from an
increase in technology, healthcare and education spending, as well
as a recovery in domestic consumption in general. The swift and
decisive action taken by the management teams of our holdings has
left them in a strong position for the recovery phase.
Carlos Hardenberg
Mark Mobius
Mobius Capital Partners LLP
Investment Managers
25 February 2021
BUSINESS REVIEW
Business Review
The Strategic Report contains a review of the Company's business
model and strategy, an analysis of its performance during the
financial year ended 30 November 2020 and its future developments
and details of the principal risks and challenges it faces. The
Strategic Report has been prepared solely to provide information to
shareholders to enable them to assess how the Directors have
performed their duty to promote the success of the Company.
The Strategic Report contains certain forward-looking
statements. These statements are made by the Directors in good
faith based on the information available to them up to the date of
this report and such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information.
Further information on how the Directors have discharged their
duty under Section 172 of the Companies Act 2006 can be found
below.
Business Model
The Company is an externally managed investment trust and its
shares are premium listed on the Official List and traded on the
main market of the London Stock Exchange.
As an externally managed investment trust all of the Company's
day to day management and administrative functions are outsourced
to service providers. As a result, the Company has no executive
Directors, employees or internal operations.
The Board has appointed Mobius Capital Partners LLP to manage
its investment portfolio. Company secretarial and administrative
services are provided by Frostrow Capital LLP. In addition,
Frostrow provides the AIFM Directive risk management function on
behalf of the AIFM.
Further information, including the remuneration and contractual
terms of appointment, of the principal service providers to the
Company, being Mobius Capital Partners LLP, Frostrow Capital LLP
and Northern Trust Global Services SE, the Company's Depositary and
Custodian, who are responsible for the safekeeping of the Company's
assets, is set out below.
Strategy for the Year ended 30 November 2020 and Strategic
Review
Throughout the year ended 30 November 2020, the Company
continued to operate as an approved investment trust, following its
investment objective and policy.
During the year, the Board made all strategic decisions for the
Company. Mobius Capital Partners LLP and Frostrow Capital LLP
undertook all strategic and administrative activities on behalf of
the Board, which retained overall responsibility.
Investment Objective and Policy
The Company's investment objective and policy are set out
above.
Dividend Policy
It is the Company's policy to pursue capital growth for
shareholders as well as income. Many of the companies in which the
Company invests are relatively young businesses to which the
Company is committed for the long term. The Company's Investment
Manager is drawn to companies with excellent returns on capital
with the ability to expand as well as generate dividends.
The Company will comply with the investment trust rules
regarding distributable income, which require investment trusts to
retain no more than 15% of their income each year. The Company will
only pay the minimum dividend required to maintain investment trust
status. The Directors have not recommended a final dividend in
respect of the year ended 30 November 2020.
The Board
The Board of the Company comprises Maria Luisa Cicognani
(Chairman), Christopher Casey, Dr Sophie Robé and Charlie Shi, all
of whom are independent non-executive directors. All Directors
served during the year under review and up to the date of signing
this report and they will stand for re-election at the forthcoming
Annual General Meeting.
Further information on the Directors can be found below.
Board Focus and Responsibilities
With the day to day management of the Company outsourced to
service providers the Board's primary focus at each Board meeting
is reviewing the investment performance and associated matters,
such as, inter alia, future outlook and strategy, gearing, asset
allocation, investor relations, marketing, and industry issues.
In line with its primary focus, the Board retains responsibility
for all the key elements of the Company's strategy and business
model, including:
-- Investment Objective and Policy, incorporating the investment
guidelines and limits, and changes to these;
-- whether the Manager should be authorised to gear the
portfolio up to a pre-determined limit;
-- review of performance against the Company's KPIs;
-- review of the performance and continuing appointment of service providers; and
-- maintenance of an effective system of oversight, risk management and corporate governance.
Details of the principal KPIs, along with details of the
principal risks, and how they are managed, follow within this
Business Review.
The Corporate Governance report includes a statement of
compliance with corporate governance codes, together with the
outline of the internal control and risk management framework
within which the Board operates.
Information on the Company's social, community, employee or
environmental responsibilities can be found in the Report of the
Directors and the Corporate Governance Statement.
Key Performance Indicators "KPIs"
The Company's Board of Directors meets at least four times a
year. At each quarterly meeting it reviews performance against a
number of key measures, as follows:
-- Net asset value per share total return against the peer group*^
-- Average discount/premium of share price to net asset value per share over the year^
-- Ongoing charges ratio^
* Measured since launch.
^ Alternative Performance Measure (see Glossary)
Net asset value per share total return - peer group
The Company is committed to building a long-term investment
record and will assess itself by reference to its peers.
The Company's peer group has been defined as a selection of
eight investment trusts as set out in the Glossary with a similar
investment objective out of the AIC's Global Emerging Markets
Sector.
Over the year ended 30 November 2020, the Company ranked fourth
in its peer group with a net asset value per share total return
performance of 16.3% against a peer group average of 13.8%.
Subsequent to the year-end, from 1 December 2020 to 31 January
2021, the Company ranked number 4 against its peer group with a net
asset value total return of 7.6%; the average for the peer group
was 9.6%. The Board continues to monitor this closely (see Glossary
for further details).
Discount/premium of share price to net asset value per share
The Board believes that an important driver of an investment
trust's discount or premium over the long term is investment
performance together with a proactive marketing strategy. However,
there can be volatility in the discount or premium during the year.
Therefore, the Board takes powers each year to buy back and issue
shares with a view to limiting the volatility of the share price
discount or premium.
During the year ended 30 November 2020, no new shares were
issued by the Company nor were any shares bought back. New shares
will only be issued at a premium to the Company's cum income net
asset value per share at the time of issue. During the whole year
ended 30 November 2020, the Company traded at an average discount
of 9.8%, although this narrowed to 2.7% as at 30 November 2020. As
stated in the prospectus, the Directors will consider repurchasing
ordinary shares when the average one-month discount at which the
ordinary shares have traded exceeds 5% of the net asset value per
ordinary share. The Board did, indeed, consider share buybacks at
the time, and consulted with existing shareholders given concerns
that buybacks would lead to a reduction in liquidity. To date,
feedback has continued to indicate a preference for narrowing the
discount through generating natural demand and, at the time of
writing, the discount stands at 7.1%.
Average premium/(discount) of share price to net asset value per
share*^ during the year/period ended
30 November 2020 30 November 2019
(9.8%) (0.9%)
Peer group average discount (8.4%) Peer group average discount (3.8%)
* Source: Morningstar
^ Alternative Performance Measure (see Glossary)
Ongoing charges ratio
The Board continues to be conscious of expenses and works hard
to maintain a sensible balance between high quality service and
costs.
Over the year ended 30 November 2020 the ongoing charges ratio
was 1.5%. This ongoing charges ratio compares to the average of the
Company's peer group of 1.3%.
Ongoing charges ratio^
Year ended Period ended
30 November 2020 30 November 2019
1.5% 1.7%
Peer group average 1.3% Peer group average 1.3%
^ Alternative Performance Measure (see Glossary)
Principal Risks, Emerging Risks and Risk Management
The Board considers that the risks detailed within this report
are the principal risks currently facing the Company to deliver its
strategy.
The Board is responsible for the ongoing identification,
evaluation and management of the of the principal risks faced by
the Company and the Audit Committee, on behalf of the Board, has
established a process for the regular review of these risks and
their mitigation. This process accords with the UK Governance Code
and the FRC's Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting. The impact of the global
Covid-19 pandemic on the operations of the Company and its service
providers was also considered as part of this process.
During the year ended 30 November 2020, the Audit Committee has
carried out a robust assessment of the emerging and principal risks
facing the Company, including those that would threaten its
business model, future performance, solvency and liquidity. The
Committee also considered the controls in place to mitigate the
inherent risks and whether additional controls or actions were
required to bring the residual risk down to an acceptable level.
The Committee was satisfied with the controls that are in place. In
respect of the ongoing impact of Covid-19 on business everywhere,
the Committee was reassured that all service providers of the
Company had adequate business continuity measures in place to
ensure that no operational issues would arise out of new
working-from-home practices and that cyber and IT risks were
properly addressed.
Further details as well as a summary of the Company's approach
to risk and how principal risks and uncertainties were dealt with
during the year under review, are set out below.
Principal Risks and Uncertainties Mitigation
------------------------------------------------------- -------------------------------------------------------------
Investment Risks (including financial risks)
Market, Foreign Exchange, Fiscal and Legal Risk
By the nature of its activities, the Company's To manage this risk the Board have appointed Mobius Capital
portfolio is exposed to fluctuations in market Partners LLP to manage the portfolio
prices (from both individual security prices and within the remit of the investment objective and policy. The
foreign exchange rates) and due to the exposure investment policy limits ensure
to emerging markets world-wide, in which the portfolio that the portfolio is diversified reducing the risks
companies operate, it is expected to associated with individual stocks and
have higher volatility than the wider market. As such markets. Frostrow Capital LLP monitors compliance with the
investors should be aware that by investing investment policy on a daily basis.
in the Company they are exposing themselves to this The Board on an ongoing basis, through monthly and quarterly
risk. reporting from Frostrow Capital
Furthermore, by nature of its emerging markets LLP and Mobius Capital Partners LLP, monitors exposure to
portfolio, the Company is exposed to fiscal investments, performance, and compliance
and legal risk in the various countries where with the investment objective and policy.
investments are held. At each quarterly Board meeting Mobius Capital Partners LLP
The emergence of the Covid-19 pandemic also had an provide an explanation of investment
impact on markets, especially in March decisions, the make-up of the investment portfolio and the
2020 when most suffered big falls, although the impact investment strategy.
of the Coronavirus was not just restricted The Company also employs specialist tax advisers in some
to emerging markets but was a global phenomenon. jurisdictions to ensure that all
laws, rules and regulations are adhered to.
------------------------------------------------------- -------------------------------------------------------------
Portfolio Risk
The performance of the Company's portfolio is The Investment Managers, Mobius Capital Partners LLP, have
influenced by a number of factors, including put in place a rigorous investment
the quality of the initial investment decision; the process which ensures disciplined investment selection and
quality of the management team of the portfolio management. This includes
investee company and the ability of that team to detailed due diligence and portfolio reviews as well as an
implement its business strategy successfully; active engagement with investee
and the success of the Investment Managers in building companies, in particular on environmental, social and
an effective working relationship with governance ('ESG') matters.
the management of each investee company in order to The AIFM, Mobius Capital Partners LLP, has delegated its
agree and implement value-creation strategies. risk management function to Frostrow
Capital LLP.
------------------------------------------------------- -------------------------------------------------------------
Counterparty Risk
In addition to market and foreign currency risks, Counterparty risk is managed by the Board through:
discussed above, the Company is exposed * reviews of the arrangements with, and services
to credit risk arising from the use of counterparties. provided by, the Custodian to ensure that the
If a counterparty were to fail, the security of the Company's custodial assets is being
Company could be adversely affected through either maintained; and
delay in settlement or loss of assets.
The most significant counterparty the Company is
exposed to is Northern Trust Global Services * monitoring of the Depositary and Custodian, including
SE, the Depositary and Custodian, which is responsible reviews of internal control reports and sub-custodial
for the safekeeping of the Company's arrangements, as appropriate.
assets. Under the terms of the contract with Northern
Trust Global Services SE the Company's
investments are required to be segregated from Further information on other financial risks, can be found
Northern Trust Global Services SE's own assets. in note 14 in the Notes to the
Financial Statements.
------------------------------------------------------- -------------------------------------------------------------
Strategic Risks
Strategy Implementation Risk
The Company is subject to the risk that its long-term A robust and sustainable corporate governance structure has
strategy and its level of performance been implemented with the Board
fail to meet the expectations of its shareholders. being responsible for continued delivery for shareholders.
Experienced emerging markets investment
managers have been retained to deliver the strategy. There
is healthy dialogue between the
Board and the investment managers as well as challenge from
the Board when felt necessary.
------------------------------------------------------- -------------------------------------------------------------
Investment Management Key Person Risk
There is a risk that the individual(s) responsible for The Board manages this risk by:
managing the Company's portfolio may * appointing an Investment Manager who operates a team
leave their employment or may be prevented from environment such that the loss of any individual
undertaking their duties. should not impact on service levels;
During the year, and as already announced in the
Company's half-yearly report, Greg Konieczny
retired from Mobius Capital Partners LLP. The * receiving regular reports from the Investment Manager,
investment committee now consists of Dr Mobius such reports include any significant changes in the
and Mr Hardenberg. make-up of the team supporting the Company;
* meeting the wider team, outside the designated lead
manager, at both physical and virtual Board meetings
and at the Investment Manager's offices;
* outside of regular Board meetings the Chairman is in
regular contact with senior representatives of the
Investment Manager; and
* delegating to the Management Engagement and
Remuneration Committee, responsibility to perform an
annual review of the service received from the
Investment Manager, including, inter-alia, the team
supporting the lead manager and succession planning.
The retirement of Mr Konieczny and his departure from MCP
was well managed with a handover
of responsibilities to other members of the team, and the
Board is satisfied that the Company's
investment management continued to positively address any
challenges.
------------------------------------------------------- -------------------------------------------------------------
Shareholder Relations Risk
The Company is also exposed to the risk, particularly In managing this risk the Board:
if the investment strategy and approach * reviews the Company's investment objective and policy
are unsuccessful, that the Company underperforms its and Mobius Capital Partners LLP's investment approach
peer group resulting in the Company becoming in relation to the investment performance, market and
unattractive to investors and a widening of the share economic conditions and the operation of the
price discount to net asset value per Company's peers;
share.
* regularly discusses the Company's future development
and strategy;
* undertakes a regular review of the level of the
Company's share price discount/premium to net asset
value per share and consideration is given to ways in
which share price performance may be enhanced,
including the effectiveness of marketing, share
issuance and share buy-backs, where appropriate; and
* reviews an analysis of the shareholder register at
each Board meeting and is kept informed of
shareholder sentiment.
------------------------------------------------------- -------------------------------------------------------------
Operational Risks
Service Providers Risk
The Board is reliant on the systems of the Company's To manage these risks the Board:
service providers and as such disruption * ensures that all major service agreements are in line
to, or a failure of, those systems could lead to a with best practice and reviews performance against
failure to comply with corporate governance these terms annually, taking action as needed;
requirements, law and regulations, leading to
reputational damage and/or financial loss to
the Company. This encompasses disruption or failure * receives a monthly report from Frostrow Capital LLP,
caused by cyber crime or the Covid-19 which includes, inter alia, details of compliance
pandemic and covers dealing, trade processing, with applicable laws and regulations;
administrative services, financial and other
operational functions.
* reviews internal control reports and key policies,
including the disaster recovery procedures, of its
service providers;
* maintains a risk matrix with details of risks to
which the Company is exposed, the approach to those
risks, key controls relied on and the frequency of
the controls operation;
* receives updates on pending changes to the regulatory
and legal environment and progress towards the
Company's compliance with such changes;
* has considered the increased risk of cyber-attacks
and has received reports and assurance from its
service providers regarding the controls in place;
and
* has considered the major service providers' business
continuity procedures and resilience in the face of
the Covid-19 pandemic and is satisfied that all
service providers are able to provide good service
levels while staff are working remotely and safely.
------------------------------------------------------- -------------------------------------------------------------
Geopolitical Risk
The geopolitical risk to the Company is closely Macroanalysis is a vital part of the investment process, and
monitored by the Board. the investment team takes a very
cautious approach when it comes to investing in countries
with volatile economic and political
conditions. In addition, the Board consults regularly with
the team on political risk factors.
Having one Board member based in Asia provides valuable
insights into local risks and challenges.
------------------------------------------------------- -------------------------------------------------------------
Other Global Risk
Other global events, such as the Covid-19 pandemic or During the year under review, the Board has:
terrorist attacks, might affect the * held extra review meetings by video conference with
performance of portfolio companies or result in the the Investment Managers; and
Company's service providers being unable
to meet their contractual duties.
* reviewed new working practices adopted by key service
providers as a consequence of the Covid-19 pandemic
to ensure that service levels were not disrupted or
eroded. Further details are given below.
------------------------------------------------------- -------------------------------------------------------------
Emerging Risks
The Company has carried out a detailed assessment of its
emerging and principal risks. The International Risk Governance
Council's definition of an "emerging" risk is one that is new, or
is a familiar risk in a new or unfamiliar context or under new
context conditions (re-emerging). Failure to identify emerging
risks may cause reactive actions rather than being proactive and,
in a worst case scenario, could cause the Company to become
unviable or otherwise fail or force the Company to change its
structure, objective or strategy.
The Audit Committee reviews a risk register at its half-yearly
meetings. Emerging risks are discussed in detail as part of this
process to try to ensure that emerging as well as well-known risks
are identified and mitigated as far as possible. The emerging risks
identified during the year were the Covid-19 pandemic, the impact
of which is dealt with below, as well as risks related to the
environment, social issues and governance (ESG) such as the impact
of climate change or bad governance of portfolio companies. All
ESG-related risks are constantly being assessed by the Investment
Managers and reported to the Board.
The experience and knowledge of the Directors is useful in these
discussions, as are update papers and advice received from the
Board's key service providers such as the AIFM and Investment
Manager and the Company's brokers. In addition, the Company is a
member of the AIC, which provides regular technical updates, draws
members' attention to forthcoming industry and regulatory issues
and advises on compliance obligations.
Brexit
The Board has considered whether the United Kingdom's exit from
the European Union ("Brexit") poses a discrete risk to the Company.
At the date of this report, the UK has left the EU and has come out
of the "transition period" with a trade and security deal finalised
with the EU on 24 December 2020, the exact impact of which remains
to be seen.
As the Company is priced in sterling and its portfolio companies
are priced in foreign currencies sharp movements in exchange rates
can affect the net asset value. This is obviously not a reflection
of the underlying value of the investee companies in their own
currencies, but may lead to an increase or decrease in the
Company's Net Asset Value simply because of movements in
sterling.
Furthermore, whilst the Company's current shareholders are
predominantly UK based, sharp or unexpected changes in investor
sentiment, or tax or regulatory changes, could lead to short-term
selling pressure on the Company's shares which potentially could
lead to the share price discount widening.
Overall, however, the Board believes that over the longer term,
Brexit is unlikely to affect the Company's business model or
whether the Company's shares trade at a premium or discount to the
net asset value per share. The Board will continue to monitor
developments as they occur.
Impact of Covid-19
The Board recognises that the emergence and spread of the new
coronavirus (Covid-19) represents a new area of risk, both to the
Company's investment performance and to its operations. In recent
months the investment managers successfully continued their
dialogue with investee companies and the Board has stayed in close
contact with the investment managers and has been continuously
monitoring portfolio and share price developments. The Board has
also received assurances from all of the Company's service
providers in respect of:
-- their business continuity plans and the steps being taken to
guarantee the ongoing efficiency of their operations while ensuring
the safety and well-being of their employees;
-- their cyber security measures including improved user-access
controls, safe remote working and evading malicious attacks;
and
-- any increased risks of fraud as a result of decreased
operations and possible employee terminations and weakness in
user-access controls resulting in the potential for management
overrides.
With the emergence of several vaccines, the outlook is
cautiously positive, but the Board will continue to monitor
developments as they occur.
Long Term Viability Statement
In accordance with the UK Corporate Governance Code, the
Directors have carefully assessed the Company's position and
prospects as well as the principal risks and have formed a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the next
five financial years. The Board has chosen a five-year horizon in
view of the long-term nature and outlook adopted by the Investment
Manager when making investment decisions.
To make this assessment and in reaching this conclusion, the
Audit Committee has considered the Company's financial position and
its ability to liquidate its portfolio and meet its liabilities as
they fall due:
-- the portfolio is principally comprised of investments traded
on major international stock exchanges. Based on historic analysis
100% of the current portfolio could be liquidated within 30 trading
days with 97.4% in seven days under normal market conditions and
there is no expectation that the nature of the investments held
within the portfolio will be materially different in future;
-- the expenses of the Company are predictable and modest in
comparison with the assets and there are no capital commitments
foreseen which would alter that position; and
-- the Company has no employees, only its non-executive
Directors. Consequently, it does not have redundancy or other
employment related liabilities or responsibilities.
The Audit Committee, as well as considering the potential impact
of the Company's principal risks and various severe but plausible
downside scenarios, has also considered the following assumptions
in considering the Company's longer-term viability:
-- there will continue to be demand for investment trusts;
-- the Board and the Investment Manager will continue to adopt a
long-term view when making investments;
-- the Company invests principally in the securities of listed
companies in emerging markets to which investors will wish to
continue to have exposure;
-- regulation will not increase to a level that makes running the Company uneconomical; and
-- the performance of the Company will continue to be satisfactory.
Covid-19 was also factored into the key assumptions made by
assessing its impact on the Company's key risks and whether the key
risks had increased in their potential to affect the normal,
favourable and stressed market conditions. As part of this review
the Board considered the impact of a significant and prolonged
decline in the Company's performance and prospects. This included a
range of plausible downside scenarios such as reviewing the effects
of substantial falls in investment values and the impact of the
Company's ongoing charges ratio, which were the subject of stress
testing.
Furthermore, the Audit Committee considered the operational
resilience of the Company's service providers, and thereby the
operational viability of the Company. During the year under review,
the majority of meetings were held online, and all key service
providers have been contacted with regard to their business
continuity systems in place due to the pandemic as well as their IT
and cyber security systems to prevent fraudulent activity of any
kind. There have been no issues raised and the Audit Committee was
reassured that all key service providers were operating well and to
their normal high service standards while ensuring the safety of
their employees by enabling them to work remotely.
Principal Service Providers
Investment Manager
Mobius Capital Partners LLP is the Alternative Investment Fund
Manager ("AIFM") for the Company pursuant to an Investment
Management Agreement dated 10 September 2018 (the "IMA"). The
investment management fee payable to the AIFM is calculated at an
annual rate of 1.0% of the lower of (i) Net Asset Value; and (ii)
Market Capitalisation (the "Fund Value") up to and including GBP500
million; of 0.85% of the Fund Value over GBP500 million and up to
and including GBP1 billion; and of 0.75% of the Fund Value over
GBP1 billion. The management fee is payable in arrears monthly.
There are no provisions for the payment of a performance fee.
The IMA may be terminated by either party by giving to the other
not less than 12 months' notice in writing, such notice not to
expire earlier than the third anniversary of Admission of the
Company's ordinary shares (i) to the premium segment of the
Official List; and (ii) to trading on the London Stock Exchange's
main market for listed securities, this having been 1 October
2018.
Manager, Company Secretary and Administrator
Frostrow Capital LLP ("Frostrow") acts as the Company's Manager,
Company Secretary and Administrator. It is an independent provider
of services to the investment companies sector and currently has 14
other investment trust and investment company clients whose assets
totalled approximately GBP10 billion as at the date of this
report.
Company secretarial, marketing, and administrative services are
provided by Frostrow under an Administration and Management
Services Agreement dated 10 September 2018.
A management services fee of 0.225% of the lower of (i) Net
Asset Value and (ii) Market Capitalisation (= the Fund Value) of
the Company, charged monthly in arrears, is payable, up to a Fund
Value of GBP250 million. Frostrow's fees will reduce from 0.225% to
0.20% on Fund Value of the Company in the range of GBP250 million
to GBP500 million, and to 0.175% on that part of the Fund Value in
excess of GBP500 million. The agreement may be terminated by either
the Company or Frostrow on six months' written notice.
Furthermore, Frostrow provides the AIFM Directive risk
management function on behalf of the AIFM under a delegation
agreement with Mobius Capital Partners LLP (MCP). This delegation
of the risk management function may be terminated by either
Frostrow or the AIFM, MCP, on two months' written notice.
Further details of the fees payable to Mobius Capital Partners
LLP and Frostrow Capital LLP are set out in note 3 to the
accounts.
Depositary and Custodian
With effect from 10 September 2018, Northern Trust Global
Services SE (Northern Trust) was appointed as the Company's
Depositary by the Board and Mobius Capital Partners LLP.
Under the Depositary Agreement, an annual fee of 0.015% per
annum charged on the Net Asset Value is payable, subject to a
minimum annual fee of GBP25,000. The Depositary Agreement may be
terminated upon six months' written notice from the Company or the
Investment Manager to the Depositary or the Depositary to the
Company and the Investment Manager.
Investment Manager and Manager Evaluation and Re-Appointment
The review of the performance of Mobius Capital Partners LLP as
Investment Manager and Frostrow as Manager, Company Secretary and
Administrator is a continuous process carried out by the Board with
a formal evaluation being undertaken each year. As part of this
process the Board monitors the services provided by the Investment
Manager and the Manager and receives regular reports and views from
them. The Board also receives comprehensive performance measurement
reports to enable it to determine whether or not the performance
objective set by the Board has been met.
The Board believes the continuing appointment of Mobius Capital
Partners LLP and Frostrow Capital LLP, under the terms described
above, is in the interests of shareholders. In coming to this
decision, the Board also took into consideration the following
additional reasons:
-- the quality and depth of experience of Mobius Capital
Partners LLP and the level of performance of the portfolio in
absolute terms and the Company's peer group since launch; and
-- the quality and depth of experience of the management,
administrative and company secretarial team that Frostrow allocates
to the Company.
Company Promotion
The Company has appointed Frostrow to promote the Company's
shares to professional investors in the UK and Ireland. As
Investment Company Specialists, the Frostrow team provides a
continuous, pro-active marketing, distribution and investor
relations service that aims to promote the Company by encouraging
demand for the shares.
Frostrow actively engages with professional investors, typically
discretionary wealth managers, some institutions and a range of
execution-only platforms. Regular engagement helps to attract new
investors and retain existing shareholders, and over time results
in a stable share register made up of diverse, long-term
holders.
Frostrow arranges and manages a continuous programme of
one-to-one meetings with professional investors around the UK.
These include regular meetings with "gate keepers", the senior
points of contact responsible for their respective organisations'
research output and recommended lists. The programme of regular
meetings also includes autonomous decision makers within large
multi-office groups, as well as small independent organisations.
Some of these meetings involve Mobius Capital Partners, but most of
the meetings do not, which means the Company is being actively
promoted while the Investment Manager concentrates on the
portfolio. Over the course of the Covid-19 pandemic, many of these
meetings have been held via video conference.
The Company also benefits from involvement in the regular
professional investor seminars run by Frostrow in major centres,
notably London and Edinburgh, or webinars which are focused on
buyers of investment companies.
Frostrow produces many key corporate documents, monthly
factsheets, annual and half-yearly reports. All Company information
and invitations to investor events, including updates from the
Investment Manager on portfolio and market developments, are
regularly emailed to a growing database, overseen by Frostrow,
consisting of professional investors across the UK and Ireland.
Frostrow maintains close contact with all the relevant
investment trust broker analysts, particularly those from Jefferies
International Limited, the Company's corporate broker, but also
others who publish and distribute research on the Company to their
respective professional investor clients.
The Company continues to benefit from regular press coverage,
with articles appearing in respected publications that are widely
read by both professional and self-directed private investors. The
latter typically buy their shares via retail platforms, which
account for a significant proportion of the Company's share
register.
Stakeholder Interests and Board Decision-Making (Section 172
Statement)
Under new reporting regulations and the new AIC Code, the
Directors must now explain more fully how they have discharged
their duties under Section 172 of the Companies Act 2006 in
promoting the success of the Company for the benefit of the members
as a whole. This includes the likely consequences of the Directors'
decisions in the long term and how they have taken wider
stakeholders' needs into account.
The Directors aim to act fairly as between the Company's
shareholders. The Board's approach to shareholder relations is
summarised in the Corporate Governance Report. The Chairman's
Statement provides an explanation of actions taken by the Directors
during the year to achieve the Board's long-term aim of ensuring
capital growth and income returns predominantly through investment
in a diversified portfolio of companies operating in emerging or
frontier markets.
As an externally managed investment trust, the Company has no
employees, customers, operations, or premises. Therefore, the
Company's key stakeholders (other than its shareholders) are
considered to be its service providers.
The need to foster business relationships with the service
providers and maintain a reputation for high standards of business
conduct are central to the Directors' decision-making as the Board
of an externally managed investment trust. The Directors believe
that fostering constructive and collaborative relationships with
the Company's service providers will assist in their promotion of
the success of the Company for the benefit of all shareholders.
The Board engages with representatives from its service
providers throughout the year. Representatives from Mobius Capital
Partners and Frostrow are in attendance at each Board meeting. As
the Investment Manager and the Company Secretary and Administrator
respectively, the services they provide are essential to the
long-term success of the Company.
Further details are set out below:
Who? Why? How?
HOW THE BOARD, THE PORTFOLIO
MANAGER AND ADMINISTRATOR HAVE
THE BENEFITS OF ENGAGING WITH ENGAGED WITH THE COMPANY'S
STAKEHOLDER GROUP THE COMPANY'S STAKEHOLDERS STAKEHOLDERS
-------------------- ----------------------------------- -----------------------------------------------------------
Investors Clear communication of the The Investment Manager, Frostrow
Company's strategy and the and the Company's broker, on
performance against the Company's behalf of the Board, complete
objective can help the share a programme of investor relations
price trade at a narrower throughout the year.
discount or a wider premium An analysis of the Company's
to its net asset value per shareholder register is provided
share which benefits shareholders. to the Directors at each Board
New shares can be issued to meeting along with marketing
meet demand without net asset reports from Frostrow. The
value per share dilution to Board reviews and considers
existing shareholders. Increasing the marketing plans on a regular
the size of the Company can basis. Reports from the Company's
benefit liquidity as well broker are submitted to the
as spread costs. Board on investor sentiment
In an effort to control the and industry issues.
discount at which shares trade Key mechanisms of engagement
to their net asset value per include:
share, the Company can buy * the Annual General Meeting;
back shares if the Board considers
this to be in the best interest
of the Company and shareholders * the Company's website which hosts reports, video
as a whole. Shares can either interviews with the portfolio manager and monthly
be held in "treasury" or factsheets;
cancelled.
Any shares held in treasury
can later be sold back to * one-on-one investor meetings and online webinars;
the market if conditions permit.
The Company does not currently
hold any shares in treasury. * should any significant votes be cast against a
resolution, proposed at the Annual General Meeting,
the Board will engage with Shareholders in order to
understand the reasons behind the votes against; and
* following the consultation, an update will be
published no later than six months after the AGM and
the Annual Report will detail the impact the
Shareholder feedback has had on any decisions the
Board has taken and any actions or resolutions
proposed.
-------------------- ----------------------------------- -----------------------------------------------------------
Investment Manager Engagement with the Company's The Board meets regularly with
Investment Manager is necessary the Company's Investment Manager
to evaluate their performance throughout the year both formally
against the Company's stated at the scheduled Board meetings
strategy and to understand and informally as needed. For
any risks or opportunities example, at the start of the
this may present. The Board Covid-19 pandemic, fortnightly
ensures that the Investment meetings were held when markets
Manager's environmental, social were particularly volatile,
and governance ("ESG") approach reducing in frequency as markets
is in line with standards became more stable. The Board
elsewhere and is in line with also receives monthly performance
the Board's expectations. and compliance reporting.
Engagement also helps ensure The Investment Manager's attendance
that Investment Management at each Board meeting provides
costs are closely monitored the opportunity for the Investment
and remain competitive. Manager and Board to further
reinforce their mutual understanding
of what is expected from both
parties.
-------------------- ----------------------------------- -----------------------------------------------------------
Service Providers The Company contracts with The Board and Frostrow engage
third parties for other services regularly with other service
including: depositary, investment providers both in one-to-one
accounting & administration meetings and via regular written
as well as company secretarial reporting. Representatives
and registrars. The Company from service providers are
ensures that the third parties asked to attend Board and Audit
to whom the services have Committee meetings when deemed
been outsourced complete their appropriate. This regular interaction
roles in line with their service provides an environment where
level agreements, thereby topics, issues and business
supporting the Company in development needs can be dealt
its success and ensuring with efficiently and collegiately.
compliance The Board together with Frostrow
with its obligations. have maintained regular contact
The Covid-19 pandemic has with the Company's key service
meant that it was vital to providers during the pandemic,
make certain there were adequate as well as carrying out a review
procedures in place at the of the service providers' business
Company's key service providers continuity plans and additional
to ensure the safety and wellbeing cyber security provisions.
of their employees and the
continued high quality of
service to the Company.
-------------------- ----------------------------------- -----------------------------------------------------------
Portfolio Companies Gaining a deeper understanding Active engagement on ESG+Culture
of the portfolio companies issues with the aim of improving
and their strategies as well operations, ESG-standards and
as incorporating consideration performance, and thereby catalysing
of ESG factors into the investment a re-rerating of the investee's
process assists in understanding stock price, lies at the heart
and mitigating risks of an of the Investment Manager's
investment as well as identifying strategy. The Investment Manager
future potential opportunities. individually tailors engagement
on ESG+C issues to the company
and its respective sector.
In addition to ESG factors,
MCP places a high emphasis
on understanding a company's
corporate culture. The Board
strongly supports the team
in this undertaking and has
been keeping in close and regular
contact with the Investment
Manager to understand the progress
portfolio holdings are making
along their individual action
plans.
-------------------- ----------------------------------- -----------------------------------------------------------
What? Outcomes and actions
WHAT WERE THE KEY TOPICS OF ENGAGEMENT? WHAT ACTIONS WERE TAKEN, INCLUDING
PRINCIPAL DECISIONS?
------------------------------------------------------------ ------------------------------------------------------------
Key topics of engagement with investors
* Ongoing dialogue with shareholders concerning the * The Investment Manager, Frostrow and the broker meet
strategy of the Company, performance, the portfolio regularly with shareholders and potential investors
and ESG issues. to discuss the Company's strategy, performance, the
portfolio and any ESG issues which might be raised.
* At a time of wide discount during the year,
investors' opinion was sought as to whether buybacks * Shareholders made it clear that they preferred for
should be undertaken to control the discount. the Company's share price and NAV to recover
naturally, through good performance, rather than for
the Company to undertake buybacks to control the
discount. At the year-end, the Company's discount had
narrowed to 2.7% due to good performance.
------------------------------------------------------------ ------------------------------------------------------------
Key topics of engagement with the Investment Manager on an ongoing basis
* Portfolio composition, performance, outlook and * Updates are received by the Board at every Board
business updates as well as ESG engagement with meeting.
portfolio companies.
* No specific action on Brexit is required.
* The impact of Brexit on their business and the
portfolio.
* Regular updates were received by the Board throughout
the year in respect of the impact of the pandemic on
* The impact of Covid-19 on their business and the investment decision making and working practices.
portfolio.
* The unique network of external experts and
* Team composition. consultants in Emerging Markets built over decades of
investing in this space enables the Investment
Manager to buy in project-specific, high-quality
know-how while allowing the core team to remain lean,
agile and highly motivated.
------------------------------------------------------------ ------------------------------------------------------------
Other Service Providers
* The Directors have frequent engagement with the * No specific action required as the reviews of the
Company's other service providers through the annual Company's service providers have been positive and
cycle of reporting and due diligence meetings or site the Directors believe their continued appointment is
visits by Frostrow. This engagement is completed with in the best interests of the Company.
the aim of maintaining an effective working
relationship and oversight of the services provided.
------------------------------------------------------------ ------------------------------------------------------------
Responsible and Sustainable Investing
It is the Board's view that, in order to achieve long-term
success, companies need to maintain high standards of corporate
governance and corporate responsibility. More information is given
in the Investment Manager's Report.
The Investment Manager's customised engagement acts as one of
the key features in the investment process and includes an Action
Plan targeted at ESG and operational issues identified in the
individual holdings. The Investment Manager believes this
customised engagement will lead to an enhancement in ESG+C
positioning, operational improvements, and attractive returns to
investors following a stock rerating. Throughout the year, the
Board followed the progress on engagement closely and was delighted
to see a number of very encouraging results in the sustainability
arena, including the addition of three investee company holdings to
the Dow Jones Sustainability Index 2020 in recognition of their
achievements in the ESG-sphere.
Integrity and Business Ethics
The Company is committed to carrying out business in an honest
and fair manner with a zero-tolerance approach to bribery, tax
evasion and corruption. As such, policies and procedures are in
place to prevent the above. In carrying out its activities, the
Company aims to conduct itself responsibly, ethically and fairly,
including in relation to social and human rights issues.
As an investment trust with limited internal resources, the
Company has little impact on the environment. The Company believes
that high standards of ESG make good business sense and have the
potential to protect and enhance investment returns. Consequently,
the Investment Manager's investment criteria ensure that ESG and
ethical issues are taken into account and best practice is
encouraged. The Board's expectations are that its principal service
providers have appropriate governance policies in place.
Looking to the Future
The Board concentrates its attention on the Company's investment
performance and Mobius Capital Partners LLP's investment approach
and on factors that may have an effect on this approach.
The Board monitors the performance of the Company's net asset
value compared to its peer group.
The Board is regularly updated by Frostrow Capital LLP on wider
investment trust industry issues and regular discussions are held
concerning the Company's future development and strategy.
A review of the Company's year ended 30 November 2020, its
performance and the outlook for the Company can be found in the
Chairman's Statement and in the Investment Manager's Review.
The Company's overall strategy remains unchanged.
Maria Luisa Cicognani
Chairman
25 February 2021
BOARD OF DIRECTORS
Maria Luisa Cicognani
Independent Non-Executive Chairman
Appointed to the Board on 5 September 2018
Remuneration per annum: GBP35,000
Shareholding in the Company: 71,740
Skills and Experience:
Maria Luisa has over 25 years' experience with significant
knowledge of the banking sector, emerging markets and corporate
governance issues. Between 1993 and 2005, she worked at the
European Bank for Reconstruction and Development, ultimately as
Head of the Bank Equity group, before holding senior positions with
Merrill Lynch and Renaissance Capital, Mediobanca, Azimut Global
Counselling in Italy and Azimut International Holding in
Luxembourg. Since 2016 she has been senior adviser to a number of
financial institutions and investors as well as non-executive
director in listed companies including MONETA Money Bank listed in
Prague where she was elected chairperson in 2017 until 2018, and
Arafa Holding listed in Cairo.
Maria Luisa holds a magna cum laude Bachelor's degree in
Business and Administration from Bocconi University in Italy and a
Master's degree in Japanese Economy and Business from the
International University of Japan.
Other Appointments:
Maria Luisa is also a non-executive director of TBC Bank Group
plc, UBI Banca in Italy and Global Frontier Markets Inc, New
York.
Standing for re-election
Yes
Christopher Casey
Independent Non-Executive Director and Chairman of the Audit
Committee
Appointed to the Board on 5 September 2018
Remuneration per annum: GBP30,000
Shareholding in the Company: 10,000
Skills and Experience:
Christopher has extensive experience as a non-executive director
and audit committee chairman of public companies, in particular
investment trusts.
Previously he was chairman, independent non-executive director
and audit committee chairman of China Polymetallic Mining Limited
until 2016, independent non-executive director and audit committee
chairman of Latchways plc until 2015 and independent non-executive
director and audit committee chairman of Eddie Stobart Logistics
plc, until August 2020.
Christopher's career spans over 40 years and he was previously
an audit partner at KPMG before moving to transaction services,
providing due diligence assistance to private equity and corporate
clients. He graduated from Oxford University in 1977 with a degree
in Politics, Philosophy and Economics.
Other Appointments:
Christopher is also a non-executive director and chairman of TR
European Growth Trust plc, non-executive director and audit
committee chairman of BlackRock North American Income Trust plc and
Life Settlements Assets plc as well as non-executive director of
CQS Natural Resources Growth and Income plc.
Standing for re-election
Yes
Dr Sophie Robé
Independent Non-Executive Director and Senior Independent
Director
Appointed to the Board on 5 September 2018
Remuneration per annum: GBP25,000
Shareholding in the Company: none
Skills and Experience:
Sophie has over 20 years' experience in asset management as well
as responsible and impact investing. She is the founder of FIIND
Impact, an advisory firm specialised on sustainable and impact
investing. Before that, she founded Phenix Capital in 2012 and was
co-CEO until March 2020. Sophie was a director at Jupiter Asset
Management London, heading business development in the Netherlands
from 2010 to 2012, and acting as Global Head of hedge fund sales
from 2002 to 2010. She also held senior positions at Commerzbank
Asset Management, incl. head of quantitative analysis from 1997
until 2002.
Sophie is currently a member of the ESG committee and a former
board member of the CFA Society of the Netherlands. Sophie is a CFA
Charterholder and holds a PhD in Finance and Econometrics from the
University of Kassel in Germany.
Other Appointments:
Sophie is also a director of FIIND Impact BV and FIIND Impact
Foundation in the Netherlands.
Standing for re-election
Yes
Charlie Shi
Independent Non-Executive Director and Chairman of the
Management Engagement and Remuneration Committee
Appointed to the Board on 5 September 2018
Remuneration per annum: GBP25,000
Shareholding in the Company: none
Skills and Experience:
Between 2006 and 2012, Charlie served as an independent,
non-executive director for China Life Asset Management Limited
(CLAMC) in Beijing and he continues to serve as an external expert
member of the Alternative Investment Consultative Committee of
CLAMC. Between 2012 and 2017, Charlie served as an independent,
non-executive director for China Life Franklin Asset Management
(Hong Kong) Limited.
Other Appointments:
Charlie is also a director of Apex Class Limited (a pure
investment holding company) as well as an independent,
non--executive director of Franklin Templeton Sealand Fund
Management Co Ltd and Pico Far East Holdings Limited (listed on the
Hong Kong Stock Exchange).
Standing for re-election
Yes
REPORT OF THE DIRECTORS
The Directors present this Annual Report on the affairs of the
Company together with the audited financial statements and the
Independent Auditor's Report for the year ended 30 November
2020.
In accordance with the requirement for the Directors to prepare
a Strategic Report and an enhanced Directors' Remuneration Report
for the year ended 30 November 2020, the following information is
set out in the Strategic Report: a review of the business of the
Company including details of its objective, strategy and business
model, future developments, details of the principal risks and
uncertainties associated with the Company's activities (including
the Company's financial risk management objectives and policies),
information regarding community, social, employee and human rights,
environmental issues and the Company's policy regarding Board
diversity.
Information about Directors' interests in the Company's ordinary
shares is included within the Annual Report in the Remuneration
section of the Directors' Remuneration Report.
The Corporate Governance Statement forms part of this Directors'
Report.
Business and Status of the Company
The Company is registered as a public limited company in England
and Wales (Registered Number: 11504912) and is an investment
company within the terms of Section 833 of the Companies Act 2006
(the 'Act'). Its shares are premium listed on the Official List of
the UK Listing Authority and traded on the main market of the
London Stock Exchange, which is a regulated market as defined in
Section 1173 of the Act.
The principal activity of the Company is to carry on business as
an investment trust. The Company has been granted approval from HM
Revenue & Customs as an investment trust under sections 1158
and 1159 of the Corporation Taxes Act 2010. The Company will be
treated as an investment trust company subject to the Company's
continued compliance with applicable laws and regulations. The
Directors do not envisage any change in this activity in the
future.
The Company is a member of the Association of Investment
Companies ('AIC').
Alternative Performance Measures
The Financial Statements set out the required statutory
reporting measures of the Company's financial performance. In
addition, the Board assesses the Company's performance against a
range of criteria which are viewed as particularly relevant for
investment trusts, which are summarised and explained in greater
detail in the Strategic Report, under the heading 'Key Performance
Indicators' in the Business Review.
The Directors believe that these measures enhance the
comparability of information between reporting periods and aid
investors in understanding the Company's performance. The measures
used for the year under review have remained consistent with the
prior period.
Definitions of the terms used and the basis of calculation
adopted are set out in the Glossary.
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.
Resolutions relating to the following items of special business
will be proposed at the forthcoming Annual General Meeting.
Resolution 9 Authority to allot shares
Resolution 10 Authority to disapply pre-emption rights
Resolution 11 Authority to buy back shares
Resolution 12 Authority to hold General Meetings (other than the
AGM) on at least 14 clear days' notice
The full text of the resolutions can be found in the Notice of
Annual General Meeting. Explanatory notes regarding the resolutions
can be found at the end of this document. Ordinary resolutions
require that more than 50% of the votes cast at the relevant
meeting must be in favour of the resolutions. Special resolutions
require that at least 75% of the votes cast must be in favour of
the resolution to be passed.
Recommendation
The Directors consider that all the resolutions to be proposed
at the AGM are in the best interests of the Company and its members
as a whole. The Directors unanimously recommend that shareholders
vote in favour of all the resolutions, as they intend to do in
respect of their own beneficial holdings.
AGM Arrangements
The Board hopes that it will be possible to hold the AGM in
person on 28 April 2021, although recent Government announcements
make this look unlikely. Shareholders should note that at the time
of writing this annual report, it is not yet completely clear
whether it will be possible to hold a physical AGM or whether
further social distancing rules will necessitate a much pared-down
AGM in order to guarantee everyone's safety and well-being in view
of Covid-19. In case the decision has to be made that it will not
be possible for shareholders to meet with the Board in person and
that the Board can only conduct the minimal statutory business at
the AGM, then arrangements will be made for shareholders to attend
via a webinar, view the Managers' presentation and ask questions in
advance. Shareholders are encouraged to view the Company's website,
www.mobiusinvestmenttrust.com for further information nearer the
time. Questions can be submitted to the Company Secretary at
info@frostrow.com .
As also noted in the Chairman's Statement, shareholders are
strongly encouraged to exercise their votes in respect of the
meeting in advance by returning their forms of proxy. This will
ensure that all shareholders' votes are registered in the event
that attendance is not possible or restricted or if the meeting is
postponed. Further details about the voting process can be found in
the Notice of Meeting.
Results and Dividend
The results attributable to shareholders for the year are shown
in the Income Statement.
The Directors are not recommending that a final dividend be paid
for the year ended 30 November 2020 (2019: 0.30p per share) in line
with the Company's dividend policy set out in the Business
Review.
Directors
The current Directors of the Company are listed at the beginning
of the Report of the Directors. They all served as Directors
throughout the year to 30 November 2020. No other person was a
Director during any part of the year or up to the approval of this
Report.
Directors' Conflicts of Interest
Directors report on actual or potential conflicts of interest at
each Board meeting. Any Director with a potential conflict would be
excluded from any related discussion.
Directors' and Officers' Liability Insurance Cover
Directors' and Officers' liability insurance cover was
maintained by the Board during the year ended 30 November 2020. It
is intended that this policy will continue for the year ending 30
November 2021 and subsequent years.
Directors' Indemnities
Subject to the provisions of applicable UK legislation, the
Company provides an indemnity for Directors in respect of costs
incurred in the defence of any proceedings brought against them and
also liabilities owed to third parties, in either case arising out
of their positions as Directors of the Company. This was in place
throughout the financial year under review and up to the date of
the approval of this report. The indemnities are qualifying third
party provisions for the purposes of the Companies Act 2006.
A copy of each deed of indemnity is available for inspection at
the Registered Office of the Company during normal business hours
and will be available for inspection at the Annual General Meeting.
Should the AGM have to be held as a virtual meeting, copies of the
indemnities can be requested from the Company Secretary.
Directors' Fees
Reports on Directors' Remuneration and also the Directors'
Remuneration Policy are set out below.
Appointment and Replacement of Directors
Unless otherwise determined by the Company by ordinary
resolution, the number of Directors shall not be less than two.
Directors' Interests
The beneficial interests in the Company of the Directors, and of
the persons closely associated with them, are set out in the
Directors' Remuneration Report.
Capital Structure
As at 30 November 2020, there were 105,000,000 ordinary shares
of 1p each (at launch on 1 October 2018: 100,000,000 ordinary
shares) and 50,000 management shares of GBP1 each in issue.
All ordinary shares rank equally for dividends and
distributions. Each shareholder is entitled to one vote on a show
of hands and, on a poll, to one vote for every ordinary share held.
Details of the substantial holders of ordinary shares in the
Company are listed below.
The management shares do not carry a right to receive notice of,
or attend or vote at, any general meeting of the Company unless no
other shares are in issue at that time. The management shares are
entitled to receive, in priority to any payment of a dividend on
any other class of share, a fixed cumulative dividend of 0.01% per
annum on their nominal amount. On a return of capital (including on
a winding up) the holders of the management shares shall only
receive an amount up to the capital paid up on such management
shares. The management shares are not redeemable.
There are no restrictions concerning the transfer of ordinary
shares in the Company; no special rights with regard to control
attached to ordinary shares; no restrictions on voting rights; no
agreements between holders of ordinary shares regarding their
transfer known to the Company; and no agreements which the Company
is party to that might affect its control following a successful
takeover bid.
Details of the voting rights in the Company's shares at the date
of this Annual Report are given in Note 2 to the Notice of the
Annual General Meeting.
Details of the substantial shareholders in the Company are
listed below.
Share Issues and Buybacks
The Directors have the authority to issue shares up to an
aggregate nominal amount equal to 10% of the issued share capital
of the Company. They also have the authority to issue shares, or
sell Treasury shares, up to an aggregate nominal amount equal to
10% of the issued share capital for cash, without pre-emption
rights applying. Furthermore, at the last Annual General Meeting
held on 23 April 2020, the Directors were granted authority to
repurchase up to 15,739,500 Ordinary shares, being 14.99% of the
Company's issued share capital. Those authorities will expire at
the Annual General Meeting to be held on 28 April 2021, when
resolutions to renew them will be proposed.
At 30 November 2020, the number of Ordinary shares in issue was
105,000,000. No shares were issued during the year and no shares
were bought back.
Treasury Shares
The Company may make market purchases of its own shares for
cancellation or for holding in Treasury where it is considered by
the Board to be cost effective and positive for the management of
the Company's capital base to do so. During the year, and since the
year end, no shares were purchased for, or held in, Treasury.
Shares would only be re-issued from Treasury at a price
representing a premium to net asset value per share.
Redemption Facility
As set out in the prospectus, the Company has a redemption
facility through which shareholders will be entitled to request the
redemption of all or part of their holding of ordinary shares on a
periodic basis. The first redemption point for the ordinary shares
will be 30 November 2022 and each subsequent redemption point shall
fall on 30 November every third year thereafter. The Directors have
absolute discretion to operate the periodic redemption facility on
any given Redemption Point and to accept or decline in whole or
part any redemption request.
Substantial Interests in Share Capital
As at 30 November 2020 and 31 January 2021, being the latest
practicable date before publication of the annual report, the
Company was aware of the following substantial interests in the
voting rights of the Company:
30 November 2020
--------------------------------------- --------------------------------
Number of
ordinary shares % of issued
Shareholder held share capital
--------------------------------------- ---------------- --------------
Allan & Gill Gray Foundation 20,000,000 19.05
Mark Mobius 15,617,092 14.87
Hargreaves Lansdown, stockbrokers (EO) 6,534,380 6.22
BMO Global Asset Management (UK) 5,425,000 5.17
1607 Capital Partners 5,351,825 5.10
Premier Miton Investors 4,015,000 3.82
Connor Broadley 3,953,521 3.77
Church House Investments 3,621,610 3.45
JM Finn, stockbrokers 3,532,770 3.36
Interactive Investor (EO) 3,203,843 3.05
--------------------------------------- ---------------- --------------
31 January 2021
--------------------------------------- ----------------------------
Number of
ordinary % of issued
Shareholder shares held share capital
--------------------------------------- ------------ --------------
Allan & Gill Gray Foundation 20,000,000 19.05
Mark Mobius 15,617,092 14.87
Hargreaves Lansdown, stockbrokers (EO) 7,703,854 7.34
BMO Global Asset Management (UK) 5,425,000 5.16
Interactive Investor (EO) 4,099,533 3.91
JM Finn, stockbrokers 3,660,470 3.49
Church House Investments 3,637,160 3.46
Connor Broadley 3,543,248 3.37
--------------------------------------- ------------ --------------
Interests of key management personnel in the shares of the
Company as at 30 November 2020:
Mark Mobius (see also above) 15,617,092 14.87%
Carlos Hardenberg 940,000 0.90%
----------------------------- ---------- ------
Beneficial Owners of Ordinary Shares - Information Rights
The beneficial owners of ordinary shares who have been nominated
by the registered holder of those shares to receive information
rights under Section 146 of the Companies Act 2006 are required to
direct all communications to the registered holder of their shares
rather than to the Company's registrar, Computershare, or to the
Company directly.
Articles of Association
Amendment of the Company's Articles of Association requires a
special resolution to be passed by shareholders.
Modern Slavery Act 2015
The Company does not provide goods or services in the normal
course of business, and as a financial investment vehicle does not
have customers. The Directors do not therefore consider that the
Company is required to make a statement under the Modern Slavery
Act 2015 in relation to slavery or human trafficking.
The Company's suppliers are typically professional advisers and
the Company's supply chains are considered to be low risk in this
regard.
Anti-Bribery and Corruption Policy
The Board has adopted a zero tolerance approach to instances of
bribery and corruption. Accordingly, it expressly prohibits any
Director or associated persons when acting on behalf of the
Company, from accepting, soliciting, paying, offering or promising
to pay or authorise any payment, public or private, in the United
Kingdom or abroad to secure any improper benefit for themselves or
for the Company.
The Board applies the same standards to its service providers in
their activities for the Company.
A copy of the Company's Anti Bribery and Corruption Policy can
be found on its website at www.mobiusinvestmenttrust.com. The
policy is reviewed annually by the Audit Committee.
Prevention of the Facilitation of Tax Evasion
In response to the implementation of the Criminal Finances Act
2017, the Board has adopted a zero-tolerance approach to the
criminal facilitation of tax evasion. A copy of the Company's
policy on preventing the facilitation of tax evasion can be found
on the Company's website
www.mobiusinvestmenttrust.com . The policy is reviewed annually
by the Audit Committee.
Political Donations
The Company has not made any political donations in the past,
nor does it intend to do so in the future.
Corporate Governance
The Corporate Governance report, which includes the Company's
Corporate Governance policies is set out below.
Global Greenhouse Gas Emissions for the Year ended 30 November
2020
The Company is an investment trust, with neither employees nor
premises, nor has it any financial or operational control of the
assets which it owns. It 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, including those
within the Company's underlying investment portfolio. Consequently,
the Company consumed less than 40,000 kWh of energy during the year
in respect of which the Directors' Report is prepared and therefore
is exempt from the disclosures required under the Streamlined
Energy and Carbon Reporting criteria.
Common Reporting Standard (CRS)
CRS is a global standard for the automatic exchange of
information commissioned by the Organisation for Economic
Cooperation and Development and incorporated into UK law by the
International Tax Compliance Regulations 2015. CRS requires the
Company to provide certain additional details to HMRC in relation
to certain shareholders. The reporting obligation began in 2016 and
will be an annual requirement going forward. The Registrars,
Computershare Investor Services, have been engaged to collate such
information and file the reports with HMRC on behalf of the
Company.
Requirements of the Listing Rules
Listing Rule 9.8.4 requires the Company to include certain
information in a single identifiable section of the Annual Report
or a cross reference table indicating where the information is set
out. The Directors confirm that there are no disclosures to be made
in this regard.
Going Concern
The content of the Company's portfolio, trading activity, the
Company's cash balances and revenue forecasts, and the trends and
factors likely to affect the Company's performance are reviewed and
discussed at each Board meeting. For the year ended 30 November
2020, the emergence of Covid-19 has added the factor of a global
pandemic and its effect on the investment management and the
general operations of the Company and its service providers to the
deliberations of the Board, which will also remain an influencing
factor for the year ending 30 November 2021.
The Board has considered a detailed assessment of the Company's
ability to meet its liabilities as they fall due, including tests
which modelled the effects of further substantial falls in markets
and significant reductions in market liquidity to that experienced
to date in connection with the coronavirus pandemic, on the
Company's NAV, its cash flows and its expenses. Further information
is provided in the Audit Committee report.
Based on the information available to the Directors at the date
of this report, including the results of these stress tests, the
conclusions drawn in the Viability Statement, the Company's cash
balances, and the liquidity of the Company's listed investments,
the Directors are satisfied that the Company has adequate financial
resources to continue in operation for at least the next 12 months
and that, accordingly, it is appropriate to continue to adopt the
going concern basis in preparing the financial statements.
Statement of Disclosure of Information to the Auditors
The Directors who held office at the date 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 he/she ought to have taken as
a Director to make himself/herself aware of any relevant audit
information and to establish that the Company's Auditors are aware
of that information. This information should be interpreted in
accordance with the provisions of section 418 of the Companies Act
2006.
Other Statutory Information
The following information is disclosed in accordance with the
Companies Act 2006:
-- The rules on the appointment and replacement of directors are
set out in the Company's articles of association (the "Articles").
A change to the Articles would be governed by the Companies Act
2006.
-- Subject to the provisions of the Companies Act 2006, to the
Articles, and to any directions given by special resolution, the
business of the Company shall be managed by the Directors who may
exercise all the powers of the Company. The powers shall not be
limited by any special powers given to the Directors by the
Articles and a meeting of the Directors at which a quorum is
present may exercise all the powers exercisable by the Directors.
The Directors' powers to buy back and issue shares, in force at the
end of the year, are recorded in the Directors' Report.
There are no agreements:
(i) to which the Company is a party that might affect its
control following a takeover bid; and/or
(ii) between the Company and its Directors concerning compensation for loss of office.
By order of the Board
Frostrow Capital LLP
Company Secretary
25 February 2021
CORPORATE GOVERNANCE
The Board and Committees
Responsibility for effective governance lies with the Board. The
governance framework of the Company reflects the fact that as an
investment company it has no employees and outsources portfolio
management to Mobius Capital Partners LLP and Company management,
company secretarial, marketing and administrative services to
Frostrow Capital LLP.
The Board
Chairman - Maria Luisa Cicognani
Three additional non-executive Directors, all considered independent.
The Board has appointed Dr Sophie Robé as Senior Independent Director.
Key responsibilities:
* to provide leadership and set strategy, values and
standards within a framework of prudent effective
controls which enable risk to be assessed and
managed;
* to ensure that a robust corporate governance
framework is implemented; and
* to challenge constructively and scrutinise the
performance of all outsourced activities.
Management Engagement and Remuneration Committee .
Chairman - Charlie Shi
All Independent Directors
Key responsibilities:
* to review regularly the contracts, the performance
and remuneration of the Company's principal service
providers;
* to set the remuneration policy of the Company; and
* to determine and agree with the Board the
remuneration of the Directors. Where appropriate, the
Committee will consider both the need to judge the
position of the Company relative to other companies
regarding the remuneration of Directors and the need
to appoint external remuneration consultants.
Audit Committee
Chairman - Christopher Casey*
All Independent Directors (The Chairman of the Board is also a
member of the Committee)
Key responsibilities:
-- to monitor the integrity of the Company's annual report and
financial statements and of the half-yearly report;
-- to oversee the risk and control environment and financial
reporting; and to review the performance of the Company's external
Auditors and to set their remuneration.
* The Directors believe that Christopher Casey has the necessary
recent and relevant financial experience to chair the Company's
Audit Committee.
Copies of the full terms of reference, which clearly define the
responsibilities of each Committee, can be obtained from the
Company Secretary and will be available for inspection at the
Annual General Meeting. They can also be found on the Company's
website at www.mobiusinvestmenttrust.com
The Company does not have a Nomination Committee. Instead, all
duties of a Nomination Committee such as the annual consideration
of Directors' performance and the skills possessed collectively by
the Board as well as the consideration of new appointments, are
performed by the Board as a whole.
Corporate Governance Report
The Company is committed to the highest standards of corporate
governance and the Board is accountable to shareholders for the
governance of the Company's affairs.
The Board of Mobius Investment Trust plc has considered the
principles and recommendations of the AIC Code of Corporate
Governance published in February 2019 (the "AIC Code"). The AIC
Code addresses all the principles set out in the UK Corporate
Governance Code (the "UK Code"), as well as setting out additional
provisions on issues that are of specific relevance to the
Company.
The Board considers that reporting against the principles and
provisions of the AIC Code (which has been endorsed by the
Financial Reporting Council) will provide better information to
shareholders. By reporting against the AIC Code, the Company meets
its obligations under the UK Code (and associated disclosure
requirements under paragraph 9.8.6 of the Listing Rules) and as
such does not need to report further on issues contained in the UK
Code which are irrelevant to the Company as an externally-managed
investment company, including the provisions relating to the role
of the chief executive, executive directors' remuneration and the
internal audit function.
The AIC Code is available on the AIC's website www.theaic.co.uk
and the UK Code can be viewed on the Financial Reporting Council's
website www.frc.org.uk. The AIC Code 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 Company has complied with the principles and provisions of
the AIC Code.
The Corporate Governance Statement forms part of the Report of
the Directors.
The Board
The Board is responsible for the effective governance and the
overall management of the Company's affairs. The governance
framework of the Company reflects the fact that as an investment
company it outsources portfolio management services to Mobius
Capital Partners LLP and company secretarial, administration,
marketing and risk management services to Frostrow Capital LLP.
The Board's key responsibilities are to set the strategy, values
and standards; to provide leadership within a controls framework
which enable risks to be assessed and managed; to challenge
constructively and scrutinise performance of all outsourced
activities; and to review regularly the contracts, performance and
remuneration of the Company's principal service providers and
Investment Manager. The Board is responsible for all matters of
direction and control of the Company, including its investment
policy, and no one individual has unfettered powers of
decision.
The role of the Board is to promote the long-term sustainable
success of the Company, generating value for shareholders and
contributing to wider society.
Board Leadership and Purpose
Purpose and Strategy
The Board assesses the basis on which the Company generates and
preserves value over the long term. The Strategic Report describes
how opportunities and risks to the future success of the business
have been considered and addressed, the sustainability of the
Company's business model and how its governance contributes to the
delivery of its strategy.
The Company's Objective and Investment Policy are set out
above.
The purpose and strategy of the Company are described in the
Strategic Report.
Strategy issues and all material operational matters are
considered at Board meetings.
Board Culture
The Board aims to fully enlist differences of opinion, unique
vantage points and areas of expertise. The Chairman encourages open
debate to foster a supportive and co-operative approach for all
participants. Strategic decisions are discussed openly and
constructively.
The Board aims to be open and transparent with shareholders and
other stakeholders and for the Company to conduct itself
responsibly, ethically and fairly in its relationships with service
providers.
Board Diversity
The Board supports the principle of boardroom diversity, of
which gender is one important aspect, and the recommendations of
the Lord Davies review. The Board currently comprises two female
and two male Directors.
The Board's aim is to have a broad range of approaches,
backgrounds, skills, knowledge and experience represented and to
make appointments on merit against objective criteria, including
diversity in its broadest sense. The Board believes that this will
promote the long-term sustainable success of the Company and
generate value for all shareholders by ensuring there is a breadth
of perspectives among the Directors and the challenge needed to
support good decision making. Having one Board member based in
Continental Europe and another in Asia, provides valuable insights
into, and different perspectives of, local events, risks and
challenges.
Directors' Independence
The Board consists of four non-executive Directors, each of whom
is independent of Mobius Capital Partners LLP and the Company's
other service providers. No member of the Board is a Director of
another investment company managed by Mobius Capital Partners LLP,
nor has any Board member been an employee of the Company, Mobius
Capital Partners LLP or any of the Company's service providers. All
Directors were appointed on 5 September 2018 and have been in
office for the year under review. All Directors will retire at the
Company's Annual General Meeting (AGM) and seek to be re-elected by
shareholders. Further details regarding the Directors can be found
above.
The Board carefully considers the various guidelines for
determining the independence of non-executive Directors, placing
particular weight on the view that independence is evidenced by an
individual being independent of mind, character and judgement. All
Directors are presently considered to be independent. All Directors
retire at the AGM each year and, if appropriate, seek re-election.
Each Director has signed a letter of appointment to formalise the
terms of their engagement as a non-executive Director, copies of
which are available on request from the Company Secretary and at
the AGM.
Directors' Other Commitments
During the year, none of the Directors took on an increase in
total commitments. Brief biographical details of the Directors,
including details of their significant commitments, can be found
above. All of the Directors consider that they have sufficient time
to discharge their duties.
Directors' Interests
The beneficial interests of the Directors in the Company are set
out in the Directors' Remuneration Report.
Meetings
The Board meets formally at least four times each year.
Representatives of Mobius Capital Partners LLP attend all meetings
at which investment matters are discussed; representatives from
Frostrow are in attendance at each Board meeting. The Chairman
encourages open debate to foster a supportive and co -- operative
approach for all participants.
The Board has agreed a schedule of matters specifically reserved
for decision by the Board. This includes establishing the
investment objectives, strategy, the permitted types or categories
of investments, the markets in which transactions may be
undertaken, the amount or proportion of the assets that may be
invested in any category of investment or in any one investment,
and the Company's share issuance and share buyback policies.
The Board, at its regular meetings, undertakes reviews of key
investment and financial data, revenue projections and expenses,
analyses of asset allocation, transactions and performance
comparisons, share price and net asset value performance, marketing
and shareholder communication strategies, the risks associated with
pursuing the investment strategy, peer group information and
industry issues.
The Chairman is responsible for ensuring that the Board receives
accurate, timely and clear information. Representatives of Mobius
Capital Partners LLP and Frostrow report regularly to the Board on
issues affecting the Company.
The Board is responsible for strategy and has established an
annual programme of agenda items under which it reviews the
objectives and strategy for the Company at each meeting.
Meeting Attendance
The table below sets out the number of scheduled Board and
Committee meetings held during the year ended 30 November 2020 and
the number of meetings attended by each Director.
Management
Engagement
& Remuneration
Board Audit Committee Committee
Number of meetings (5) (2) (1)
---------------------- ----- --------------- ---------------
Maria Luisa Cicognani 5 2 1
Christopher Casey 5 2 1
Sophie Robé 5 2 1
Charlie Shi 5 2 1
---------------------- ----- --------------- ---------------
In addition to the scheduled Board and Committee meetings,
Directors attended a number of ad hoc Board and Committee meetings
to consider matters such as the approval of regulatory
announcements, portfolio updates and new procedures for the
Company's AGMs during the Covid-19 pandemic.
Especially during the start of the pandemic with its increased
market volatility, Directors attended fortnightly portfolio update
briefings with representatives of the Investment Manager. These
update briefings reduced in frequency and ceased later in the year
as the volatility of the markets decreased.
Board Composition and Succession
The Board has approved a composition and succession plan to
ensure that the Board members collectively (i) display the
necessary balance of professional skills, experience, length of
service and industry/Company knowledge; and (ii) are fit and proper
to direct the Company's business with prudence and integrity. This
plan is reviewed annually and at such other times as circumstances
may require.
To this end, the Board collectively reviews all appointments to
the Board and its Committees and, if necessary following a skills
review of the current Directors, will seek to add persons with
complementary skills or who possess skills and experience which
might fill any gaps in the Board's knowledge or experience and who
can devote sufficient time to the Company to carry out their duties
effectively.
The Board will ensure that a robust recruitment process is
undertaken for all directors appointments to deliver fair and
effective selection outcomes. Independent advisors will be
appointed to aid directors recruitment and to help to mitigate the
risk of self-selection from a narrow pool of candidates. The Board
will ensure that any search agency used has no connection with the
Company or any of the Board members and that the appropriate
disclosure is made in the next annual report.
Achieving a diversity and balance of skills and knowledge in the
Board will be a key determinant of any new appointments. Selecting
the best candidate, irrespective of background is paramount. This
will benefit the effectiveness of the Board by creating a breadth
of perspective among directors.
The Board supports the principle of Boardroom diversity, of
which gender is one important aspect, and the recommendations of
Lord Davies' review. The Board's aim is to have a broad range of
approaches, backgrounds, skills and experience represented on the
Board to make appointments on merit against objective criteria,
including diversity.
Chairman and Senior Independent Director ("SID")
The current Chairman, Mrs Cicognani, is deemed by her fellow
independent Board members to be independent and to have no
conflicting relationships. Her biography and other appointments are
detailed above and the Board considers that she has sufficient time
to commit to the Company's affairs as necessary.
Subsequent to the year end, the Board appointed Dr Robé as the
Senior Independent Director. Her biography and other appointments
are detailed above and the Board considers that she has sufficient
time to commit to the Company's affairs as necessary.
Responsibilities of the Chairman and the SID
The Chairman's primary role is to provide leadership to the
Board, assuming responsibility for its overall effectiveness in
directing the Company. The Chairman is responsible for:
-- taking the chair at general meetings and Board meetings,
conducting meetings effectively and ensuring that all Directors are
involved in discussions and decision making;
-- setting the agenda for Board meetings and ensuring the
Directors receive accurate, timely and clear information for
decision-making;
-- taking a leading role in determining the Board's composition and structure;
-- overseeing the induction of new directors and the development of the Board as a whole;
-- leading the annual board evaluation process and assessing the
contribution of individual directors;
-- supporting and also challenging the Investment Manager (and
other suppliers where necessary);
-- ensuring effective communications with shareholders and,
where appropriate, stakeholders; and
-- engaging with shareholders to ensure that the Board has a
clear understanding of shareholders' views.
The Senior Independent Director ("SID") serves as a sounding
board for the Chairman and acts as an intermediary for other
Directors and shareholders. The SID is responsible for:
-- working closely with the Chairman and providing support;
-- leading the annual assessment of the performance of the Chairman;
-- holding meetings with the other non-executive Directors
without the Chairman being present, on such occasions as
necessary;
-- carrying out succession planning for the Chairman's role;
-- working with the Chairman, other Directors and shareholders to resolve major issues; and
-- being availa ble to shareholders and other Directors to
address any concerns or issues they feel have not been adequately
dealt with through the usual channels of communication (i.e.
through the Chairman or the Investment Manager).
Policy on Director Tenure
The Board subscribes to the view that long-serving Directors
should not be prevented from forming part of an independent
majority. It does not consider that a Director's tenure necessarily
reduces his or her ability to act independently and, following
formal performance evaluations, believes that each of the Directors
is independent in character and judgement and that there are no
relationships or circumstances which are likely to affect their
judgement.
The Board's policy on tenure is that continuity and experience
are considered to add significantly to the strength of the Board
and, as such, no limit on the overall length of service of any of
the Company's Directors, including the Chairman, has been imposed.
When considering the length of an individual Director's service,
the Board will do so in the context of the average length of tenure
of the Board as a whole. In view of its non-executive nature, the
Board considers that it is not appropriate for the Directors to be
appointed for a specific term, although new Directors are appointed
with the expectation that they will serve for a minimum period of
three years subject to shareholder approval.
All of the Company's Directors will seek re-election at each
Annual General Meeting, regardless of their length of tenure.
Board Evaluation
An evaluation of the Board and its Committees as well as the
Chairman and the individual Directors is carried out annually. In
addition to evaluations carried out by the Board collectively, the
Management Engagement and Remuneration Committee on behalf of the
Board considers annually whether an external evaluation should be
undertaken by an independent agency.
The Chairman acts on the results of the Board's evaluation by
recognising the strengths and addressing the weaknesses of the
Board and recommending any areas for development. If appropriate,
the Chairman will propose that new members are appointed to the
Board or will seek the resignation of Board Directors.
During the year ended 30 November 2020, the performance of the
Board, its committees and individual Directors (including each
Director's independence) was again evaluated through a formal
assessment process led by the Chairman. This involved the
circulation of a Board and Committee evaluation checklist, tailored
to suit the nature of the Company, followed by discussions between
the Chairman and each of the Directors. The performance of the
Chairman was evaluated by the other Directors under the leadership
of the Chairman of the Audit Committee.
As part of the Board evaluation discussions, each of the
Directors also assessed the overall time commitment of their
external appointments and it was concluded that all Directors have
sufficient time to discharge their duties. This conclusion was
reached on the basis that most external appointments, especially
for Messrs Casey and Shi, are non--executive roles which are far
less time-consuming than full-time executive positions in a trading
company would be.
In addition to being a non-executive Director of Mobius
Investment Trust plc and as set out in his biographical details, Mr
Casey is a non-executive director of four other investment trusts.
Investment trusts generally only require time for quarterly board
meetings, committee meetings which usually take place on the same
day as board meetings and for reviewing documents such as Board
papers, annual and half yearly reports. Mr Casey has made himself
available for all meetings of the Company and, in his capacity of
Audit Committee Chairman, has also held meetings and conference
calls with the Company's auditors. In between scheduled meetings
and calls, he also makes himself available to the Managers and the
Company Secretary as and when his expertise and opinion are
required.
Mr Shi is a director of several other companies as summarised
above. Apex Class Limited is a pure investment holding company with
no operating functions. All other directorships are independent and
non-executive and only require limited time commitment. Like Mr
Casey, Mr Shi has attended all meetings of the Company and, in
between meetings and conference calls, has also made himself
available to the Managers and the Company Secretary whenever his
input was required. As the Chairman of the Management Engagement
and Remuneration Committee he was involved in reviewing all
management arrangements of the Company.
The Chairman is satisfied that the structure and operation of
the Board continues to be effective and relevant and that there is
a satisfactory mix of skills, experience and knowledge of the
Company. The Board has considered the position of all the Directors
including the Chairman as part of the evaluation process and
believes that it would be in the Company's best interests to
propose them for re-election.
Training and Advice
New appointees to the Board are provided with a full induction
programme. The programme covers the Company's investment strategy,
policies and practices. The Directors are also given key
information on the Company's regulatory and statutory requirements
as they arise including information on the role of the Board,
matters reserved for its decision, the terms of reference of the
Board Committees, the Company's corporate governance practices and
procedures and the latest financial information. It is the
Chairman's responsibility to ensure that the Directors have
sufficient knowledge to fulfil their role.
On an ongoing basis, and further to the annual evaluation
process, the Company Secretary will make arrangements for Directors
to develop and refresh their skills and knowledge in areas which
are mutually identified as being likely to be required, or of
benefit to them, in carrying out their duties effectively.
Directors will endeavour to make themselves available for any
relevant training sessions which may be organised for the
Board.
The AIC holds regular Director Roundtable events throughout the
year, which are designed to cover the latest issues and regulatory
developments affecting the investment company sector. The Director
Roundtables are open to all member investment company
directors.
Conflicts of Interest
Company Directors have a statutory obligation to avoid a
situation in which they (and connected persons) have, or can have,
a direct or indirect interest that conflicts, or may possibly
conflict, with the interests of the Company.
In line with the Companies Act 2006, the Board has the power to
sanction any potential conflicts of interest that may arise and
impose such limits or conditions that it thinks fit. A register of
interests and external appointments is maintained and is reviewed
at every Board meeting to ensure that all details are kept up to
date. Should a conflict arise, the Board has the authority to
request that the Director concerned abstains from any relevant
discussion, or vote. Appropriate authorisation will be sought prior
to the appointment of any new directors or if any new conflicts or
potential conflicts arise.
No conflicts of interest arose during the year under review.
Matters Reserved for Decision by the Board
The Board has adopted a schedule of matters reserved for its
decision. This includes, inter alia, the following:
-- Decisions relating to the strategic objectives and overall
management of the Company, including the appointment or removal of
the Investment Manager and other service providers, establishing
the investment objectives, strategy and performance comparators,
the permitted types or categories of investments and the proportion
of assets that may be invested in them.
-- Requirements under the Companies Act 2006, including the
approval of the half-year and annual financial statements, the
recommendation of the final dividend (if any), the appointment or
removal of the Company Secretary and determining the policy on
share issuance and buybacks.
-- Matters relating to certain Stock Exchange requirements and
announcements, the Company's internal controls, and the Company's
corporate governance structure, policies and procedures.
-- Matters relating to the Board and its Committees, including
the terms of reference and membership of the committees, and the
appointment of directors (including the Chairman and the SID).
Day-to-day investment management is delegated to Mobius Capital
Partners LLP and operational management is delegated to Frostrow
Capital LLP.
The Board takes responsibility for the content of communications
regarding major corporate issues even if Mobius Capital Partners
and Frostrow act as spokesman. The Board is kept informed of
relevant promotional material that is issued by Mobius Capital
Partners.
Risk Management and Internal Controls
The Board has overall responsibility for the Company's risk
management and internal control systems and for reviewing their
effectiveness. The Company applies the guidance published by the
Financial Reporting Council on internal controls. Internal control
systems are designed to manage, rather than eliminate, the risk of
failure to achieve the business objective and can provide only
reasonable and not absolute assurance against material misstatement
or loss. These controls aim to ensure that the assets of the
Company are safeguarded, that proper accounting records are
maintained and that the Company's financial information is
reliable. The Directors have a robust process for identifying,
evaluating and managing the significant risks faced by the Company,
which are recorded in a risk matrix. The Audit Committee, on behalf
of the Board, considers each risk as well as reviewing the
mitigating controls in place. Each risk is rated for its
"likelihood" and "impact" and the resultant numerical rating
determines its ranking into 'Principal/Key', 'Significant' or
'Minor'. This process was in operation during the year and
continues in place up to the date of this report. The process also
involves the Audit Committee receiving and examining regular
reports from the Company's principal service providers. The Board
then receives a detailed report from the Audit Committee on its
findings. The Directors have not identified any significant
failures or weaknesses in respect of the Company's internal control
systems.
Information on the Company's financial, strategic and
operational risk management can be found in the Strategic
Report.
Relationship with the Investment Manager
At each Board meeting, representatives from the Investment
Manager are in attendance to present verbal and written reports
covering their activity, portfolio and investment performance over
the preceding period, and compliance with the applicable rules and
guidance of the FCA and the UK Stewardship Code. The Investment
Managers also seek approval for specific transactions which they
are required to refer to the Board.
Ongoing communication with the Board is maintained between
formal meetings. The Board and the Investment Manager operate in a
supportive, co-operative and open environment.
The Management Engagement Committee evaluates the Investment
Manager's performance and reviews the terms of the Investment
Management Agreement at least annually. The outcome of this year's
review is described in the Business Review.
Relationship with Other Service Providers
Representatives from Frostrow are in attendance at each Board
meeting to address questions on the Company's operations,
administration and governance requirements.
The Management Engagement Committee monitors and evaluates all
of the Company's other service providers, including Frostrow, and
also the Custodian, the Registrars and the Brokers. At the most
recent review, in September 2020, the Committee concluded that all
the service providers were performing well and should be retained
on their existing terms and conditions.
Company Secretary
The Board has direct access to the advice and services of the
Company Secretary, Frostrow, which is responsible for ensuring that
the Board and Committee procedures are followed and that the
Company complies with applicable regulations. The Company Secretary
is also responsible to the Board for ensuring timely delivery of
information and reports and that statutory obligations of the
Company are met.
Independent Professional Advice
The Board has formalised arrangements under which the Directors,
in the furtherance of their duties, may seek independent
professional advice at the Company's expense.
Legal advice was sought during the year in respect of the 2020
Annual General Meeting which had to be held under lockdown
conditions, with no shareholders being allowed to attend. Due to
these highly unusual conditions brought about by the Covid-19
pandemic, the Board wished to ensure that everything was done to
ensure that shareholders were enabled to have a say in Company
matters.
Relations with Shareholders
A detailed analysis of the substantial shareholders in the
Company is provided to the Directors at each Board meeting.
Representatives of Mobius Capital Partners LLP and Frostrow Capital
LLP regularly meet with institutional shareholders and private
client asset managers to discuss strategy and to understand their
issues and concerns and, if applicable, to discuss corporate
governance issues. The results of such meetings are reported at the
following Board meeting.
Regular reports from the Company's corporate stockbroker are
submitted to the Board on investor sentiment, industry issues and
trends.
The Company aims to provide shareholders with a full
understanding of the Company's investment objective, policy and
activities, its performance and the principal investment risks by
means of informative annual and half-yearly reports. This is
supplemented by the daily publication of the net asset value of the
Company's shares through the London Stock Exchange. The Company's
website, www.mobiusinvestmenttrust.com is regularly updated and
provides useful information about the Company, including the
Company's financial reports, monthly factsheets, quarterly
Manager's commentaries and announcements. The Company also held two
webinars for investors.
Shareholders wishing to communicate with the Chairman, or any
other member of the Board, may do so by writing to the Company, for
the attention of the Company Secretary at the offices of Frostrow
Capital LLP. Subject to any Covid restrictions, all shareholders
are encouraged to attend the Annual General Meeting, where they are
given the opportunity to question the Chairman, the Board and
representatives of Mobius Capital Partners LLP. The Directors
welcome the views of all shareholders and place considerable
importance on communications with them.
Socially Responsible Investment
The Company's investment activities and day to day management is
delegated to the Investment Manager, the Manager and other third
parties. As an investment trust, the Company has no direct social,
community, employee or environmental responsibilities. Its
principal responsibility to shareholders is to ensure that the
investment portfolio is properly managed and invested. As detailed
above, the management of the portfolio has been delegated to the
Company's Investment Manager.
In light of the nature of the Company's business there are no
relevant human rights issues and the Company does not have a human
rights policy. The Company does not maintain premises, hold any
physical assets or operations and does not have any employees.
Consequently, 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' Reports) Regulations 2013.
The investment manager's customised engagement acts as one of
the key features in the investment process and includes an Action
Plan targeted at ESG and operational issues identified in the
individual holdings. The Investment Manager believes this
customised engagement will lead to an enhancement in ESG+C
positioning, operational improvements, and attractive returns to
investors following a stock rerating.
UK Stewardship Code and Exercise of Voting Powers
The Board and the Investment Manager support the UK Stewardship
Code, issued by the FRC, which sets out the principles of effective
stewardship by institutional investors. The Company's investment
portfolio is managed by Mobius Capital Partners LLP who have
extensive experience with emerging markets and who have a strong
commitment to effective stewardship.
The Board has delegated discretion to Mobius Capital Partners
LLP to exercise voting powers on its behalf in respect of shares
owned by the Company.
Nominee Share Code
Where the Company's shares are held via a nominee company name,
the Company undertakes:
-- to provide the nominee company with multiple copies of
shareholder communications, so long as an indication of quantities
has been provided in advance; and
-- to allow investors holding shares through a nominee company
to attend general meetings, provided the correct authority from the
nominee company is available.
Nominee companies are encouraged to provide the necessary
authority to underlying shareholders to attend, speak and vote at
the Company's general meetings.
Significant Holdings and Voting Rights
Details of the shareholders with substantial interests in the
Company's shares, the Directors' authorities to issue and
repurchase the Company's shares, and the voting rights of the
shares are set out in the Report of the Directors.
Audit, Risk and Internal Control
The Statement of Directors' Responsibilities describes the
Directors' responsibility for preparing this annual report.
The Audit Committee Report explains the work undertaken to allow
the Directors to make this statement and to apply the going concern
basis of accounting. It also sets out the main roles and
responsibilities and the work of the Audit Committee throughout the
year, and describes the Directors' review of the Company's risk
management and internal control systems.
A description of the principal risks facing the Company and an
explanation of how they are being managed is provided in the
Strategic Report.
The Board's assessment of the Company's longer-term viability is
set out in the Business Review.
Remuneration
The Directors' Remuneration Report sets out the levels of
remuneration for each Director and explains how Directors'
remuneration is determined.
Frostrow Capital LLP
Company Secretary
25 February 2021
STATEMENT OF DIRECTORS' RESPONSIBILITIES
In respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial period. Under that law the Directors
have prepared the Company financial statements in accordance with
United Kingdom Accounting Standards, comprising FRS 102 "The
Financial Reporting Standard applicable in the UK and Republic of
Ireland", and applicable law (United Kingdom Generally Accepted
Accounting Practice).
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 return or
loss of the Company for that period. In preparing the financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable United Kingdom Accounting Standards
have been followed for the financial statements, subject to any
material departures disclosed and explained in the financial
statements;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- 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
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.
Going Concern
The Directors, having made relevant enquiries, are satisfied
that it is appropriate to prepare the financial statements on the
going concern basis as the net assets of the Company consist of
liquid securities.
Responsibility Statement
The Directors consider that the annual report and accounts,
taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in
the 'Board of Directors' confirm that, to the best of their
knowledge:
-- the Company's financial statements, which have been prepared
in accordance with United Kingdom Accounting Standards, comprising
FRS 102 "The Financial Reporting Standard applicable in the UK and
Republic of Ireland", and applicable law (United Kingdom Generally
Accepted Accounting Practice) United Kingdom Accounting Standards,
comprising FRS 102 "The Financial Reporting Standard applicable in
the UK and Republic of Ireland"), and applicable law (United
Kingdom Generally Accepted Accounting Practice), give a true and
fair view of the assets, liabilities, financial position and loss
of the Company; and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
Approved by the Board of Directors and signed on its behalf
by
Maria Luisa Cicognani
Chairman
25 February 2021
AUDIT COMMITTEE REPORT
for the year ended 30 November 2020
Introduction from the Chairman
I am pleased to present my second formal report to shareholders
as Chairman of the Audit Committee, for the year ended 30 November
2020.
Composition and Meetings
Due to the small size of the Board, the Audit Committee
comprises the whole Board (all Directors are independent and
non-executive), including the Chairman of the Company. In
accordance with the terms of reference of the Committee, the
Chairman of the Board may be a member of the Committee, but may not
act as the Committee Chairman.
The Committee has sufficient recent and relevant financial
experience and, as a whole, has competence relevant to the sector
in which the Company operates. I am also the audit committee
chairman of various other listed companies and was, previously, an
audit partner at KPMG LLP.
The other Committee members have a combination of financial,
investment and other relevant experience gained throughout their
careers. The experience of the members of the Committee can be
assessed from the Directors' biographies.
Role and Responsibilities of the Audit Committee
1. To review the Company's half-year and annual financial
statements together with announcements and other filings relating
to the financial performance of the Company.
2. To review the risk management and internal control processes
of the Company and its key service providers. As part of this
review the Committee assesses the appropriateness of the Company's
anti-bribery and corruption policy and also its policy on the
prevention of the facilitation of tax evasion.
3. To recommend the appointment and removal of the external
Auditors, and agreeing the scope of their work and their
remuneration, reviewing their independence and the effectiveness of
the audit process. Also, to be responsible for the selection
process of the external Auditors.
4. To consider any non-audit work to be carried out by the
Auditors. The Audit Committee reviews the need for non-audit
services to be performed by the Auditors in accordance with the
Company's non-audit services policy, and authorises such on a case
by case basis having given consideration to the cost effectiveness
of the services and the objectivity of the Auditor (see Audit
Committee report for further information).
5. To consider the need for an internal audit function. Since
the Company delegates its day-to-day operations to third parties
and has no employees, the Committee has determined there is no
requirement for such a function.
The Committee's Terms of Reference are available for review on
the Company's website at www.mobiusinvestmenttrust.com.
The Committee met twice during the year under review and once
more since the year-end. Attendance by each Director during the
year is shown in the Corporate Governance Report.
Significant Issues Considered by the Audit Committee during the
Year
Covid-19
The Covid-19 pandemic commenced around the time when the 2019
Annual Report was mailed out to shareholders and the Committee gave
in-depth consideration to its potential effects on the Company.
Despite initial volatility in line with markets world-wide, the
Company's performance has remained robust. The long-term effect of
the pandemic on the global economy and, in particular, emerging
markets will become clearer in time and the Committee will continue
to monitor the impact of Covid-19, which is also captured in the
Company's risk register.
In order to mitigate the business risks caused by the pandemic,
the Committee continues to review the operational resilience of its
various service providers, who have continued to demonstrate their
ability to provide services to the expected level, whilst doing so
remotely.
Internal Controls and Risk Management
The Directors have identified main areas of risk as described in
the Strategic Report. They have set out the actions taken to
evaluate and manage these risks. The Committee reviews the various
actions taken and satisfies itself that they are sufficient: in
particular the Committee reviews the Company's schedule of key
risks at each meeting and requires amendments to both risks and
mitigating actions if necessary.
The Board has overall responsibility for the Company's risk
management and systems of internal controls and for reviewing their
effectiveness. In common with the majority of investment trusts,
investment management, accounting, company secretarial and
custodial services have been delegated to third parties. The
effectiveness of the internal controls is assessed on a continuing
basis by the Company Secretary, the Investment Manager and the
Depositary. Each maintains its own systems and the Committee
receives regular reports from them. The Committee is satisfied
that, notwithstanding the changes in personnel at the Investment
Manager, appropriate systems have been in place for the year under
review.
Meetings and Business
Representatives of Frostrow and the Investment Manager attended
each of the Committee's meetings and reported as to the proper
conduct of business in accordance with the regulatory environment
in which the Company and the Investment Manager operate. The
Committee also met the Auditors twice during the year.
In addition to the formal Audit Committee meetings as Audit
Committee Chairman, I maintain ongoing, less formal communications
with the Investment Manager, Frostrow and the Company's auditors as
need dictates.
The following matters were dealt with at the meetings:
January 2020
-- Consideration and review of the annual results and the Auditors' report to the Committee;
-- Approval of the Annual Report and Financial Statements;
-- Review of the Depositary's Report for the period ended 30 November 2019;
-- Review of the Investment Manager's internal controls;
-- Review of the relevant internal controls reports of Frostrow and the Depositary;
-- Review of the procedures for the detection of fraud and cyber
security and the measures for these put in place by the key service
providers;
-- Review of the Company's risk matrix;
-- Review of the Company's policies in respect of anti-bribery
and corruption as well as anti-tax evasion;
-- Evaluation of the Committee's effectiveness.
July 2020
-- Consideration and review of the half-yearly report and financial statements;
-- Approval of the half-yearly report;
-- Review of the Committee's terms of reference;
-- Review of the Depositary's Report for the six months ended 31 May 2020;
-- Review of the internal controls report of the Company's Registrars;
-- Review of the key service providers' Covid-19 resilience;
-- Review of the Company's risk matrix;
-- Approval of the Auditors' engagement letter and review of their plan for the 2020 audit;
-- Review of the Company's policies.
Annual Report and Financial Statements
The Annual Report and the Financial Statements as a whole, are
the responsibility of the Board. The Directors' Responsibility
Statement can be found ablve. The Board looks to the Committee for
advice in relation to the Financial Statements both as to their
form and content, and on any specific areas requiring
judgement.
Although the Committee did not identify any significant issues
as part of its review of the Annual Report and Financial
Statements, it paid particular attention to:
Accounting Policies
The Accounting policies have been applied throughout the year.
In light of there being no unusual transactions during the year or
other possible reasons, the Committee found no reason to change any
of the policies.
Existence of Investments
Reassurance was sought from the Depositary concerning the
safekeeping of the Company's investments.
Valuation of Investments
The Committee reviewed the robustness of the Investment
Manager's processes in place for recording investment transactions
as well as ensuring the valuation of investments is in accordance
with adopted accounting policies.
Recognition of Revenue from Investments
The Committee received assurance that all dividends receivable,
including special dividends, had been accounted for
appropriately.
Going Concern
Having considered the Company's financial position, the
Committee satisfied itself that it is appropriate for the Board to
present the Financial Statements on the going concern basis.
Long-term Viability
The Committee satisfied itself that it is appropriate for the
Board to make the long-term viability statement, that they have a
reasonable expectation that the Company will be able to continue
its operations over the next five years.
Taxation
The Committee confirmed the position of the Company in respect
of compliance with investment trust status and satisfied itself
that the Company continues to meet the eligibility conditions.
The Committee also monitored closely the position with regard to
the reclamation of withholding tax and the payment of other capital
taxes. The Company employs a number of specialist local agents (in
jurisdictions such as Taiwan, India and Bangladesh) to assist in
the process.
Internal Audit
Since the Company delegates its day-to-day operations to third
parties and has no employees, the Committee again determined that
there is no requirement for such a function.
Half-year Financial Statements
The Committee reviewed the half-year financial statements of the
Company as well as the half-year results announcement before
recommending their approval to the Board.
External Auditor
The Audit
The nature and scope of the audit for the year, together with
PricewaterhouseCoopers LLP's audit plan, were considered by the
Committee on 20 July 2020. The Committee then met
PricewaterhouseCoopers LLP on 11 February 2021 to formally review
the outcome of the audit and to discuss the limited issues that
arose. The Committee also discussed the presentation of the Annual
Report with the Auditors and sought their perspective.
Independence and Effectiveness
In order to fulfil the Committee's responsibility regarding the
independence of the Auditors, the Committee reviewed:
- the senior audit personnel in the audit plan for the year,
- the Auditors' arrangements concerning any conflicts of interest,
- the extent of any non-audit services,
- the statement by the Auditors that they remain independent
within the meaning of the regulations and their professional
standards, and
- the Auditors' independence.
In order to consider the effectiveness of the audit process, the
Committee reviewed:
- the Auditors' fulfilment of the agreed audit plan,
- the report arising from the audit itself, and
- feedback from the Company's Manager.
A summary of the Company's policy on the provision by the
Auditors of non-audit services to the Company can be found
below.
The Committee is satisfied with the Auditors' independence and
the effectiveness of the audit process, together with the degree of
diligence and professional scepticism brought to bear.
Appointment and Tenure
PricewaterhouseCoopers LLP were appointed as the Auditors of the
Company shortly after the incorporation of the Company. Mr
Christopher Meyrick is the Engagement Leader allocated to the
Company by PricewaterhouseCoopers LLP.
In accordance with the current legislation, the Company is
required to instigate a tender process for Auditors at least every
10 years and will have to change its auditor after a maximum of 20
years. In addition, the nominated Engagement Leader will be
required to rotate after serving a maximum of 5 years with the
Company; it is therefore anticipated that Mr Meyrick will serve as
Engagement Leader until completion of the audit process in 2024.
The Company has complied throughout the year ended 30 November 2020
with the provisions of the Statutory Audit Services Order 2014,
issued by the Competition and Markets Authority ("CMA Order").
The re-appointment of PricewaterhouseCoopers LLP as Auditors to
the Company will be submitted for shareholder approval, together
with a separate Resolution to authorise the Committee to reconfirm
the remuneration of the Auditors, at the AGM to be held on 28 April
2021.
Non-Audit Services
The Company operates on the basis whereby the provision of all
non-audit services by the Auditors has to be pre-approved by the
Audit Committee. Such services are only permissible where no
conflicts of interest arise, the service is not expressly
prohibited by audit legislation, where the independence of the
Auditors is not likely to be impinged by undertaking the work and
the quality and the objectivity of both the non-audit work and
audit work will not be compromised. In particular, non-audit
services may be provided by the Auditors if they are
inconsequential or would have no direct effect on the Company's
financial statements and the audit firm would not place significant
reliance on the work for the purposes of the statutory audit.
During the year under review, PricewaterhouseCoopers LLP have
carried out no non-audit work.
Effectiveness of the Committee
A formal internal Board review which included reference to the
Audit Committee's effectiveness, was undertaken by the Chairman of
the Company during the year. The outcome was positive with no
significant concerns expressed.
Christopher Casey
Chairman of the Audit Committee
25 February 2021
DIRECTORS' REMUNERATION REPORT
for the year ended 30 November 2020
Statement from the Chairman of the Management Engagement and
Remuneration
Committee
I am pleased to present the Directors' Remuneration Report to
shareholders. This report has been prepared in accordance with the
requirements of the Companies Act 2006.
The Directors' Remuneration Report is subject to an annual
advisory vote and therefore an Ordinary Resolution for the approval
of this report will be put to shareholders at the Company's
forthcoming Annual General Meeting (AGM).
The law requires the Company's Auditors to audit certain of the
disclosures provided in this report. Where disclosures have been
audited, they are indicated as such and the Auditors' audit opinion
is included in their report to shareholders.
As noted in the Strategic Report, all of the Directors are
non-executive and therefore there is no Chief Executive Officer.
The Company does not have any employees. There is therefore no CEO
or employee information to disclose.
The Management Engagement and Remuneration Committee considers
the framework for the remuneration of the Directors. It reviews the
ongoing appropriateness of the Company's remuneration policy and
the individual remuneration of Directors by reference to the
activities of the Company and comparison with other companies of a
similar structure and size. This is in-line with the AIC Code.
The Management Engagement and Remuneration Committee met once
during the year and decided to increase Directors' fees by 2% with
effect from 1 December 2020. As already noted in the last annual
report, Directors' fees should be increased annually in line with
the peer group and the market.
Directors' Fees
The Directors, as at the date of this report, and who have all
served throughout the year, received the fees listed in the table
below. These exclude any employer's national insurance
contributions, if applicable. No other forms of remuneration were
received by the Directors and so fees represent the total
remuneration of each Director.
No communications have been received from shareholders regarding
Directors' remuneration.
Articles 121 and 122 of the Company's Articles of Association
provide that Directors are entitled to be reimbursed for reasonable
expenses incurred by them in connection with the performance of
their duties and attendance at Board and General Meetings.
Under HMRC guidance, travel expenses and other out of pocket
expenses may be considered as taxable benefits for the Directors.
Where expenses reimbursed to the Directors are classed as taxable
under HMRC guidance, they are shown in the taxable expenses column
of the Directors' remuneration table along with the associated tax
liability which is settled by the Company.
Approval
A resolution to approve the Remuneration Report will be put to
shareholders at the AGM of the Company to be held on 28 April 2021.
The Remuneration Policy will apply until it is next put to
shareholders for renewed approval, which must be at intervals of
not more than three years, or when the Directors' Remuneration
Policy is varied in which case shareholder approval for the new
Directors' Remuneration Policy will be sought. The Remuneration
policy will therefore be put to shareholders again at the AGM in
2023.
Fixed Taxable Total
Date of Fees Expenses Remuneration
Appointment 2020 2020 2020
to the Board GBP GBP GBP
---------------------- ----------------- ------- -------- ------------
Maria Luisa Cigognani 5 September 2018 35,000 - 35,000
Christopher Casey 5 September 2018 30,000 573 30,573
Dr Sophie Robé 5 September 2018 25,000 - 25,000
Charlie Shi 5 September 2018 25,000 - 25,000
---------------------- ----------------- ------- -------- ------------
115,000 573 115,573
---------------------------------------- ------- -------- ------------
Directors Remuneration history
The table below contains the annual percentage change in
remuneration over the two years to 30 November 2020 in respect of
each Director
Period to 30 November Annualised Year to 30 November
Fee Rates 2019 2019 2020
-------------------------------- ---------------------- ---------- -------------------
Chairman GBP43,256 GBP35,000 GBP35,000
0% 0%
Chair of Audit Committee GBP37,077 GBP30,000 GBP30,000
0% 0%
Management Engagement and
Remuneration Committee Chairman GBP30,897 GBP25,000 GBP25,000
0% 0%
Non-executive Director GBP30,897 GBP25,000 GBP25,000
0% 0%
------------------------------------------------------- ---------- -------------------
Total GBP142,128 GBP115,000 GBP115,000
-------------------------------- ---------------------- ---------- -------------------
Loss of Office
Directors do not have service contracts with the Company but are
engaged under Letters of Engagement. These specifically exclude any
entitlement to compensation upon leaving office for whatever
reason.
Relative Cost of Directors' Remuneration
The bar chart below shows the comparative cost of Directors'
fees compared with the level of Company expenses for the year ended
30 November 2020.
[Graphic appear here]
Directors' Interests in Shares
(audited information)
The Directors' interests in the share capital of the Company are
shown in the table below:
Number of
shares held
30 November
2020
---------------------- ----------- -----------
Maria Luisa Cicognani Beneficial 71,740
Christopher Casey Beneficial 10,000
Dr Sophie Robé - -
Charlie Shi - -
---------------------- ----------- -----------
Since the year end there have not been any changes in the
Directors' interests.
Share Price Total Return
The chart above illustrates the shareholder return for a holding
in the Company's shares as compared to the peer group, which the
Board has adopted as the measure for the Company's performance from
launch to 30 November 2020.
Total Shareholder Return for the Period from launch to 30
November 2020
[Graphic appear here]
Statement of Voting at Annual General Meeting
The Directors' Remuneration Report for the period ended 30
November 2019 was approved by shareholders at the Annual General
Meeting held on 23 April 2020.
26,207,627 votes (99.82%) were in favour, with 46,027 votes
(0.18%) against and 15,700 votes withheld. Any proxy votes which
were at the discretion of the Chairman were included in the "for"
total.
Projected fees
for the year to Fees for the year to
30 November 2021 30 November 2020
------------------------------- ---------------- --------------------
Chairman GBP35,700 GBP35,000
Audit Committee Chairman GBP30,600 GBP30,000
Management Engagement and
Remuneration Committee Chairman GBP25,500 GBP25,000
Non-executive Director GBP25,500 GBP25,000
------------------------------- ---------------- --------------------
Total GBP117,300 GBP115,000
------------------------------- ---------------- --------------------
Directors' Remuneration Policy
The Company's Remuneration Policy provides that fees payable to
the Directors should reflect the time spent by the Board on the
Company's affairs and the responsibilities borne by the Directors.
The level of remuneration is set with reference to comparable
organisations and appointments, in order to attract individuals of
a high calibre.
The remuneration of the Directors is determined within the
limits set out in the Company's Articles of Association, which
state that the aggregate amount of Directors' fees shall not exceed
GBP300,000 in any financial year or such larger amount as the
Company may by ordinary resolution decide. Directors' remuneration
comprises solely Directors' fees. The Directors are not eligible
for bonuses, pension benefits, share options, long-term incentive
schemes or other benefits.
None of the Directors has a service contract. The terms of their
appointment provide that Directors shall retire and be subject to
election at the first Annual General Meeting (AGM) of the Company
after their appointment and to re-election annually thereafter. The
terms also provide that a Director may be removed without notice
and that compensation will not be due on leaving office.
In accordance with the Company's Articles of Association,
Directors are entitled to be paid all reasonable travel, hotel or
other expenses incurred in the performance of their duties,
including expenses incurred in attending Board or shareholder
meetings. Directors are also entitled to be paid additional
remuneration for rendering or performing extra or special services
of any kind, requiring them to commit significant extra time to the
Company. The current and projected Directors' fees for 2020 and
2021 are shown in the table above.
Fees for any new Director appointed will be on the above basis.
Fees payable in respect of subsequent years will be determined
following an annual review, with any increases to be in line with
the peer group and the market. Any views expressed by shareholders
with regards to fees paid to Directors will be taken into
consideration by the Management Engagement and Remuneration
Committee and the Board. No communications have been received from
shareholders regarding Directors' remuneration.
In accordance with the regulations, an ordinary resolution to
approve the Directors' Remuneration Policy will be put to
shareholders at least once every three years.
Accordingly, it was put to shareholders at the first AGM in 2020
and will next be on the AGM agenda in 2023.
Annual Statement
On behalf of the Board, I confirm that the Remuneration Policy,
set out above, and the Remuneration Report summarise, as
applicable, for the year ended 30 November 2020:
(a) the major decisions on Directors' remuneration;
(b) any substantial changes relating to Directors' remuneration
made during the year; and
(c) the context in which the changes occurred and decisions have
been taken.
Charlie Shi
Chairman of the Management Engagement and Remuneration
Committee
25 February 2021
INDEPENT AUDITORS' REPORT
to the members of Mobius Investment Trust plc
Report on the audit of the financial statements
Opinion
In our opinion, Mobius Investment Trust plc's financial
statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 November 2020 and of its return for the year then
ended;
-- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 102 "The Financial Reporting Standard
applicable in the UK and Republic of Ireland", and applicable law);
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, which comprise: the Statement of Financial Position
as at 30 November 2020; the Income Statement, and the Statement of
Changes in Equity 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 to the Company.
We have provided no non-audit services to the Company in the
period from 1 December 2019 to 30 November 2020.
Our audit approach
Overview
-- Overall materiality: GBP1.1 million (2019: GBP950,000), based on 1% of net assets.
-- The Company is a standalone Investment Trust Company and
engages Mobius Capital Partners LLP (the 'AIFM') to manage its
assets.
-- We conducted our audit of the Financial Statements using
information from the AIFM, Frostrow Capital LLP and Northern Trust
with whom Frostrow Capital LLP has engaged to provide 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.
-- Income from investments.
-- Valuation and existence of investments.
-- Consideration of impacts of COVID-19.
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. 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.
Capability of the audit in detecting irregularities, including
fraud
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 section 1158 of the Corporation
Tax Act 2010 and the UK and European regulatory principles, such as
those governed by the Financial Conduct Authority, 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 preparation of 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 inappropriate journal entries to increase
revenue 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 AIFM and Company
Secretary including consideration of known or suspected instances
of noncompliance with laws and regulations, or fraud;
-- reviewing relevant meeting minutes, including those of the Audit Committee;
-- identifying and testing journal entries, in particular any
material or revenue impacting manual journal entries posted as part
of the annual report preparation process;
-- assessment of the Company's compliance with the requirements
of section 1158 of the Corporation Tax Act 2010, including
recalculation of numerical aspects of the eligibility conditions;
and
-- designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing of expenses.
There are inherent limitations in the audit procedures described
above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely we would become aware of it.
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.
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.
Key audit matter How our audit addressed the key audit
matter
--------------------------------------------------- -------------------------------------------------------------
Income from investments
--------------------------------------------------- -------------------------------------------------------------
Refer to Audit Committee Report, Accounting We assessed the accounting policy for
Policies and Notes to the Financial income recognition for compliance with
Statements. accounting standards and the AIC SORP
ISAs (UK) presume there is a risk of and performed testing to check that
fraud in income recognition because income had been accounted for in accordance
of the pressure management may feel with this stated accounting policy.
to achieve a certain objective. We found that the accounting policies
For the Company we consider that 'income' implemented were in accordance with
refers to both revenue and capital accounting standards and the AIC SORP,
(including gains and losses on investments). and that income has been accounted
We focussed this risk on the existence/occurrence for in accordance with the stated accounting
of gains/losses on investments as well policy.
as the completeness and accuracy of We understood and assessed the design
dividend income recognition and its and implementation of key controls
presentation in the Income Statement surrounding income recognition.
as set out in the requirements of The The gains/losses on investments held
Association of Investment Companies' at fair value comprise realised and
Statement of Recommended Practice (the unrealised gains/losses. For unrealised
"AIC SORP"). gains and losses, we tested the valuation
of the portfolio at the year-end (see
below), together with testing of the
reconciliation of opening and closing
investments and agreeing the year end
holdings to independent confirmations.
For realised gains/losses, we tested
a sample of disposal proceeds by agreeing
the proceeds to bank statements and
we re-performed the calculation of
a sample of realised gains/losses.
In addition, we tested dividend receipts
by agreeing the dividend rates from
all investments to independent third-party
sources.
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. Our testing did not identify
any unrecorded dividends.
We tested accuracy and occurrence by
testing that all dividends recorded
in the year had been declared in the
market by investment holdings, and
we traced a sample of dividends received
to bank statements. No material misstatements
were identified from this testing.
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 determining
reasons behind dividend distributions.
No material misstatements were identified
from this testing.
--------------------------------------------------- -------------------------------------------------------------
Valuation and existence of investments
--------------------------------------------------- -------------------------------------------------------------
Refer Audit Committee Report, Accounting We tested the valuation of the investments
Policies and Notes to the Financial by agreeing the prices used in the
Statements. valuation to independent third-party
The investment portfolio at 30 November sources.
2020 comprised listed equity investments We tested the existence of the investments
of GBP109.8 million. We focused on by agreeing the holdings of all investments
the valuation and existence of investments to an independent confirmation from
because investments represent the principal the Depository, Northern Trust Global
element of the net asset value as disclosed Services SE as at 30 November 2020.
in the Statement of Financial Position No material misstatements were identified
in the financial statements. from this testing.
--------------------------------------------------- -------------------------------------------------------------
Consideration of impacts of COVID-19
--------------------------------------------------- -------------------------------------------------------------
Refer to the Chairman's Statement, We evaluated the Directors' assessment
Principal Risks, Emerging Risks and of the impact of the COVID-19 pandemic
Risk Management, the Long Term Viability on the Company by:
Statement and the Going Concern Statement, * evaluating the Company's updated risk assessment and
which disclose the impact of the COVID-19 considering whether it addresses the relevant threats
pandemic. presented by COVID-19; and
The COVID-19 outbreak has been declared
a pandemic by the World Health Organisation.
Since the first quarter of 2020, it * evaluating management's assessment of operational
has caused significant economic uncertainty impacts, considering their consistency with other
globally and disruption to supply chains available information and our understanding of the
and travel, slowed global growth and business and assessing the potential impact on the
caused volatility in global markets financial statements.
and in exchange rates.
The Directors have prepared the financial
statements of the Company on a going We obtained and evaluated the Directors'
concern basis, and believe this assumption going concern assessment which reflects
remains appropriate. This conclusion conditions up to the point of approval
is based on the assessment that, notwithstanding of the Annual Report by obtaining evidence
the significant market uncertainties, to support the key assumptions and
they are satisfied that the Company forecasts driving the Directors' assessment.
has adequate resources to continue This included reviewing the Directors'
in operational existence for the foreseeable assessment of the Company's financial
future and that the Company and its position and forecasts, their assessment
key third party service providers have of liquidity and their review of the
in place appropriate business continuity operational resilience of the Company
plans and will be able to maintain and oversight of key third party service
service levels throughout the COVID-19 providers.
pandemic. We assessed the disclosures presented
in the Annual Report in relation to
COVID-19 by reading the other information,
including the Principal Risks and Viability
Statement set out in the Strategic
Report, and assessing its consistency
with the financial statements and the
evidence we obtained in our audit.
Our conclusions relating to other information
are set out in the 'Reporting on other
information' section of our report.
Our conclusions relating to going concern
are set out in the 'Going Concern'
section below.
--------------------------------------------------- -------------------------------------------------------------
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.
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 materiality GBP1.1 million (2019: GBP950,000).
How we determined it 1% of net assets.
Rationale for benchmark We have applied this benchmark, a generally accepted
applied auditing practice for investment trust audits,
in the absence of indicators that an alternative
benchmark would be appropriate and because we
believe this provides an appropriate and consistent
year-on-year basis for our audit.
----------------------- ----------------------------------------------------
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above GBP55,000 (2019:
GBP47,500) as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation Outcome
-------------------------------------------------- ---------------------------------------
We are required to report if we have anything We have nothing material to add
material to add or draw attention to in respect or to draw attention to.
of the Directors' statement in the financial However, because not all future
statements about whether the Directors considered events or conditions can be predicted,
it appropriate to adopt the going concern this statement is not a guarantee
basis of accounting in preparing the financial as to the Company's ability to
statements and the Directors' identification continue as a going concern.
of any material uncertainties to the Company's
ability to continue as a going concern over
a period of at least twelve months from the
date of approval of the financial statements.
-------------------------------------------------- ---------------------------------------
We are required to report if the Directors' We have nothing to report.
statement relating to Going Concern in accordance
with Listing Rule 9.8.6R(3) is materially
inconsistent with our knowledge obtained
in the audit.
-------------------------------------------------- ---------------------------------------
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, Report of the Directors
and Corporate Governance Statement, we also considered whether the
disclosures required by the UK Companies Act 2006 have been
included.
Based on the responsibilities described above and our work
undertaken in the course of the audit, the Companies Act 2006
(CA06), ISAs (UK) and the Listing Rules of the Financial Conduct
Authority (FCA) require us also to report certain opinions and
matters as described below (required by ISAs (UK) unless otherwise
stated).
Strategic Report and Report of the Directors
In our opinion, based on the work undertaken in the course of
the audit, the information given in the Strategic Report and Report
of the Directors for the year ended 30 November 2020 is consistent
with the financial statements and has been prepared in accordance
with applicable legal requirements. (CA06)
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
Report of the Directors. (CA06)
Corporate Governance Statement
In our opinion, based on the work undertaken in the course of
the audit, the information given in the Corporate Governance
Statement about internal controls and risk management systems in
relation to financial reporting processes and about share capital
structures in compliance with rules 7.2.5 and 7.2.6 of the
Disclosure Guidance and Transparency Rules sourcebook of the FCA
("DTR") is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
(CA06)
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 this information. (CA06)
In our opinion, based on the work undertaken in the course of
the audit, the information given in the Corporate Governance
Statement with respect to the Company's corporate governance code
and practices and about its administrative, management and
supervisory bodies and their committees complies with rules 7.2.2,
7.2.3 and 7.2.7 of the DTR. (CA06)
We have nothing to report arising from our responsibility to
report if a corporate governance statement has not been prepared by
the Company. (CA06)
The Directors' assessment of the prospects of the Company and of
the principal risks that would threaten the solvency or liquidity
of the Company
We have nothing material to add or draw attention to
regarding:
-- The Directors' confirmation that they have carried out a
robust assessment of the principal risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity.
-- The disclosures in the Annual Report that describe those
risks and explain how they are being managed or mitigated.
-- The Directors' explanation as to how they have assessed the
prospects of the Company, over what period they have done so and
why they consider that period to be appropriate, and their
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 their assessment,
including any related disclosures drawing attention to any
necessary qualifications or assumptions.
We have nothing to report having performed a review of the
Directors' statement that they have carried out a robust assessment
of the principal risks facing the Company and statement in relation
to the longer-term viability of the Company. Our review was
substantially less in scope than an audit and only consisted of
making inquiries and considering the Directors' process supporting
their statements; checking that the statements are in alignment
with the relevant provisions of the UK Corporate Governance Code
(the "Code"); and considering whether the statements are consistent
with the knowledge and understanding of the Company and its
environment obtained in the course of the audit. (Listing
Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to
report when:
-- The statement given by the Directors, that they consider the
Annual Report taken as a whole to be fair, balanced and
understandable, and provides the information necessary for the
members to assess the Company's position and performance, business
model and strategy is materially inconsistent with our knowledge of
the Company obtained in the course of performing our audit.
-- The section of the Annual Report, describing the work of the
Audit Committee does not appropriately address matters communicated
by us to the Audit Committee.
-- 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.
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. (CA06)
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.
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.
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 received 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.
Appointment
Following the recommendation of the audit committee, we were
appointed by the Directors on 7 November 2018 to audit the
financial statements for the period ended 30 November 2019 and
subsequent financial periods. The period of total uninterrupted
engagement is 2 years, covering the period ended 30 November 2019
and the year ended 30 November 2020.
Christopher Meyrick (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
25 February 2021
INCOME STATEMENT
for the year ended 30 November 2020 (2019: from the period of
incorporation on 7 August 2018 to 30 November 2019)
Year ended Period ended
30 November 2020 30 November 2019
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ----- ------- ------- ------- ------- ------- -------
Gains/(losses) on investments
held at fair value through profit
or loss 9 - 16,260 16,260 - (6,180) (6,180)
Exchange losses on foreign currencies (3) (16) (19) (3) (65) (68)
Income 2 966 - 966 1,458 - 1,458
Investment management and management
service fees 3 (340) (794) (1,134) (403) (940) (1,343)
Other expenses 4 (414) - (414) (569) - (569)
-------------------------------------- ----- ------- ------- ------- ------- ------- -------
Return/(loss) on ordinary activities
before finance costs and taxation 209 15,450 15,659 483 (7,185) (6,702)
Finance costs 5 - - - (12) (28) (40)
-------------------------------------- ----- ------- ------- ------- ------- ------- -------
Return/(loss) after finance costs
attributable to equity shareholders 209 15,450 15,659 471 (7,213) (6,742)
Taxation on ordinary activities 6 (94) (3) (97) (128) - (128)
-------------------------------------- ----- ------- ------- ------- ------- ------- -------
Return/(loss) after finance costs
and taxation attributable to
equity shareholders 115 15,447 15,562 343 (7,213) (6,870)
-------------------------------------- ----- ------- ------- ------- ------- ------- -------
Return/(loss) per share basic
and diluted 8 0.11p 14.71p 14.82p 0.34p (7.05)p (6.71)p
-------------------------------------- ----- ------- ------- ------- ------- ------- -------
The Total column of this statement represents the Company's
Income Statement. The Revenue and Capital columns are supplementary
to this and are prepared under guidance published by the
Association of Investment Companies (AIC).
All revenue and capital items in the Income Statement derive
from continuing operations.
The Company had no other comprehensive income or expenses other
than those shown above and therefore no separate Statement of Other
Comprehensive Income has been presented.
The accompanying notes are an integral part of these
statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 November 2020 (2019: from the period of
incorporation on 7 August 2018 to 30 November 2019)
Share Share Special Capital Revenue
capital premium reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- ------- -------- ------- -------
At 1 December 2019 1,063 4,865 96,932 (7,213) 343 95,990
Dividends paid - - - - (315) (315)
Profit for the year - - - 15,447 115 15,562
---------------------------- ------- ------- ------- -------- ------- -------
Balance at 30 November 2020 1,063 4,865 96,932 8,234 143 111,237
---------------------------- ------- ------- ------- -------- ------- -------
Share Share Special Capital Revenue
capital premium reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ------- -------- ------- -------- ------- -------
Period ended 30 November 2019
At 7 August 2018 - - - - - -
Issue of Ordinary Shares following placing
and offer for subscription 1,000 99,000 - - - 100,000
Cost of placing and offer for subscription - (2,004) - - - (2,004)
Issue of Management shares 13 - - - - 13
Issue of new shares in the secondary market 50 4,801 - - - 4,851
Transfer of share premium to special reserve - (96,932) 96,932 - - -
(Loss)/return for the period - - - (7,213) 343 (6,870)
--------------------------------------------- ------- -------- ------- -------- ------- -------
Balance at 30 November 2019 1,063 4,865 96,932 (7,213) 343 95,990
--------------------------------------------- ------- -------- ------- -------- ------- -------
The accompanying notes are an integral part of these
statements.
STATEMENT OF FINANCIAL POSITION
as at 30 November 2020
2020 2019
Notes GBP'000 GBP'000
------------------------------------------------------ ----- ------- -------
Fixed assets
Investments held at fair value through profit or loss 9 109,808 80,055
------------------------------------------------------ ----- ------- -------
Current assets
Debtors 10 156 171
Cash and cash equivalents 1,547 15,963
------------------------------------------------------ ----- ------- -------
1,703 16,134
------------------------------------------------------ ----- ------- -------
Current liabilities
Creditors (amounts falling due within one year) 11 (274) (199)
------------------------------------------------------ ----- ------- -------
Net current assets 1,429 15,935
------------------------------------------------------ ----- ------- -------
Total assets less current liabilities 111,237 95,990
------------------------------------------------------ ----- ------- -------
Net assets 111,237 95,990
------------------------------------------------------ ----- ------- -------
Capital and reserves
Called up share capital 12 1,063 1,063
Share premium 4,865 4,865
Special reserve 96,932 96,932
Retained Earnings:
Capital reserves 8,234 (7,213)
Revenue reserve 143 343
------------------------------------------------------ ----- ------- -------
Total Shareholders' funds 111,237 95,990
------------------------------------------------------ ----- ------- -------
Net asset value per Ordinary Share (p) 13 105.94 91.42
------------------------------------------------------ ----- ------- -------
The financial statements were approved, and authorised for
issue, by the Board of Directors on 25 February 2021 and signed on
its behalf by:
Maria Luisa Cicognani
Chairman
The accompanying notes are an integral part of these
statements.
Mobius Investment Trust plc - Company Registration Number:
11504912 (Registered in England and Wales)
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
The principal accounting policies, all of which have been
applied consistently throughout the year in the preparation of
these Financial Statements, are set out below:
(a) Basis of Accounting
The Financial Statements have been prepared under UK Company
Law, FRS 102 'The Financial Reporting Standard applicable in the UK
and Ireland' and under the historical cost convention, except for
the measurement at fair value of investments, and the Statement of
Recommended Practice (SORP) for "Financial Statements of Investment
Trust Companies and Venture Capital Trusts" issued by the
Association of Investment Companies dated October 2019 and the
Companies Act 2006.
The financial statements have been prepared on a going concern
basis. The disclosure on going concern in the Statement of
Directors' Responsibilities form part of these financial
statements.
The Company has taken advantage of the exemption from preparing
a Cash Flow Statement under FRS 102, as it is an investment company
whose investments are substantially all highly liquid and carried
at fair (market) value.
Significant Judgement
There is one significant judgement involved in the presentation
of the Company's accounts being the judgement on the functional and
presentational currency of the Company.
The Company's investments are made in foreign currencies,
however the Board considers the Company's functional and
presentational currency to be sterling. In arriving at this
conclusion, the Board considered that the shares of the Company are
listed on the London Stock Exchange, it is regulated in the United
Kingdom and pays dividends and expenses in sterling. All values are
rounded to the nearest thousand pounds (GBP'000) except where
otherwise indicated.
Presentation of the Income Statement
In order to reflect better the activities of an investment trust
company and in accordance with the SORP, supplementary information
which analyses the Income Statement between items of a revenue and
capital nature has been presented alongside the Income Statement.
The net revenue return is the measure the Directors believe
appropriate in assessing the Company's compliance with certain
requirements set out in Section 1158 of the Corporation Tax Act
2010.
(b) Valuation of Investments
Investments are measured initially, and at subsequent reporting
dates, at fair value, and are recognised and derecognised 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. For quoted securities fair value is either bid price or
last traded price, depending on the convention of the exchange on
which the investment is listed. Changes in fair value and gains or
losses on disposal are included in the Income Statement as a
capital item.
In addition, for financial reporting purposes, fair value
measurements are categorised into a fair value hierarchy based on
the degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
-- Level 1 - Quoted prices in active markets;
-- Level 2 - Inputs other than quoted prices included within
Level 1 that are observable (i.e. developed using market data),
either directly or indirectly; and
-- Level 3 - Inputs are unobservable (i.e. for which market data is unavailable).
(c) Investment Income
Dividends receivable from equity shares are recognised on an
ex-dividend basis except where, in the opinion of the Board, the
dividend is capital in nature, in which case it is included in
capital.
Foreign dividends are gross of withholding tax.
Special dividends are looked at individually to decide the
reason behind the payment. In deciding whether a dividend should be
regarded as a capital or revenue receipt, the Company reviews all
relevant information as to the reasons for and sources of the
dividend on a case by case basis. Special dividends of a revenue
nature are recognised through the revenue column of the Income
Statement. Special dividends of a capital nature are recognised
through the capital column of the Income Statement.
Deposit interest receivable is taken to revenue on an accruals
basis.
(d) Expenses and finance costs
All the expense and finance costs are accounted for on an
accruals basis. Expenses are charged through the
revenue column of the Income Statement except as follows:
-- Expenses which are incidental to the acquisition or disposal
of an investment are treated as part of the cost or proceeds of
that investment;
-- Expenses are taken to the capital reserve via the capital
column of the Income Statement, where a connection with the
maintenance or enhancement of the value of investments can be
demonstrated. In line with the Board's expected long-term split of
returns, in the form of capital gains and income from the Company's
portfolio, 70% of the Investment Management fees, Administration
and Management Services fees and finance costs are taken to the
capital reserve.
(e) Taxation
In line with the recommendations of the SORP, the tax effect of
different items of expenditure is allocated between capital and
revenue using the marginal basis. Deferred taxation is provided on
all timing differences that have originated but not been reversed
by the Statement of Financial Position date other than those
regarded as permanent. 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 reversal of timing
differences can be deducted. Any liability to deferred tax is
provided for at the rate of tax enacted or substantially
enacted.
Dividend income received by the Company may be subject to
withholding tax imposed in the country of origin. The tax charges
shown in the income Statement relates to overseas withholding tax
on dividend income.
(f) Foreign currency
The currency of the primary economic environment in which the
Company operates (the functional currency) is sterling, which is
also the presentational currency of the Company. Transactions
recorded in overseas currencies during the year are translated into
sterling at the appropriate daily exchange rates. Assets and
liabilities denominated in overseas currencies at the Statement of
Financial Position date are translated into sterling at the
exchange rate ruling at that date.
Exchange differences are included in the Income Statement and
allocated as capital if they are of a capital nature, or as revenue
if they are of a revenue nature.
(g) Functional and presentational currency
The financial information is shown in sterling, being the
Company's presentational currency. In arriving at the functional
currency, the Directors have considered the following:
(i) the primary economic environment of the Company;
(ii) the currency in which the original capital was raised;
(iii) the currency in which distributions are made;
(iv) the currency in which performance is evaluated; and
(v) the currency in which the capital would be returned to
shareholders on a break-up basis.
The Directors have also considered the currency to which
underlying investments are exposed and liquidity is managed. The
Directors are of the opinion that sterling best represents the
functional currency.
(h) Cash and cash equivalents
Cash and cash equivalents are defined as cash and demand
deposits readily convertible to known amounts of cash and subject
to insignificant risk of changes in value.
(i) Nature and purpose of reserves
Ordinary share capital
-- represents the nominal value of the issued ordinary share capital.
Share premium account
-- represents the surplus of net proceeds received from the
issue of new shares over the nominal value of such shares. The
share premium account is non-distributable.
Special reserve
-- this reserve is created upon the cancellation of the Share Premium Account. This reserve is distributable by way of a dividend and can also be used to fund any repurchases of the Company's own shares.
Capital redemption reserve
-- a transfer will be made to this reserve on cancellation of
the Company's own shares purchased, equal to the nominal value of
the shares. This reserve is non-distributable.
Capital reserve
This reserve reflects any:
-- gains or losses on the disposal of investments
-- exchange differences of a capital nature;
-- the increases and decreases in the fair value of investments
which have been recognised in the capital column of the Income
Statement; and
-- expenses which are capital in nature.
This reserve can also be used to distribute realised capital
profits by way of a dividend and to fund any repurchases of the
Company's own shares.
Any gains in the fair value of investments that are not readily
convertible to cash are treated as unrealised gains in the capital
reserve.
Revenue reserve
-- reflects all income and expenditure which are recognised in
the revenue column of the income Statement and is distributable by
way of dividend.
It is the Board's current policy to only pay dividends out of
the revenue reserve.
(j) Equity dividends
Interim dividends are recognised in the period in which they are
paid. Final dividends are not recognised until they have been
approved by shareholders at the Annual General Meeting ('AGM').
2. Income
Year ended Period ended
30 November 30 November
2020 2019
GBP'000 GBP'000
-------------------------------------- ----------- ------------
Income from investments
Overseas Dividends 966 1,396
Income from fixed interest securities - 62
-------------------------------------- ----------- ------------
966 1,458
-------------------------------------- ----------- ------------
3. Investment Management and Management Service Fees
Year ended Period ended
30 November 2020 30 November 2019
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ------- ------- ------- ------- ------- -------
Investment management fee -
Mobius Capital Partners LLP 278 648 926 335 782 1,117
Management service fee - Frostrow Capital LLP 62 146 208 68 158 226
---------------------------------------------- ------- ------- ------- ------- ------- -------
340 794 1,134 403 940 1,343
---------------------------------------------- ------- ------- ------- ------- ------- -------
Further information regarding investment Management and
Management Service fees can be found in the Business Review.
4. Other Expenses
Year ended Period ended
30 November 30 November
2020 2019
GBP'000 GBP'000
-------------------------------- ----------- ------------
Directors' fees 115 142
Auditor's remuneration -
Statutory annual audit 32 24
Custody fees 74 62
Depositary fees 25 29
Printing and postage 14 15
Registrar fees 13 11
Company broker fees 40 49
Stock listing and FCA fees 8 44
Legal and professional fees 6 38
Marketing and promotional costs 50 78
Tax advice 15 28
Other expenses 22 49
-------------------------------- ----------- ------------
414 569
-------------------------------- ----------- ------------
5. Finance Costs
Year ended Period ended
30 November 2020 30 November 2019
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------- ------- ------- ------- ------- -------
Loan facility set up expenses - - - 12 28 40
------------------------------ ------- ------- ------- ------- ------- -------
- - - 12 28 40
------------------------------ ------- ------- ------- ------- ------- -------
6. Taxation
(a) Analysis of Charge in the Year/Period
Year ended Period ended
30 November 2020 30 November 2019
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------- ------- ------- ------- ------- -------
Overseas taxation 94 - 94 149 - 149
Overseas tax recoverable - - - (21) - (21)
Overseas capital gains tax - 3 3 - - -
--------------------------- ------- ------- ------- ------- ------- -------
94 3 97 128 - 128
--------------------------- ------- ------- ------- ------- ------- -------
Overseas tax arose as a result of irrecoverable withholding tax
on overseas dividends and Indian capital gains tax (CGT).
Indian capital gains tax arises on capital gains on the sale of
Indian securities at a rate of 15% on short term capital gains
(defined as those where the security was held for less than a year)
and 10% on long term capital gains. There is no provision for
Indian capital gains tax as at 30 November 2020, due to brought
forward capital losses.
(b) Reconciliation of Tax Charge
The revenue account tax charge for the year is higher than the
standard rate of corporation tax in the UK of 19.0%.
Year ended Period ended
30 November 2020 30 November 2019
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------- ------- ------- ------- ------- -------
Total return/(loss) on
ordinary activities before
tax 209 15,450 15,659 471 (7,213) (6,742)
------------------------------- ------- ------- ------- ------- ------- -------
Corporation tax charged
at 19.0% 40 2,936 2,976 89 (1,370) (1,281)
Effects of:
Non-taxable (gains)/losses
on investment - (3,089) (3,089) - 1,174 1,174
Non-taxable foreign exchange
losses 2 3 5 1 12 13
Unutilised management
expenses 142 150 292 185 179 364
Loan relationship deficit
not utilised - - - 2 5 7
Income not subject to
corporation tax (184) - (184) (277) - (277)
Overseas taxation 94 - 94 149 - 149
Overseas capital gains
tax - 3 3 - - -
Overseas tax recoverable - - - (21) - (21)
------------------------------- ------- ------- ------- ------- ------- -------
Tax charge for the year/period 94 3 97 128 - 128
------------------------------- ------- ------- ------- ------- ------- -------
(c) Provision for Deferred Taxation
For the year ended 30 November 2020, the Company had cumulative
unutilised management expenses for UK taxation purposes of
GBP3,442,000 (2019: GBP1,887,000). It is unlikely the Company will
generate sufficient taxable income in excess of the available
deductible expenses and therefore the Company has not recognised a
deferred tax asset of GBP654,000 (2019: GBP321,000) based on a
prospective corporation tax rate of 19% (2019: 17%). The UK
corporation tax rate is currently enacted to remain at 19%
effective 1 April 2020.
Due to the Company's status as an investment company and the
intention to continue meeting the conditions required to maintain
such a status in the foreseeable future, the Company has not
provided for deferred tax on any capital gains or losses arising on
the revaluation or disposal of investments.
7. Dividends
Amounts recognised as distributable to shareholders for the year
ended 30 November 2020.
Year ended Period ended
30 November 30 November
2020 2019
GBP'000 GBP'000
-------------------------------------------------------------------------- ----------- ------------
Revenue available for distribution by way of dividend for the year/period 115 343
Proposed dividend of (nil) (2019: 0.30p) per share - (315)
-------------------------------------------------------------------------- ----------- ------------
Transfer to revenue reserves 115 28
-------------------------------------------------------------------------- ----------- ------------
8. Return/(loss) per share - basic and diluted
The return/(loss) per share figures are based on the following
figures:
Year ended Period ended
30 November 30 November
2020 2019
GBP'000 GBP'000
-------------------------- ----------- ------------
Net revenue return 115 343
Net capital return/(loss) 15,447 (7,213)
-------------------------- ----------- ------------
Net total return/(loss) 15,562 (6,870)
-------------------------- ----------- ------------
Year ended Period ended
30 November 30 November
2020 2019
Pence Pence
--------------------------------------------------------------------------- ----------- ------------
Revenue return per share 0.11 0.34
Capital return/(loss) per share 14.71 (7.05)
--------------------------------------------------------------------------- ----------- ------------
Total return/(loss) per share 14.82 (6.71)
--------------------------------------------------------------------------- ----------- ------------
Weighted average number of Ordinary shares in issue during the year/period
(2019: from 1 October 2018 to 30 November 2019) 105,000,000 102,343,310
--------------------------------------------------------------------------- ----------- ------------
During the year (2019: nil) there were no dilutive instruments
held, therefore the basic and diluted return/(loss) per share are
the same.
9. Investments held at fair value through profit or loss
30 November 30 November
2020 2019
GBP'000 GBP'000
--------------------------------------------------------- ----------- -----------
Opening book cost 83,386 -
Opening investment holding losses (3,331) -
--------------------------------------------------------- ----------- -----------
Opening fair value 80,055 -
Purchases at cost 43,735 121,504
Sales proceeds (30,242) (35,269)
Gains/(losses) on investments held at fair value through
profit or loss 16,260 (6,180)
--------------------------------------------------------- ----------- -----------
Closing fair value 109,808 80,055
--------------------------------------------------------- ----------- -----------
Closing book cost 89,158 83,386
Closing investment holding gains/(losses) 20,650 (3,331)
--------------------------------------------------------- ----------- -----------
Closing fair value 109,808 80,055
--------------------------------------------------------- ----------- -----------
The company received GBP30,242,000 (2019: GBP35,269,000) from
investments sold in the year. The book cost of the investments when
they were purchased was GBP37,963,000 (2019: GBP38,118,000). These
investments have been revalued over time until they were sold. Any
unrealised gains/losses were included in the fair value of the
investments.
During the year the Company incurred transaction costs on
purchases of GBP88,000 (2019: GBP170,000).
Sales transaction costs incurred during the year was GBP44,000
(2019: GBP56,000) and comprise commission.
10. Debtors
30 November 30 November
2020 2019
GBP'000 GBP'000
--------------------------------------------- ----------- -----------
Accrued income 107 14
Overseas tax recoverable 22 21
Non-redeemable preference shares recoverable 13 13
Other debtors 14 123
--------------------------------------------- ----------- -----------
156 171
--------------------------------------------- ----------- -----------
11. Creditors: amounts falling due within one year
30 November 30 November
2020 2019
GBP'000 GBP'000
-------------------------------------------------------- ----------- -----------
Investment management fee - Mobius Capital Partners LLP 177 73
Management service fee - Frostrow Capital LLP 20 15
Other creditors 77 111
-------------------------------------------------------- ----------- -----------
274 199
-------------------------------------------------------- ----------- -----------
12. Called up Share Capital
30 November 30 November
2020 2019
GBP'000 GBP'000
------------------------------------------------------- ----------- -----------
50,000 (2019: 50,000) non-redeemable preference shares
of GBP1 each 13 13
------------------------------------------------------- ----------- -----------
Allotted and fully paid
105,000,000 (2019: 105,000,000) Ordinary shares of 1p
each 1,050 1,050
------------------------------------------------------- ----------- -----------
1,063 1,063
------------------------------------------------------- ----------- -----------
The capital of the Company is managed in accordance with its
investment policy which is detailed in the Strategic Report.
The share capital includes 50,000 non-redeemable preference
shares of a nominal value of GBP1 each; of which a one quarter is
paid up. These are held by the Investment Manager.
The Company does not have any externally imposed capital
requirements.
13. Net Asset Value Per Ordinary Share
30 November 30 November
2020 2019
-------------------------- ----------- -----------
Net Assets (GBP'000) 111,237 95,990
-------------------------- ----------- -----------
Number of shares in issue 105,000,000 105,000,000
-------------------------- ----------- -----------
Net asset value per share 105.94p 91.42p
-------------------------- ----------- -----------
During the year (2019: nil) there were no dilutive instruments
held, therefore the basic and dilutive net asset value per share
are the same.
14. Financial Instruments
The Company's financial instruments comprise its investment
portfolio, cash balances and debtors and creditors that arise
directly from its operations. As an investment trust the Company
holds an investment portfolio of financial assets in pursuit of its
investment objective.
Fixed asset investments (see note 9) are valued at fair value in
accordance with the Company's accounting policies. The fair value
of all other financial assets and liabilities is represented by
their carrying value in the Statement of Financial Position.
All investments have been classified as Level 1.
The main risks that the Company faces arising from its financial
instruments are:
(i) market risk, including:
- Other price risk, being the risk that the value of investments
will fluctuate as a result of changes in market prices;
- interest rate risk, being the risk that the future cash flows
of a financial instrument will fluctuate because of changes in
interest rates;
- foreign currency risk, being the risk that the value of
financial assets and liabilities will fluctuate because of
movements in currency rates;
(ii) credit risk, being the risk that a counterparty to a
financial instrument will fail to discharge an obligation or
commitment that it has entered into with the Company; and
(iii) liquidity risk, being the risk that the Company will not
be able to meet its liabilities when they fall due. This may arise
should the Company not be able to liquidate its investments. Under
normal market trading volumes the investment portfolio could be
substantially realised within a week.
Other price risk
The management of price risk is part of the investment
management process and is typical of equity investment. The
investment portfolio is managed with an awareness of the effects of
adverse price movements through detailed and continuing analysis
with an objective of maximising overall returns to shareholders.
Further information on how the investment portfolio is managed is
set out in the Managers' Review. Although it is the Company's
current policy not to use derivatives they may be used from time to
time, with prior Board approval, to hedge specific market risk or
gain exposure to a specific market.
If the investment portfolio valuation rose or fell by 10% at 30
November 2020 (2019: 10%), the impact on the profit and loss and
net asset value would have been GBP11.0 million (2019: GBP8.0
million). The calculations are based on the investment portfolio
valuation as at the respective Statement of Financial Position
dates and are not necessarily representative of the year as a
whole.
Interest rate risk
All of the Company's financial assets are equity shares which
neither pay interest nor have a maturity date.
When the Company retains cash balances the majority of the cash
is held in account. The benchmark rate which determines the
interest payments received on cash balances is the bank base rate
for the relevant currency for each deposit.
Foreign currency risk
The Company invests in overseas securities and holds foreign
currency cash balances which give rise to currency risks. Foreign
currency risks are managed alongside other market risks as part of
the management of the investment portfolio. It is currently not the
Company's policy to hedge this risk on a continuing basis but it
can do so from time to time.
Foreign currency exposure:
2020 2019
---------------------------------------- ----------------------------------------
Investments Cash Debtors Creditors Investments Cash Debtors Creditors
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ----------- ------- ------- --------- ----------- ------- ------- ---------
Indian rupee 25,305 - - - 16,295 - - -
Brazilian real 16,399 - 94 - 14,404 - - -
Korean won 15,567 - - - 8,586 - - -
Hong kong dollar 11,568 - - - 12,780 - - -
New Taiwanese dollar 11,485 699 - - 4,448 - - -
US dollar 11,399 - 13 - 10,091 - 14 -
Turkish lira 6,504 - - - 3,469 - - -
Mexican peso - - - - 4,520 - - -
Kenyan shilling 4,900 - - - 970 - - -
South African rand 3,794 - - - - - - -
Vietnamese dong 2,332 4 - - - - - -
Egyptian pound 555 - - - - - - -
Polish zloty - - 21 - 4,492 - 21 -
--------------------- ----------- ------- ------- --------- ----------- ------- ------- ---------
109,808 703 128 - 80,055 - 35 -
--------------------- ----------- ------- ------- --------- ----------- ------- ------- ---------
At 30 November 2020, the Company had GBP844,000 (2019:
GBP15,963,000) of sterling cash balances.
During the year sterling strengthened by an average of 4.0%
(2019: 2.6% weakened) against all of the currencies in the
investment portfolio (weighted for exposure at 30 November), if the
value of sterling had strengthened against each of the currencies
in the portfolio by 10%, the impact on the profit and loss and net
asset value would have been negative GBP11.0 million (2019: GBP8.0
million). If the value of sterling had weakened against each of the
currencies in the investment portfolio by 10%, the impact on the
profit and loss and net asset value would have been positive
GBP11.0 million (2019: GBP8.0 million). The calculations are based
on the investment portfolio valuation and cash balances as at the
year end and are not necessarily representative of the year as a
whole.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company. The Investment Manager has in
place a monitoring procedure in respect of counterparty risk which
is reviewed on an ongoing basis. The carrying amounts of financial
assets best represents the maximum credit risk exposure at the
statement of financial position date, and the main exposure to
credit risk is via the Company's Custodian who is responsible for
the safeguarding of the Company's Investments and cash
balances.
At the reporting date, the Company's financial assets exposed to
credit risk amounted to the following:
2020 2019
GBP'000 GBP'000
-------------------------- ------- -------
Cash and cash equivalents 1,547 15,963
Debtors 156 171
-------------------------- ------- -------
1,703 16,134
-------------------------- ------- -------
All the assets of the Company which are traded on a recognised
exchange are held by Northern Trust, the Company's Custodian.
Bankruptcy or insolvency of the Custodian may cause the Company's
rights with respect to securities held by the Custodian to be
delayed or limited. The Board monitors the Company's risk as
described in the Strategic Report.
The Company maintains sufficient investments in cash and readily
realisable securities to pay accounts payable and accrued
expenses.
Liquidity risk
The Company's liquidity risk is managed on an ongoing basis by
the Investment Manager and the Administrator. The Company's overall
liquidity risks are monitored on a quarterly basis by the
Board.
Substantially all of the Company's portfolio would be realisable
within one week, under normal market conditions, and as such
liquidity risk is not considered a material risk. See the Business
Review for further details.
Further details on the principal risks facing the Company,
including Covid-19 and its mitigations can be found in the Business
Review.
15. Transactions with The Managers and Related Parties
-- Mobius Capital Partners LLP
-- The Directors of the Company
The Company employs Mobius Capital Partners LLP as its
Investment Manager. During the year ended 30 November 2020, Mobius
Capital Partners LLP earned GBP926,000 (period ended 30 November
2019: GBP1,117,000) in respect of Investment Management fees, of
which GBP177,000 (period ended 30 November 2019: GBP73,000) was
outstanding at the year end. All material related party
transactions have been disclosed in notes 3 and 4. Details of the
remuneration and the shareholdings of all Directors can be found in
the Directors' Remuneration Report.
16. Contingent Liabilities
There were no contingent liabilities at 30 November 2020 (2019:
none).
AIFMD RELATED DISCLOSURE
Alternative Investments Fund Managers Directive (AIFMD)
Disclosures (Unaudited)
Investment objective and leverage
Mobius Capital Partners LLP ("MCP") and the Company are required
to make certain disclosures available to investors in accordance
with the Alternative Investment Fund Managers Directive ("AIFMD").
The Company represents approximately 74% of Mobius Capital Partners
total funds under management.
A description of the investment strategy and objectives of the
Company, the types of assets in which the Company may invest, the
techniques it may employ, any applicable investment restrictions,
the circumstances in which it may use leverage, the types and
sources of leverage permitted and the associated risks, any
restrictions on the use of leverage and the maximum level of
leverage which the AIFM and Portfolio Manager are entitled to
employ on behalf of the Company and the procedures by which the
Company may change its investment strategy and/or the investment
policy can be found above.
The table below sets out the current maximum permitted limit and
actual level of leverages for the Company (see Glossary for further
details):
As a percentage of
net assets
Gross Commitment
Method Method
--------------------------------- -------- ----------
Maximum level of leverage 150.0% 150.0%
Actual level at 30 November 2020 99.3% 100.1%
--------------------------------- -------- ----------
Remuneration Disclosure of AIFM staff
As per the firm's remuneration policy and procedures, MCP seeks
to avoid creating any incentive for individuals to take
inappropriate risk and, in general, all decisions are confirmed by
the investment committee(s) which has members in common with the
governing body. During the year ending 30 November 2020, MCP had
six members of personnel in total, including employees and
Partners, three of whom fall under Code Staff as per the firm's
remuneration code policy. Following completion of an assessment of
the application of the proportionality principle to the FCA's AIFM
Remuneration Code, MCP has disapplied the pay-out processed rules
with respect to all Code Staff members. This is because the AIFM
considers that it carries out non-complex activities and is
operating on a small scale.
The information above relates to Mobius Capital Partners LLP as
a whole, and it has not been broken down by reference to the
Company or the other funds that MCP manages. Nor has the proportion
of remuneration which relates to the income MCP earns from their
management of the company.
Further disclosures required under the AIFM Rules can be found
within the Investor Disclosure Document on the Company's website
www.mobiusinvestmenttrust.com
SHAREHOLDER INFORMATION
Financial Calendar
30 November Financial Year End
February Final Results Announced
April Annual General Meeting
31 May Half Year End
July Half Year Results Announced
Annual General Meeting
Subject to any Covid restrictions, the Annual General Meeting of
Mobius Investment Trust plc will be held at the Company's
registered office address at 25 Southampton Buildings, London WC2A
1AL on Wednesday, 28 April 2021 at 12.00 noon.
How to Vote
If you hold your shares directly you will have received a paper
proxy form. For this year's Annual General Meeting (AGM) you should
ensure that this is returned to the Company's registrars,
Computershare, before 12 noon on Monday, 26 April 2021.
Shareholders who hold their shares in uncertificated form in CREST,
should use the CREST electronic proxy appointment service as
described in the Notice of Annual General Meeting, note 4.
If you hold your shares via an investment platform or a nominee,
you should contact them to inquire about arrangements to vote.
If you would like to attend the meeting in person, shareholders
should bring their voting card or proof of identity. If you have a
disability or impairment, please let us know, so that we may try to
make suitable arrangements at the meeting.
Shareholders are advised that, in case the ongoing Covid-19
pandemic makes it impossible to hold a physical AGM, they should
exercise their votes in advance of the meeting by proxy, by
following the voting instructions given in the Notice of the Annual
General Meeting.
Dividend
If a dividend is payable, it is normally paid annually following
approval at the Annual General Meeting. Shareholders who wish to
have dividends paid directly into a bank account, rather than by
cheque to their registered address, can complete a mandate form for
the purpose. Mandates may be obtained from the Company's
Registrars, Computershare Investor Services, on request.
Shareholders should note that for the year ended 30 November
2020, the Board is not recommending the payment of a final
dividend.
Share Prices
The Company's shares are listed on the London Stock Exchange
under 'Investment Companies'. The price is given daily in the
Financial Times and other newspapers.
Change of Address
Communications with shareholders are mailed to the address held
on the share register. In the event of a change of address or other
amendment this should be notified to the Company's Registrars,
Computershare Investor Services, under the signature of the
registered holder.
Daily Net Asset Value
The daily net asset value per share of the Company's shares can
be obtained on the Company's website at
www.mobiusinvestmenttrust.com and is published daily via the London
Stock Exchange.
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES
(APMS)
AIFMD
The Alternative Investment Fund Managers Directive (the
'Directive') is a European Union Directive that entered into force
on 22 July 2013. The Directive regulates EU fund managers that
manage alternative investment funds (this includes investment
trusts).
Brexit
The advisory public referendum which was held on 23 June 2016 in
the United Kingdom to indicate whether voters wanted to remain or
withdraw from membership of the European Union (EU). The referendum
vote was cast in favour of leaving the EU. The process of actually
leaving is termed Brexit. The United Kingdom officially left the EU
on 31 January 2020 and on 31 December 2020, the 11-month transition
period came to an end.
Discount or Premium^
A description of the difference between the share price and the
net asset value per share. The size of the discount or premium is
calculated by subtracting the share price from the net asset value
per share and is usually expressed as a percentage (%) of the net
asset value per share. If the share price is higher than the net
asset value per share the result is a premium. If the share price
is lower than the net asset value per share, the shares are trading
at a discount.
Gearing^
The term used to describe the process of borrowing money for
investment purposes. The expectation is that the returns on the
investments purchased will exceed the finance costs associated with
those borrowings.
There are several methods of calculating gearing and the
following has been selected:
Total assets, less current liabilities (before deducting any
prior charges) minus cash/cash equivalents divided by shareholders'
funds, expressed as a percentage.
Leverage
Leverage is defined in the AIFMD as any method by which the AIFM
increases the exposure of an AIF. In addition to the gearing limit
the Company also has to comply with the AIFMD leverage
requirements. For these purposes the Board has set a maximum
leverage limit of 150% for both methods. This limit is expressed as
a percentage with 100% representing no leverage or gearing in the
Company. There are two methods of calculating leverage as
follows:
Under the Gross Method, exposure represents the Company's
position after the deduction of sterling cash balances and without
taking into account any hedging or netting arrangements.
Under the Commitment method, exposure is calculated without the
deduction of sterling cash balances and after certain hedging and
netting positions are offset.
Net Asset Value (NAV)
The value of the Company's assets, principally investments made
in other companies and cash being held, minus any liabilities. The
NAV is also described as 'shareholders' funds. The NAV is often
expressed in pence per share after being divided by the number of
shares which have been issued. The NAV per share is unlikely to be
the same as the share price which is the price at which the
Company's shares can be bought or sold by an investor. The share
price is determined by the relationship between the demand and
supply of the shares.
Net Asset Value Per Share (NAV) Total Return^
The theoretical total return on an investment over a specified
period assuming dividends paid to shareholders were reinvested at
net asset value per share at the time the shares were quoted
ex-dividend. This is a way of measuring investment management
performance of investment trusts which is not affected by movements
in discounts or premiums.
Year ended Period ended
30 November 30 November
NAV Per Share Total Return 2020 2019
------------------------------- ------------ ------------
Opening NAV (p) 91.4 98.0
Increase/(decrease) in NAV (p) 14.5 (6.6)
Closing NAV (p) 105.9 91.4
-------------------------------- ------------ ------------
Increase/(decrease) in NAV 15.9% (6.7)%
Impact of reinvested dividends 0.4% -
NAV Total Return 16.3% (6.7)%
-------------------------------- ------------ ------------
^ Alternative Performance Measure
Ongoing Charges^
Ongoing charges are calculated by taking the Company's
annualised operating expenses as a proportion of the average daily
net asset value of the Company over the year. The costs of buying
and selling investments are excluded, as are interest costs,
taxation, cost of buying back or issuing ordinary shares and other
non recurring costs.
Period
Year ended ended
30 November 30 November
2020 2019
Ongoing Charges GBP'000 GBP'000
------------------------------------------------------- ------------ ------------
Investment management fees and management service fees 1,134 1,343
Operating expenses 414 569
Pro-rata adjustment* - (273)
-------------------------------------------------------- ------------ ------------
Annualised expenses 1,548 1,639
Average net assets during the year 102,006 97,887
-------------------------------------------------------- ------------ ------------
Ongoing Charges 1.5% 1.7%
-------------------------------------------------------- ------------ ------------
* Pro-rata adjustment is to reflect that the accounting period
in 2019 was longer than 12 months.
Peer Group
Mobius Investment Trust plc is part of the AIC's Global Emerging
Markets sector. The Company has selected the following companies to
form the Peer Group:
BlackRock Frontiers Investment Trust, Fundsmith Emerging
Equities Trust, Genesis Emerging Markets Fund, JPMorgan Emerging
Markets Investment Trust, JPMorgan Global Emerging Markets Income
Trust, Jupiter Emerging & Frontier Income Trust, Templeton
Emerging Markets Investment Trust and Weiss Korea Opportunity
Fund.
Revenue Return per Share
The revenue return per share is calculated by taking the return
on ordinary activities after taxation and dividing it by the
weighted average number of shares in issue during the year (see
note 8 for further information).
Share Price Total Return^
The theoretical total return on an investment over a specified
period assuming dividends paid to shareholders were reinvested in
shares at the share price at the time the shares were quoted
ex-dividend.
Year ended Period ended
30 November 30 November
2020 2019
Share Price Total Return p p
----------------------------------- ------------ ------------
Opening share price 83.0 100.0
Increase/(decrease) in share price 20.0 (17.0)
Closing share price 103.0 83.0
------------------------------------ ------------ ------------
Increase/(decrease) in share price 24.1% (17.0)%
Impact of reinvested dividends 0.6% -
------------------------------------ ------------ ------------
Share price Total Return 24.7% (17.0)%
------------------------------------ ------------ ------------
Risk warnings
Past performance is no guarantee of future performance. The
value of your investment and any income from it may go down as well
as up and you may not get back the amount invested. This is because
the share price is determined by the changing conditions in the
relevant stock markets in which the Company invests and by the
supply and demand for the Company's shares. As the shares in an
investment trust are traded on a stock market, the share price will
fluctuate in accordance with the supply and demand and may not
reflect the underlying net asset value of the shares; where the
share price is less than the underlying value of the assets, the
difference is known as the 'discount'. For these reasons investors
may not get back the original amount invested. Although the
Company's shares are denominated in sterling, it may invest in
stocks and shares which are denominated in currencies other than
sterling and to the extent they do so, they may be affected by
movements in exchange rates. As a result the value of your
investment may rise or fall with movements in exchange rates.
Investors should note that tax rates and reliefs may change at any
time in the future. The value of ISA tax advantages will depend on
personal circumstances. The favourable tax treatments of ISAs may
not be maintained.
NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that, subject to any restrictions made
necessary by the Covid-19 pandemic, the second Annual General
Meeting of Mobius Investment Trust plc will be held at the
Company's registered office address at 25 Southampton Buildings,
London WC2A 1AL on Wednesday, 28 April 2021 at 12.00 noon for the
following purposes:
Ordinary Business
To consider and, if thought fit, pass the following as Ordinary
Resolutions:
1. That the Report of the Directors and Accounts for the year
ended 30 November 2020 together with the Report of the Auditors
thereon be received.
2. To receive and approve the Directors' Remuneration Report for the year ended 30 November 2020.
3. That Ms M L Cicognani be re-elected as a Director.
4. That Mr C Casey be re-elected as a Director.
5. That Dr S Robé be re-elected as a Director.
6. That Mr C Y Shi be re-elected as a Director.
7. That PricewaterhouseCoopers LLP be re-appointed as Auditors
to hold office from the conclusion of the meeting to the conclusion
of the next Annual General Meeting at which accounts are laid.
8. That the Audit Committee be authorised to determine the Auditors' remuneration.
Special Business
To consider and, if thought fit, pass the following resolutions,
of which resolutions 10, 11 and 12 will be proposed as Special
Resolutions.
Authority to Allot Shares
9. That, the Board of Directors of the Company (the 'Board') be
and it is hereby generally and unconditionally authorised pursuant
to and in accordance with section 551 of the Companies Act 2006 to
exercise all the powers of the Company to allot shares in the
Company and to grant rights to subscribe for or to convert any
security into shares in the Company up to an aggregate nominal
amount of GBP105,000 (or if changed, the number representing 10% of
the issued share capital of the Company immediately prior to the
passing of this resolution) provided that this authority shall
expire at the conclusion of the Annual General Meeting of the
Company to be held in 2022 or 15 months from the date of passing
this resolution, whichever is the earlier, unless previously
revoked, varied or renewed by the Company in general meeting and
provided that the Company may before such expiry make an offer or
enter into an agreement which would or might require shares to be
allotted, or rights to subscribe for or to convert securities into
shares to be granted, after such expiry and the Board may allot
shares or grant such rights in pursuance of such an offer or
agreement as if the authority conferred hereby had not expired.
Disapplication of Pre-emption Rights
10. That , subject to the passing of resolution 9, the Board of
Directors of the Company (the 'Board') be and it is hereby
generally empowered pursuant to sections 570 and 573 of the
Companies Act 2006 (the 'Act') to allot equity securities (within
the meaning of section 560 of the Act) (including the grant of
rights to subscribe for, or to convert any securities into,
ordinary shares of 1p each in the capital of the Company ('Ordinary
Shares')) for cash pursuant to the authority conferred on them by
such Resolution 9 as if section 561(1) of the Act did not apply to
any such allotment, provided that this power shall be limited
to:
the allotment of equity securities up to an aggregate nominal
amount of GBP105,000, (or if changed, the number representing 10%
of the issued share capital of the Company immediately prior to the
passing of this resolution) and shall expire (unless previously
renewed, varied or revoked by the Company in general meeting) at
the conclusion of the Annual General Meeting of the Company to be
held in 2022 or 15 months from the date of passing this resolution,
whichever is the earlier, unless previously revoked, varied or
renewed by the Company in general meeting and provided that the
Company may before such expiry make an offer or enter into an
agreement which would or might require equity securities to be
allotted after such expiry and the Board may allot equity
securities in pursuance of such an offer or agreement as if the
authority conferred hereby had not expired.
Authority to Repurchase Shares
11. That, the Company be and is hereby generally and
unconditionally authorised for the purposes of section 701 of the
Companies Act 2006 (the 'Act') to make one or more market purchases
(as defined in section 693(4) of the Act) of ordinary shares of 1p
each in the capital of the Company ('Ordinary Shares') for
cancellation or for holding in Treasury on such terms and in such
manner as the board of directors may determine provided that:
(i) the maximum aggregate number of Ordinary Shares which may be
purchased is 15,739,500 or, if changed, the number representing
14.99% of the issued share capital of the Company immediately prior
to the passing of this resolution;
(ii) the minimum price which may be paid for an Ordinary Share
is 1p (exclusive of associated expenses);
(iii) the maximum price which may be paid for an Ordinary Share
(exclusive of associated expenses) shall not be more than the
higher of: (a) an amount equal to 105% of the average of the middle
market quotations for an Ordinary Share as derived from the London
Stock Exchange Daily Official List for the five dealing days
immediately preceding the day on which the Ordinary Share is
purchased; and (b) the higher of the last independent trade and the
highest current independent bid on the London Stock Exchange for an
Ordinary Share; and
(iv) unless previously renewed, varied or revoked, this
authority shall expire at the conclusion of the Annual General
Meeting of the Company to be held in 2022 or 15 months from the
date of passing this resolution, whichever is the earlier, unless
previously revoked, varied or renewed by the Company in general
meeting and provided that the Company may before such expiry enter
into a contract to purchase Ordinary Shares which will or may be
completed wholly or partly after such expiry and a purchase of
Ordinary Shares may be made pursuant to any such contract.
General Meetings
12. That any General Meeting of the Company (other than the
Annual General Meeting of the Company) shall be called by notice of
at least 14 clear days in accordance with the provisions of the
Articles of Association of the Company provided that the authority
shall expire on the conclusion of the next Annual General Meeting
of the Company, or, if earlier, on the expiry 15 months from the
date of the passing of this resolution.
Shareholders should note that, should the ongoing restrictions
in view of the Covid-19 pandemic make it impossible to hold a
physical meeting without endangering the wellbeing of shareholders
and other attendees, then the Board will only conduct the
statutory, formal business this year in order to meet the minimum
legal requirements. In that case arrangements will be made for
shareholders to attend via a webinar, view a presentation by the
Investment Managers and ask questions in advance. Shareholders are
encouraged to view the Company's website,
www.mobiusinvestmenttrust.com for further information nearer the
time. Questions to the Board and the Investment Managers can be
submitted to the Company Secretary at info@frostrow.com . Should
time pressures make it impossible to answer all questions during
the webinar, then an effort will be made to answer them on the
website afterwards.
All shareholders should look on the Company's website,
www.mobiusinvestmenttrust.com, for any last changes to the AGM
arrangements and whether attendance will be possible. In any case,
all shareholders are strongly advised to exercise their votes in
advance of the meeting by proxy, by following the voting
instructions below.
By order of the Board Registered office
Frostrow Capital LLP 25 Southampton Buildings
Company Secretary London
25 February 2021 WC2A 1AL
Notes
1. If you wish to attend the Annual General Meeting in person,
you should arrive at the venue for the Annual General Meeting in
good time to allow your attendance to be registered. It is
advisable to have some form of identification with you as you may
be asked to provide evidence of your identity to the Company's
registrar, Computershare Investor Services plc (the 'Registrar'),
prior to being admitted to the Annual General Meeting.
Please bear in mind that due to ongoing Covid-19 restrictions,
it might not be possible to attend the AGM in person at all!
2. Members are entitled to appoint one or more proxies to
exercise all or any of their rights to attend, speak and vote at
the Annual General Meeting. A proxy need not be a member of the
Company but must attend the Annual General Meeting to represent a
member. To be validly appointed a proxy must be appointed using the
procedures set out in these notes and in the notes to the
accompanying proxy form.
If members wish their proxy to speak on their behalf at the
meeting, members will need to appoint their own choice of proxy
(not the chairman of the Annual General Meeting) and give their
instructions directly to them.
Members can only appoint more than one proxy where each proxy is
appointed to exercise rights attached to different shares. Members
cannot appoint more than one proxy to exercise the rights attached
to the same share(s). If a member wishes to appoint more than one
proxy, they should contact the Registrar on 0370 703 6304. Lines
are open between 8.30 am and 5.30 pm, Monday to Friday, the
Registrars' overseas helpline number is +44 370 703 6304.
A member may instruct their proxy to abstain from voting on any
resolution to be considered at the meeting by marking the abstain
option when appointing their proxy. It should be noted that an
abstention is not a vote in law and will not be counted in the
calculation of the proportion of votes "for" or "against" the
resolution.
The appointment of a proxy will not prevent a member from
attending the Annual General Meeting and voting in person if he or
she wishes.
A person who is not a member of the Company but who has been
nominated by a member to enjoy information rights does not have a
right to appoint any proxies under the procedures set out in these
notes and should read note 8 overleaf.
3. A proxy form for use in connection with the Annual General
Meeting is enclosed. To be valid any proxy form or other instrument
appointing a proxy, together with any power of attorney or other
authority under which it is signed or a certified copy thereof,
must be received by post or (during normal business hours only) by
hand by the Registrar at Computershare Investor Services plc, The
Pavilions, Bridgwater Road, Bristol BS99 6ZY no later than 48 hours
(excluding non-working days) before the time of the Annual General
Meeting or any adjournment of that meeting.
If you do not have a proxy form and believe that you should have
one, or you require additional proxy forms, please contact the
Registrar on 0370 703 6304. Lines are open between 8.30 am and 5.30
pm, Monday to Friday, The Registrars' overseas helpline number is
+44 370 703 6304.
4. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so by using
the procedures described in the CREST Manual and by logging on to
the following website: www.euroclear.com/CREST. CREST personal
members or other CREST sponsored members, and those CREST members
who have appointed (a) voting service provider(s), should refer to
their CREST sponsor or voting service provider(s) who will be able
to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message (a "CREST
Proxy Instruction") must be properly authenticated in accordance
with Euroclear UK & Ireland Limited's specifications, and must
contain the information required for such instruction, as described
in the CREST Manual. The message, regardless of whether it
constitutes the appointment of a proxy or is 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 the Registrar (ID
3RA50) no later 48 hours (excluding non-working days) before the
time of the Annual General Meeting or any adjournment of that
meeting. 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 Application Host) from which the Registrar is able to
retrieve the message by enquiry to CREST in the manner prescribed
by CREST. After this time any change of instructions to proxies
appointed through CREST should be communicated to the appointee
through other means.
CREST members and, where applicable, their CREST sponsors or
voting service provider(s) should note that Euroclear UK &
Ireland Limited does not make available special procedures in CREST
for any particular message. 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(s), to procure that his CREST sponsor or voting service
provider(s) take(s)) 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 system 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.
5. In the case of joint holders, where more than one of the
joint holders purports to appoint one or more proxies, only the
purported appointment submitted by the most senior holder will be
accepted. Seniority is determined by the order in which the names
of the joint holders appear in the Company's register of members in
respect of the joint holding (the first named being the most
senior).
6. Any corporation which is a member can appoint one or more
corporate representatives. Members can only appoint more than one
corporate representative where each corporate representative is
appointed to exercise rights attached to different shares. Members
cannot appoint more than one corporate representative to exercise
the rights attached to the same share(s).
7. To be entitled to attend and vote at the Annual General
Meeting (and for the purpose of determining the votes they may
cast), members must be registered in the Company's register of
members at 6.30 p.m. on 26 April 2021 (or, if the Annual General
Meeting is adjourned, at 6.30 p.m. on the day two working days
prior to the adjourned meeting). Changes to the register of members
after the relevant deadline will be disregarded in determining the
rights of any person to attend and vote at the Annual General
Meeting.
8. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 (the "2006
Act") to enjoy information rights (a "Nominated Person") may, under
an agreement between him/her and the member by whom he/she was
nominated, have a right to be appointed (or to have someone else
appointed) as a proxy for the Annual General Meeting. If a
Nominated Person has no such proxy appointment right or does not
wish to exercise it, he/she may, under any such agreement, have a
right to give instructions to the member as to the exercise of
voting rights.
9. Information regarding the Annual General Meeting, including
information required by section 311A of the 2006 Act, and a copy of
this notice of Annual General Meeting is available from
www.mobiusinvestmenttrust.com.
10. Members should note that it is possible that, pursuant to
requests made by members of the Company under section 527 of the
2006 Act, the Company may be required to publish on a website a
statement setting out any matter relating to: (a) the audit of the
Company's accounts (including the auditor's report and the conduct
of the audit) that are to be laid before the Annual General
Meeting; or (b) any circumstance connected with an auditor of the
Company ceasing to hold office since the previous meeting at which
annual accounts and reports were laid in accordance with section
437 of the 2006 Act. The Company may not require the members
requesting any such website publication to pay its expenses in
complying with sections 527 or 528 of the 2006 Act. Where the
Company is required to place a statement on a website under section
527 of the 2006 Act, it must forward the statement to the Company's
auditor not later than the time when it makes the statement
available on the website. The business which may be dealt with at
the Annual General Meeting includes any statement that the Company
has been required under section 527 of the 2006 Act to publish on a
website.
11. As at 24 February 2021 (being the latest practicable date
prior to the publication of this notice) the Company's issued share
capital consisted of 105,000,000 ordinary shares carrying one vote
each. Accordingly, the total voting rights in the Company at 24
February 2021 were 105,000,000 votes.
12. Any person holding 3% or more of the total voting rights of
the Company who appoints a person other than the chairman of the
Annual General Meeting as his proxy will need to ensure that both
he, and his proxy, comply with their respective disclosure
obligations under the UK Disclosure Guidance and Transparency
Rules.
13. Under section 319A of the 2006 Act, the Company must cause
to be answered any question relating to the business being dealt
with at the Annual General Meeting put by a member attending the
meeting unless answering the question would interfere unduly with
the preparation for the meeting or involve the disclosure of
confidential information, or the answer has already been given on a
website in the form of an answer to a question, or it is
undesirable in the interests of the Company or the good order of
the meeting that the question be answered.
Members who have any queries about the Annual General Meeting
should contact Frostrow Capital LLP, the Company Secretary, at 25
Southampton Buildings, London WC2A 1AL.
Members may not use any electronic address provided in this
notice or in any related documents (including the accompanying
proxy form) to communicate with the Company for any purpose other
than those expressly stated.
14. The following documents will be available for inspection at
the offices of Frostrow Capital LLP, the Company's Company
Secretary, 25 Southampton Buildings, London WC2A 1AL during normal
business hours on any weekday (Saturdays, Sundays and English
public holidays excepted) from the date of this notice and at the
venue of the Annual General Meeting from 9.45 a.m. on the day of
the Annual General Meeting until the conclusion of the Annual
General Meeting:
14.1 copies of the Directors' letters of appointment; and
14.2 copies of the Directors' deeds of indemnity.
Alternatively, should Covid restrictions continue and the Annual
General Meeting needs to be held virtually, the above documents can
be requested from the Company Secretary.
15. Under section 338 and section 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, 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 15 March 2021, being the date six clear weeks before the
meeting, and (in the case of a matter to be included on the
business only) must be accompanied by a statement setting out the
grounds for the request.
EXPLANATORY NOTES TO THE RESOLUTIONS
Resolution 1 - To receive the Report of the Directors and
Accounts
The Report of the Directors and Accounts for the year ended 30
November 2020 will be presented to the AGM. These accounts
accompany this Notice of Meeting and shareholders will be given an
opportunity at, or in advance of, the meeting to ask questions.
Resolution 2 - Remuneration Report
The Directors' Remuneration Report is set out in full in the
Annual Report.
Resolutions 3 to 6 - Re-election of Directors
Resolutions 3 to 6 deal with the re-election of each Director.
Biographies of each of the Directors can be found in the Report of
the Directors.
The Board has confirmed, following a performance review, that
the Directors standing for re-election continue to perform
effectively.
Resolutions 7 and 8 - Re-appointment of Auditors and the
determination of their remuneration
Resolutions 7 and 8 relate to the re-appointment of
PricewaterhouseCoopers LLP as the Company's independent Auditors to
hold office until the next AGM of the Company and also authorise
the Audit Committee to set the Auditors' remuneration.
Resolutions 9 and 10 - Authority to Allot Shares and
Disapplication of Pre-emption Rights
Ordinary Resolution 9 in the Notice of Annual General Meeting
will renew the authority to allot the unissued share capital up to
an aggregate nominal amount of GBP105,000 (equivalent to 10,500,000
shares, or 10% of the Company's existing issued share capital on 24
February 2021, being the nearest practicable date prior to the
signing of this Report or, if changed, the number representing 10%
of the issued share capital of the Company immediately prior to the
passing of this resolution). Such authority will expire on the date
of the next AGM or after a period of 15 months from the date of the
passing of the resolution, whichever is earlier. This means that
the authority will have to be renewed at the next AGM.
When shares are to be allotted for cash, Section 551 of the
Companies Act 2006 (the "Act") provides that existing shareholders
have pre-emption rights and that the new shares must be offered
first to such shareholders in proportion to their existing holding
of shares. However, shareholders can, by special resolution,
authorise the Directors to allot shares otherwise than by a pro
rata issue to existing shareholders. Special Resolution 10 will, if
passed, give the Directors power to allot for cash equity
securities up to 10% of the Company's existing share capital on 24
February 2021, or, if changed, the number representing 10% of the
issued share capital of the Company immediately prior to the
passing of this resolution as if Section 551 of the Act does not
apply. This is the same nominal amount of share capital which the
Directors are seeking the authority to allot pursuant to Resolution
9. This authority will also expire on the date of the next AGM or
after a period of 15 months, whichever is earlier. This authority
will not be used in connection with a rights issue by the
Company.
The Directors intend to use the authority given by Resolutions 9
and 10 to allot shares and disapply pre-emption rights only in
circumstances where this will be clearly beneficial to shareholders
as a whole. The issue proceeds would be available for investment in
line with the Company's investment policy. No issue of shares will
be made which would effectively alter the control of the Company
without the prior approval of shareholders in general meeting.
Shares will only be issued at a premium to the Company's cum
income net asset value per share at the time of issue.
Resolution 11 - Authority to Repurchase Shares
The Directors wish to renew the authority to buy back shares for
cancellation or for holding in Treasury. The principal aim of a
share buy-back facility is to enhance shareholder value by
acquiring shares at a discount to net asset value, as and when the
Directors consider this to be appropriate. The purchase of shares,
when they are trading at a discount to net asset value per share,
should result in an increase in the net asset value per share for
the remaining shareholders. This authority, if conferred, will only
be exercised if to do so would result in an increase in the net
asset value per share for the remaining shareholders and if it is
in the best interests of shareholders generally. Any purchase of
shares will be made within guidelines established from time to time
by the Board. It is proposed to seek shareholder authority to renew
this facility for another year at the AGM.
Under the current Listing Rules, the maximum price that may be
paid on the exercise of this authority must not exceed the higher
of (i) 105% of the average of the middle market quotations for the
shares over the five business days immediately preceding the date
of purchase and (ii) the higher of the last independent trade and
the highest current independent bid on the trading venue where the
purchase is carried out. The minimum price which may be paid is 1p
per share. Shares which are purchased under this authority may be
cancelled or held in Treasury.
Special Resolution 11 in the Notice of AGM will renew the
authority to purchase in the market a maximum of 14.99% of shares
in issue on 24 February 2021, being the nearest practicable date
prior to the signing of this Report, (amounting to 15,739,500
shares or, if changed, the number representing 14.99% of the issued
share capital of the Company immediately prior to the passing of
this resolution). Such authority will expire on the date of the
next Annual General Meeting or after a period of 15 months from the
date of passing of the resolution, whichever is earlier. This means
in effect that the authority will have to be renewed at the next
AGM or earlier if the authority has been exhausted.
Resolution 12 - General Meetings
Special Resolution 12 seeks shareholder approval for the Company
to hold General Meetings (other than the AGM) on at least 14 clear
days' notice. The minimum notice for Annual General Meetings will
remain at 21 clear days. The approval for this resolution will be
effective until the Company's Annual General Meeting to be held in
2022, at which it is intended that renewal will be sought. The
Directors will only call a general meeting on 14 days' notice where
they consider it to be in the interests of shareholders to do so
and the relevant matter is required to be dealt with
expediently.
Recommendation
The Board considers that the resolutions detailed above are in
the best interests of shareholders as a whole. Accordingly, the
Board unanimously recommends to the shareholders that they vote in
favour of the above resolutions to be proposed at the forthcoming
AGM as the Directors intend to do in respect of their own
beneficial holdings totalling 81,740 shares.
The Annual Report will be posted to shareholders on or around 10
March 2021.
Further copies may be obtained from the Company Secretary:
Frostrow Capital LLP, at 25 Southampton Buildings, London WC2A
1AL.
A copy of the Annual Report will be submitted to the National
Storage Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Annual Report will also be available on the Company's
website at www.mobiusinvestmenttrust.com where up to date
information on the Company, including daily NAV, share prices and
fact sheets, can also be found.
- END -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FLFIFFFIEFIL
(END) Dow Jones Newswires
February 25, 2021 07:07 ET (12:07 GMT)
Mobius Investment (LSE:MMIT)
Historical Stock Chart
From Apr 2024 to May 2024
Mobius Investment (LSE:MMIT)
Historical Stock Chart
From May 2023 to May 2024