REG - Mobius Inv.Trust PLC - Annual Financial Report
05/03/2024 13:45
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RNS Number : 6763F Mobius Investment Trust PLC 05 March 2024
MOBIUS INVESTMENT TRUST
ANNUAL REPORT OF MOBIUS INVESTMENT TRUST PLC
FOR THE YEAR ENDED 30 NOVEMBER 2023
Mobius Investment Trust plc (the "Company" or "MMIT") today announces audited
results
for the year ended 30 November 2023
FINANCIAL HIGHLIGHTS
As at As at
30 November 30 November
2023 2022 % change
Net Asset Value per Ordinary share† 144.3p 134.2p +7.5%
Share price 132.5p 131.0p +1.1%
Discount to Net Asset Value per share^ 8.2% 2.4% -
† UK GAAP measure
^ Alternative performance measure, see Glossary.
Year ended Year ended
30 November 30 November
2023 2022
Net Asset Value per Ordinary share total return*^ +8.5% (12.3)%
Share price total return*^ +2.1% (15.0)%
Ongoing charges* 1.5% 1.5%
Dividend per share - final 1.25p 1.20p
* Source: Morningstar.
^ Alternative performance measure, see Glossary.
CHAIRMAN'S STATEMENT
Introduction
Dear Shareholders,
Last year marked a significant milestone for the Mobius Investment Trust plc
("MMIT", the "Trust" or the "Company") as we celebrated the Company's first
five years of operations on 30 September 2023 with a remarkable 47.1% NAV
return since launch, substantially outperforming our peer group(1). The Board
views the five-year performance as evidence that MMIT's concentrated and
differentiated strategy, which emphasises quality and active engagement, can
consistently deliver outsized returns and effective downside protection. While
the coming years will likely see ongoing geopolitical uncertainty and wide
reaching structural economic shifts, the board is convinced that emerging
market companies can deliver strong earnings growth.
(1) Please see Glossary.
The year 2023 has continued to present challenges for emerging markets. After
an optimistic start as China lifted its zero-covid policy, bringing hope of a
return to familiar patterns in the global supply chain, the US banking crisis,
global inflation fears coupled with concerns over the ongoing conflict in
Ukraine and uncertainties surrounding the European economies dominated the
agenda. A slow recovery in China and unsettling events such as the terrorist
attacks in Israel and the ensuing conflict added layers of complexity and
caused investors to adopt a cautious stance. At the same time, enthusiasm for
generative artificial intelligence (AI) maintained investors' appetite for
equities and as the year was coming to a close expectation of interest rate
cuts in 2024 led to a rally in global equities.
Emerging markets continued to be negatively impacted by the strength of the
US$ and elevated inflation; At the same time, investment flows into the asset
class continued to be subdued. Finally, uncertainty about the elections in
Taiwan and many other Asian countries in 2024 caused low confidence and risk
appetite.
Amid these dynamics, the MCP team actively managed the portfolio, adding
carefully selected high conviction ideas following intense due diligence and
face-to-face meetings during trips to India and Southeast Asia. The Board is
supportive of the team's cautious and thoughtful approach, which ensures a
very careful bottom up stock selection process with a high emphasise on
management quality.
Carefully diversified across geographies and sectors, the portfolio is made up
of innovative, high-quality companies that have shown resilience and are
strategically positioned to benefit from the cyclical upturn in the
semiconductor sector, the resurgence in consumption and emerging trends.
At the same time, the investment manager has been mindful of macro and
regulatory risk and has taken a cautious approach to China. This has provided
downside protection at a time where China recorded heavy outflows. MMIT's NAV
total return increased by 8.5% over the 12 months to 30 November 2023,
outperforming the MSCI EM Mid Cap Index Net (GBP) by 6%. The high active share
strategy, with its focus on lesser known, quality companies, offers investors
a unique portfolio of carefully selected companies outside the benchmark
indices followed by the passive ETFs.
We recently announced Dr Mark Mobius' intention to step back from the
partnership, leaving MCP in the experienced hands of Carlos Hardenberg and his
team, who managed the Trust since inception. The Board would like to express
its gratitude for Dr Mobius' advice and expertise over these last five years.
Dr Mark Mobius was instrumental in establishing MMIT's manager, Mobius Capital
Partners LLP ("MCP" or the "Investment Manager") and has supported the team
with over 40 years of experience in investing in emerging markets.
MMIT continues to operate seamlessly with exceptional, passionate and
dedicated analysts led by Carlos Hardenberg who has been the lead manager of
the Company since its launch in 2018. The team works collaboratively to
generate new investment ideas and engages actively with portfolio company
managers and shareholders.
Performance
The NAV and share price total return of MMIT increased by 8.5% and 2.1%
respectively over the 12-month period to 30 November 2023, with the share
price reaching a high of 146.0p on 3 February 2023 and closing at 132.5p on 30
November 2023. The Investment Manager's Report will provide further details on
portfolio and performance. MMIT traded at an average discount to NAV of 2.0%
during the period under review, closing at a discount of 8.2% at the end of
the reporting year. Throughout the year, the Company has issued a total of
7,871,353 shares to meet investors' demand. At the close of business on 1
March 2024, the latest practicable date for this Annual Report, the discount
of the share price to NAV per share was 6.9%, with NAV and share price at
151.2p and 140.75p respectively.
Dividend
The Company made a revenue profit during the year and, as a result, the Board
recommends to shareholders the payment of a dividend which allows MMIT to
comply with the investment trust rules regarding distributable income. Subject
to these rules, any dividends and distributions will continue to be at the
discretion of the Board from time to time.
At the forthcoming Annual General Meeting the Board proposes a final dividend
of 1.25p per Ordinary share which will be paid on 7 May 2024 to shareholders
on the register as of 12 April 2024. The associated ex-dividend date will be
11 April 2024.
The Board
The governance of the Company remains crucial for effective oversight on the
delivery of results. I would like to thank my fellow Board members for their
continued support and contributions during the last twelve months. We have
conducted our Board assessment, and we believe that the Company's size fully
supports the Board composition without compromising on competencies,
diversity, and experience. In the forthcoming year we will conduct a Board
review with an external consultant which we will share in our next Annual
Report.
Management Team
As always, MMIT's successful performance is due to the competence of the team
at MCP.
During the year and as announced on 10 November 2023, Dr Mark Mobius notified
both the Company and MCP of his intention to step back from the partnership,
leaving a legacy of excellence and devotion to MCP and the Company. His
contributions have been pivotal to the Company's success, and his approach of
emerging market investing since the 1980s remains embedded in MCP's investment
philosophy.
MMIT will continue to be managed by MCP, which is led by Carlos Hardenberg,
supported by an experienced team of emerging markets specialists. Carlos has
been investing in emerging markets and working closely with Dr Mobius for over
23 years. He successfully managed country, regional and global emerging and
frontier market portfolios including the largest London listed emerging
markets trust generating significant outperformance over the entire period.
Going forward, selected employees will be invited to join the partnership.
This is in recognition of their strong performance and to further align
interests. The Board of MMIT looks forward to continue to work together with
the enthusiastic, knowledgeable and diverse team led by Carlos which we are
confident will continue to deliver outstanding results for our shareholders.
Annual General Meeting
The fifth AGM of the Company will take place at 12.00 noon on Tuesday, 23
April 2024 at 25 Southampton Buildings, London WC2A 1AL. The Notice convening
the AGM together with explanations of the proposed resolutions can be found at
the end of this document. My fellow Directors and I are looking forward to
meeting shareholders at the AGM.
Outlook
Uncertainties remain ahead. The themes that have dominated investors'
attention over the past year, such as inflation, interest rates, geopolitics,
supply chain disruptions and the slowdown in China, will continue to shape the
landscape in the months ahead.
Although US inflation is moderating, the timing of interest rate adjustments
remains uncertain. The resilience of the US economy suggests a potential soft
landing, but it could also prolong the period of elevated interest rates.
Elections in countries representing more than half of the world's population
could have far-reaching implications.
The recent election in Taiwan is a good example of the potential geopolitical
impact of these polls. Marked by the victory of pro-sovereignty candidate Lai
Ching-te, the people of Taiwan have resisted Chinese pressure for change. The
MCP team, which recently visited Taiwan*, is monitoring the situation closely
but believes that military intervention by China is unlikely at this stage
because of the potential economic consequences. With elections in India in
April and May, a fragile political balance in the Middle East and the upcoming
US elections, the geopolitical landscape could change significantly.
* Please also see MMIT's website,
https://www.mobiusinvestmenttrust.com/news-insights
Despite these uncertainties, we expect well-managed companies to emerge as
winners in emerging markets. The backdrop of demographic growth and rising
domestic demand should support the recovery in corporate and consumer
spending, especially as interest rates begin to fall. In addition, the
technology investment landscape remains robust, driven by growing trends
across industries such as automation, digitalisation and artificial
intelligence. I am confident that MMIT's portfolio is well positioned to take
advantage of these opportunities.
While larger companies catering to artificial intelligence have already seen
their share price rise, MMIT focuses on researching, investing and working
with lesser-known companies that provide essential components for
high-performance AI chips. These companies are experiencing exponential growth
as we saw reflected in their third quarter earnings reports.
At a time when macro themes dominate the investor landscape, an unwavering
focus on fundamentals, governance and individual company positioning becomes
increasingly important. MMIT's investment strategy remains focused on
investing in companies with strong balance sheets, minimal debt, positive cash
flows and unique offerings that are difficult to replicate. They have shown
resilience and adaptability and we have seen this reflected in their strong
performance and the outperformance of our Company. On behalf of the Board of
MMIT, I would like to thank all our shareholders for their strong support and
for sharing our view that the Trust's active emerging markets strategy is well
placed to deliver resilient and sustainable results.
Maria Luisa Cicognani
Chairman
5 March 2024
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
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.
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.
Investment policy commentary
Borrowing
There was no borrowing during the year under review or after the year end, nor
have any derivatives been used.
Hedging
The Investment Manager does not use currency hedging products in the portfolio
but manages currency risk through "natural hedging" by maintaining a
geographically diversified portfolio. The Investment Manager closely monitors
all portfolio companies on a daily basis and is in a regular dialogue with
portfolio companies on a range of issues, including currency hedging.
Analysing currency risk is an integral part of the Investment Manager's
macroeconomic framework and is fully integrated throughout the investment
process.
Breaches
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 the London
Stock Exchange via a Regulatory Information Service.
During the year under review, no breaches of the investment policy occurred.
Changes to the investment policy
No material change will be made to the investment policy without the approval
of shareholders by ordinary resolution.
COMPANY PERFORMANCE
Historic performance for the years ended 30 November
2019(#) 2020 2021 2022 2023
Net asset value per share total return*^ (6.7)% +16.3% +44.9% (12.3)% +8.5%
Share price total return*^ (17.0)% +24.7% +50.0% (15.0)% +2.1%
Shareholder funds (£'000) 95,990 111,237 166,502 144,294 166,529
Net asset value per share 91.4p 105.9 153.4p 134.2p 144.3p
Share price 83.0p 103.0 154.5p 131.0p 132.5p
(Discount)/premium of share price to net asset value per share*^ (9.2)% (2.7)% 0.7% (2.4)% (8.2)%
Ongoing charges^ 1.7% 1.5% 1.5% 1.5% 1.5%
* Source: Morningstar
# From launch 1 October 2018 to 30 November 2019.
^ Alternative Performance Measure (see Glossary).
INVESTMENT PORTFOLIO
as at 30 November 2023
Fair value % of net
Company Country £'000 assets
LEENO Industrial South Korea 10,491 6.3
Classys South Korea 10,164 6.1
TOTVS Brazil 9,884 5.9
EPAM Systems USA 9,024 5.4
E Ink Holdings Taiwan 7,875 4.7
Elite Material Taiwan 7,347 4.4
Zilltek Techonologies Taiwan 7,340 4.4
CE Info Systems India 7,244 4.4
APL Apollo Tubes India 7,204 4.3
Parade Technologies Taiwan 6,388 3.8
Top 10 Investments 82,961 49.7
Persistent Systems India 6,278 3.8
Sinbon Electronics Taiwan 5,632 3.4
Park Systems South Korea 5,527 3.3
eMemory Technology Taiwan 5,418 3.3
Hitit Bilgisayar Turkiye 4,833 2.9
Vietnam Dairy Products Vietnam 4,724 2.8
Bluebik Group Thailand 4,553 2.8
Dreamfolks Service India 4,209 2.5
Clicks Group South Africa 4,199 2.5
360 ONE WAM India 4,139 2.5
Top 20 Investments 132,473 79.5
Mavi Giyim Sanayi Ve Ticaret Turkiye 3,982 2.4
Kangji Medical Holdings China 3,959 2.4
Metropolis Healthcare India 3,614 2.2
Logo Turkiye 3,340 2.0
Safaricom Kenya 3,339 2.0
EC Healthcare China 3,306 2.0
Vivara Participacoes SA Brazil 2,677 1.6
Total Investments 156,690 94.1
Other Net Assets 9,839 5.9
Total Net Assets 166,529 100.0
Portfolio Distribution
Sector Breakdown, 30 November 2023
Technology 60.8%
Health Care 12.6%
Industrials 6.8%
Consumer Staples 5.4%
Consumer Discretionary 4.0%
Financials 2.5%
Communications 2.0%
Cash 5.9%
Sector Breakdown, 30 November 2022
Technology 52.8%
Health Care 15.1%
Consumer Staples 6.3%
Industrials 5.7%
Communications 4.9%
Consumer Discretionary 3.1%
Cash 12.1%
Geographical Breakdown, 30 November 2023
Taiwan 24.0%
India 19.7%
South Korea 15.7%
Brazil 7.5%
Turkiye 7.3%
United States 5.4%
China 4.4%
Vietnam 2.8%
Thailand 2.%
South Africa 2.5%
Kenya 2.0%
UK (includes uninvested cash) 5.9%
Geographical Breakdown, 30 November 2022
Taiwan 22.9%
India 13.9%
South Korea 10.6%
United States 8.2%
China 8.1%
Turkiye 6.2%
Brazil 5.5%
Kenya 4.8%
Vietnam 4.2%
South Africa 2.2%
Malaysia 1.3%
UK (includes uninvested cash) 12.1%
MMIT employs a flexible cash management policy. The aim is to be fully
invested while ensuring patient purchases and sales. This can lead to
temporarily higher cash levels.
INVESTMENT MANAGERS' REVIEW
Introduction
Reflecting on 2023, and the five-year trajectory since MMIT's inception, the
pervasive theme of persistent uncertainty remains a hallmark of our journey.
MCP, established in 2018, has carefully navigated challenges such as the
global pandemic, geopolitical turbulence and economic shocks. In 2023, global
concerns converged around inflation, the ongoing conflict in Ukraine, and
uncertainties surrounding the US and European economies. A slow recovery in
China, coupled with the outbreak of the conflict in the Middle East, led to
cautious investor positioning.
Amidst the challenges facing emerging markets in 2023, MMIT returned 8.5% over
the reporting period, outperforming the MSCI EM Mid Cap Index Net TR (GBP) by
almost 6.0%. MMIT continued to lead the peer group since inception to the
period end, with a return of 49.5%. This performance reflects the strategy's
resilience and adept navigation of uncertainties, and reinforces our
commitment to delivering value to our investors.
Some of the issues that have occupied the minds of investors over the past
year have been:
Inflation and interest rates:
With US inflation easing, the key question is when interest rates will be
adjusted. The resilience of the US economy points to a possible moderate
slowdown, but also raises the possibility of a prolonged period of elevated
interest rates, a scenario reinforced by recent strong US retail sales data.
Many emerging markets, on the other hand, are ahead in the tightening cycle
and should benefit from supportive domestic monetary policies that are
boosting growth and consumption.
Geopolitics:
As we traverse the uncertainties ahead, the geopolitical landscape, including
conflicts in the Middle East and Ukraine, remains fluid. A Trump victory in
the US might alter the geopolitical landscape yet again and underscores global
political dynamics. The recent victory of the China-sceptic ruling party's
candidate in Taiwan renews concerns of potential military reactions from
China. While we closely monitor this situation, our recent trip to Taiwan,
engaging with companies and experts on the ground, provides insights that
mitigate immediate concerns about a military strike. China has other
priorities given the slow recovery (see 'China Economic Slowdown' below).*
* Please also see MMIT's website,
www.mobiusinvestmenttrust.com/news-insights.
Geopolitical considerations are likely to continue to dominate the investor
agenda in 2024. Recent Houthi attacks on ships in the Red Sea are a stark
reminder of the risks associated with these conflicts, particularly given that
around 10% of global trade passes through the Suez Canal. These attacks could
have a significant impact on transport costs, potentially leading to higher
inflation and affecting central bank policy. Just as supply chains are
normalising and inventory levels are declining, new disruptions in 2024 could
continue to occupy our attention.
China Economic Slowdown:
China's slow recovery has emerged as a key theme in 2023 and beyond. This came
as a bit of a surprise to many investors. The year had started off with the
hope of a strong recovery with Chinese stocks rallying as the country bid
farewell to its zero-covid policy. We do not believe there is a quick fix for
China's problems. Structural challenges such as property sector woes,
overcapacity, slowing FDI flows and low consumer sentiment, with 70% of
household wealth tied up in real estate, have left Chinese companies trading
at attractive valuations. We invest cautiously in China due to governance and
regulatory risks, we prefer the indirect route via companies in Taiwan or
South Korea, offering better governance and transparency. However, screening
the Chinese market for exciting companies meeting our quality investment
criteria remains ongoing.
Artificial Intelligence:
Artificial intelligence continues to be a strong driver of equity performance,
a trend we believe is here to stay. Semiconductor companies are already
benefiting from increased demand for high-performance chips. The positive
outlook has boosted the share prices of some of the larger, better-known
companies catering to this trend. However, our highly innovative companies,
which provide essential components for high-performance chips and are yet to
be widely discovered, continue to grow exponentially. We have featured two
such companies in previous reports: Park Systems, a leader in atomic force
microscopy that provides essential semiconductor testing functions to the
makers of ever-smaller semiconductor chips, and Elite Materials, which
provides essential materials to the major chip makers. These are the types of
companies we like; they are highly innovative, have high barriers to entry and
strong fundamentals.
Throughout the year we worked diligently to refine our portfolio. This has
involved the strategic addition of new, high-conviction companies from our
pipeline. In 2023, we added several holdings (see section Portfolio Overview
below), which have already contributed positively to the overall performance
of the fund. These additions followed meticulous on-site evaluations and
face-to-face meetings with management teams during our extensive visits to
India and Southeast Asia. During January 2024, our analyst, Swathi Seshadri,
was back in India, conducting follow-up meetings with existing holdings. She
also initiated dialogue with over 50 new companies, starting our rigorous
360-degree due diligence process on selected prospects.
Performance
The NAV and share price of MMIT increased by 8.5% and 2.1% respectively over
the 12-month period to 30 November 2023, with the share price reaching a high
of 146.0p on 3 February 2023 and closing at 132.5p. MMIT traded at an average
discount to NAV of 2.0% during the period under review, closing at a discount
of 8.2%. At the time of writing, MMIT traded at a discount of 6.9%. Strong
performance was driven by robust company fundamentals, as well as more broadly
by an upturn in the semiconductor industry and cooling global inflation.
The top three performers over the period were South Korean medical aesthetics
provider Classys (+4.8%), Taiwanese hardware company Elite Material (+3.6%)
and Indian digital mapping provider CE Info Systems (+2.9%). Classys benefited
from continued R&D investment, an aggressive expansion of its instalment
base and an increased global presence following the approval of sales in
countries such as Australia and Taiwan.
Hong Kong-based EC Healthcare (-3.5%), software company EPAM Systems (-2.6%)
and Kenyan telecoms provider Safaricom (-2.4%) were the main detractors over
the period. EC Healthcare's share price more than doubled following the
reversal of China's zero-covid policy in November 2022. However, the share
price has been on a downward trend since mid-January, mirroring the poor
performance of the Hong Kong stock exchange over the year as a result of
negative spillovers from China's slowing economy.
MMIT continues to lead the peer group(1) since inception with a return of
+49.5% (as of 30 November 2023). Driven by investor interest the Trust has
been trading at a premium for much of the year and has issued shares 19 times
between February and August 2023 to meet investor demand.
1 The peer group is defined in the Glossary.
Portfolio Overview
As of 30 November 2023, MMIT had invested 94.1% of capital, with 26 holdings
across 11 countries. The largest geographic exposure was Taiwan (24%),
followed by India (19.7%) and South Korea (15.7%). The team continues to find
the most high-conviction ideas in Asia. The region accounts for over 60% in
the portfolio. The largest sector exposure was technology (60.8%), followed by
health care (12.6%) and industrials (6.8%).
During the period, MCP added six new investments to its portfolio: Park
Systems, Hitit, Bluebik, Dreamfolks, 360One WAM and Vivara. Some of these
companies were discussed in more detail in the interim report.
Hitit Bilgisayar Hizmetleri AS, a Turkish software company, provides IT
solutions to the global airline industry. Park Systems, a South Korean
hardware company, is a leader in the development and manufacture of atomic
force microscopes, with its flagship product "NX Wafer" targeting microchip
manufacturers. MapMyIndia, a digital map provider, operates on a Software as a
Service (SaaS) and Platform as a Service (PaaS) model and caters to a diverse
clientele including Apple, Hyundai and Amazon. Dreamfolks, India's leading
airport services aggregator, has seamlessly integrated global card networks
and card issuers, contributing positively to the trust's performance.
In Q3, MCP made a strategic investment in 360 One WAM, India's largest
specialist asset manager. Serving over 6,800 high net worth individuals and
families, the company is poised to benefit from the ongoing wealth creation in
the country, with a robust 17% CAGR in HNWI assets. Anchored by deep moats,
including a recurring fee model, scale, client loyalty and strong brand
recognition, the company boasts an experienced founding team that has
attracted top talent from leading financial institutions. The company is
backed by reputable shareholders including Capital Group and Bain Capital.
Company Spotlight: Vivara
In Q4, MCP expanded its portfolio by investing in Brazil's leading jewellery
brand, 'Vivara'. This move followed thorough due diligence, including
interviews with the founding family, senior management, and global jewellery
retail experts. Vivara, a 60-year-old brand, dominates with an 18% market
share in a fragmented market, operating nearly 400 stores across Brazil. Its
vertical integration, controlling sourcing, design, and production, acts as a
significant competitive advantage. The launch of the new 'Life' brand is
anticipated to enhance profitability and broaden the customer base. With
favourable economic conditions, expected interest rate cuts, and strong
sustainability initiatives, Vivara aligns well with MCP's portfolio strategy.
Over the period, MCP exited two holdings: Win Semiconductors and Pentamaster.
The former was exited over capital allocation concerns, and the latter over
deteriorating liquidity conditions.
Engagement
Throughout 2023, MCP saw significant progress on ESG+C(®) factors across its
portfolio companies, driven by extensive engagement with each holding. In
particular, several portfolio companies received esteemed recognition for
their ESG achievements. Sang-il Park, CEO of Park Systems, received the
prestigious Esteemed Hanyang Paiknam Award. 360One, an Indian wealth
management company, won awards such as 'Progressive Place to Work 2023' and
'Best HR Technology Company of the Year', and its independent director, Geetha
Mathur, won the 'Woman Independent Director of the Year Award for a Listed
Company'. At the 2023 Gender Mainstreaming Awards, South African
pharmaceutical retailer Clicks Group stood out, with CEO Bertina Engelbrecht
winning three prestigious awards.
In addition, Vietnamese dairy company Vinamilk was recognised as a global
sustainability leader, ranking in the top 5 in the global dairy industry
according to Brand Finance. Notably, it is the only Southeast Asian company in
this elite group, demonstrating its leadership in the region. In addition,
Persistent Systems, an Indian software provider, was included in the MSCI
India and S&P BSE 100 indices. Meanwhile, Dreamfolks, an Indian airport
aggregator, marked a milestone by publishing its first annual report outlining
its contributions to the UN SDGs. These achievements underscore the commitment
of MCP's portfolio companies to excellence in ESG practices and sustainable
business operations.
While celebrating these achievements, MCP remains committed to driving further
enhancements in ESG standards. Recent initiatives include advising MapMyIndia
and Dreamfolks in India to appoint in-house investor relations professionals,
aiming to unlock their true value. MCP believes such appointments will
optimize company engagement with investors and analysts, articulate business
strategies more effectively, and enhance brand visibility. Analyst Swathi
Seshadri's engagement in India has provided valuable insights, and upcoming
trips to South East Asia and Brazil are planned for continued
relationship-building and gathering of insights.
Outlook
The final quarter of 2024 saw a global equity rally, driven by expectations of
Fed rate cuts. Developed markets outperformed emerging markets, mainly due to
the robust performance of US equities and the continued success of the
"magnificent seven".
This has widened the already significant valuation gap with emerging market
companies in a number of sectors. Many institutional investors are currently
under-allocated to emerging markets, however recent discussions with investors
suggest that sentiment is changing and flows are beginning to return to
emerging markets.
During the fourth quarter, our team conducted in-depth discussions with each
portfolio holding to assess its current outlook. These discussions, combined
with recent earnings reports, have reinforced our positive outlook for 2024.
Our bullish stance on emerging markets is further driven by the potential
inflection point, characterised by attractive valuations, robust growth
trajectories and the presence of highly innovative companies capitalising on
prevailing trends and favourable macroeconomic tailwinds, including a
weakening dollar and supportive central bank policies.
Uncertainties remain, with geopolitical tensions high in a year in which more
than half of the world's population will go to the polls. However, we believe
our active approach to optimising the portfolio, adding high-conviction, asset
light ideas and maintaining diversification across geographies and sectors
positions us well. As we navigate the ever-changing landscape, our commitment
to creating value and seizing opportunities remains unwavering.
In November 2023, we announced Mark Mobius' intention to step back from the
partnership. We would like to express our gratitude for his mentorship,
leadership, and the remarkable energy and passion he brought not only to the
business but also to our lives. The firm and its vehicles continue seamlessly
under Carlos Hardenberg's leadership, supported by our exceptional team of
passionate and dedicated analysts, who are committed to continuing to deliver
superior long-term returns over the next decade.
Carlos Hardenberg
Mobius Capital Partners LLP
Investment Managers
5 March 2024
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 2023, 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 ordinary 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 third party 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 ("Frostrow") who engage Northern Trust Global Services
plc to provide certain administrative functions. In addition, Frostrow
provides the AIFM Directive risk management function on behalf of the AIFM.
The Northern Trust Company and Northern Trust Investor Services Limited are
the Company's Custodian and Depositary, respectively.
Further information, including the remuneration and contractual terms of
appointment, of these principal service providers to the Company is set out
below.
Strategy for the Year ended 30 November 2023 and Strategic Review
Throughout the year ended 30 November 2023, 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.
The Board is aware of the continued emphasis on environmental, social and
governance ("ESG") matters in recent years. The Investment Manager engages
regularly with all portfolio companies to understand and improve their
approach to ESG, based on strong evidence that ESG leaders tend to outperform
their peers. In addition, the Investment Managers believe that companies with
strong corporate cultures provide an additional driver of outperformance in
the long term. Details of the Investment Manager's "ESG+C(®)" approach can be
found in the Investment Managers' Review.
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. 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.
Results and Dividend
The results attributable to shareholders for the year are shown in the Income
Statement below. In the year ended 30 November 2023, the Company made a
revenue profit. Under investment trust rules regarding distributable income, a
final dividend must be paid to allow the Company to comply with those rules.
Subject to shareholders' approval at the forthcoming Annual General Meeting, a
final dividend of 1.25p per share will be paid on 7 May 2024 to shareholders
on the register as of 12 April 2024. The associated ex-dividend date will be
11 April 2024.
The Board
The Board of the Company comprises Maria Luisa Cicognani (Chairman),
Christopher Casey and Gyula Schuch, all of whom are independent non-executive
directors.
All Directors served during the whole 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 in the Governance section.
Information in respect of the Board's diversity policy and Board diversity can
be found in the Governance section.
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 below 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 Business Review below.
Key Performance Indicators ("KPIs")
The Board uses certain financial and non-financial KPIs to monitor and assess
the performance of the Company in achieving its strategic aims.
The Board reviews the performance of the portfolio in detail and hears the
views of the Investment Manager at each meeting.
Information on the Company's performance is provided in the Chairman's
Statement and the Investment Manager's Review.
This performance is assessed against the following KPIs:
· Net asset value per share total return*^
· Average discount/premium of share price to net asset value per
share over the year^
· Ongoing charges ratio^
· Return/(loss) per share†
* Source: Morningstar
^ Alternative Performance Measure (see Glossary)
† UK GAAP Measure
Alternative Performance Measures ("APM")
The Board believes that each of the APMs, which are typically used within the
investment company sector, provides additional useful information to
Shareholders in order to assess the Company's performance between reporting
periods and against its peer group. The APMs used for the year under review
are unchanged from last year. Further information on each of the APMs can be
found in the Glossary.
Net asset value per share total return^
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 investment
companies from the AIC's Global Emerging Markets Sector, that have a similar
investment objective to the Company and they are set out in the Glossary.
Over the year ended 30 November 2023, the Company ranked first in its peer
group with a net asset value per share total return performance of 8.5%
against a peer group average of 2.8%. Subsequent to the year-end, from 1
December 2023 to 31 January 2024, the Company ranked sixth against its peer
group with a net asset value total return of 0.1%; the average for the peer
group was 2.5%. The Board continues to monitor this closely.
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.
^ Alternative Performance Measure (see Glossary)
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 2023, between February and August 2023,
7,871,353 new ordinary shares were issued by the Company. New shares will only
be issued at a premium to the Company's cum income net asset value ("NAV") per
share at the time of issuance. During the year, the Company's shares traded at
an average discount of 8.2%, but between February and August the shares traded
at a premium to NAV per share, so that share issuances were possible. Since
the year-end, no further ordinary shares were issued.
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. To date, however, feedback from
shareholders has continued to indicate a preference for narrowing the discount
through generating natural demand. The Board also takes into consideration the
interest of shareholders to have liquidity in the shares when evaluating
strategies on discount management. As at 1 March 2024, the Company's shares
traded at a discount of 6.9% to the net asset value per Ordinary Share and no
shares have been bought back.
Average discount of share price to net asset value per Ordinary Share^ during
the year
30 November 2023 30 November 2022
2.0%
2.3%
Peer group average discount 12.5%
Peer group average discount 12.6%
^ 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 2023 the ongoing charges ratio was 1.5%. This
ongoing charges ratio compares with the average of the Company's peer group of
1.1%. One of the main reasons for MMIT's higher than average ongoing charges
ratio is the fact that most companies in the peer group are larger than MMIT,
so that expenses will be paid out of larger total assets, making them seem
smaller in comparison.
Ongoing charges ratio^
Year ended Year ended
30 November 2023
30 November 2022
1.5%
1.5%
Peer group average 1.1%
Peer group average 1.1%
^ Alternative Performance Measure (see Glossary)
Return/(loss per share†
The total return per share for the year was 11.79p (2022: loss of 18.96p).
† UK GAAP measure
Prospects
The Board continues to support the Investment Managers' strategy of investing
in a high conviction portfolio across emerging and frontier markets with an
active ownership approach. The Board believes that this strategy will continue
to deliver strong investment returns over the long term. This is supported by
the Company's performance which, since launch to 30 November 2023, has
provided a NAV total return of 49.5% and a share price total return of 34.7%,
compared with average peer group returns of 19.1% and 16.1% respectively.
Principal Risks, Emerging Risks and Risk Management
The Board considers that the risks detailed within this report are the
principal risks to the delivery of its strategy that are currently facing the
Company.
The Board is responsible for the ongoing identification, evaluation and
management of the principal risks faced by the Company. 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 Corporate
Governance Code and the FRC's Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting.
During the year ended 30 November 2023, the Audit Committee, on behalf of the
Board, has again 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 available 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 for the Company. The Committee was again reassured that all service
providers of the Company had adequate measures to ensure that no operational
issues would arise out of post-Covid-19 hybrid working 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 Key Mitigations
Investment Risks (including financial risks)
Market, Foreign Exchange, Monetary and Fiscal Risk in Emerging and Frontier
Markets
By the nature of its activities, the Company's portfolio is exposed to The Board has appointed Mobius Capital Partners LLP to manage the portfolio
fluctuations in market prices (from both individual security prices and within the remit of the investment objective and policy. The investment policy
foreign exchange rates) and due to the exposure to emerging markets limits ensure that the portfolio is diversified, reducing the risks associated
world-wide, in which the portfolio companies operate, it is expected to have with individual stocks and markets. Furthermore, foreign exchange risk is
higher volatility than the wider market. As such investors should be aware being considered when making investment decisions. Frostrow Capital LLP
that by investing in the Company they are exposing themselves to this risk. monitors compliance with the investment policy on a daily basis.
Furthermore, by nature of its emerging markets portfolio, the Company is The Board on an ongoing basis, through monthly and quarterly reporting from
exposed to fiscal and legal risk in the various countries where investments Frostrow Capital LLP and Mobius Capital Partners LLP, monitors exposure to
are held. investments, performance, and compliance with the investment objective and
policy.
Events like the war in Ukraine and, more recently, the war in Gaza also had an
impact on markets, although this was not just restricted to emerging markets At each Board meeting Mobius Capital Partners LLP provides an explanation of
but was a global phenomenon. investment decisions, the characteristics of the investment portfolio and the
investment strategy.
The Company also employs specialist tax advisers in some jurisdictions to
ensure that all tax laws, tax rules and tax regulations are adhered to.
Portfolio Risk The Investment Managers, Mobius Capital Partners LLP, have put in place a
rigorous investment process which ensures disciplined investment selection and
The risk in the Company's portfolio is influenced by diversification of portfolio management. This includes detailed due diligence and portfolio
country, currency and sector as well as the ability of the Portfolio Manager reviews as well as active engagement with investee companies, in particular on
to identify companies with strong fundamentals and to work with strong environmental, social, governance and cultural ("ESG+C(®)") matters.
management teams that are able to implement their value-creation strategies
successfully. The AIFM, Mobius Capital Partners LLP, has delegated its risk management
function to Frostrow Capital LLP.
Counterparty Risk Counterparty risk is managed by the Board through:
In addition to market and foreign currency risks, the Company is exposed to · reviews of the arrangements with, and services provided by, the
credit risk arising from the use of counterparties. If a counterparty were to Custodian to ensure that the security of the Company's custodial assets is
fail, the Company could be adversely affected through either delay in being maintained;
settlement or loss of assets. The most significant counterparty the Company is
exposed to is The Northern Trust Company, the Company's Custodian, which is · ensuring cash is only held at banks that have been identified as
responsible for the safekeeping of the Company's assets. Under the terms of reputable and of high credit quality. The Northern Trust Company has a credit
the contract with the Custodian the Company's investments are required to be rating of Aa2 (Moody's), AA- (Standard and Poor's) and AA (Fitch Ratings); and
segregated from The Northern Trust Company's own assets.
· monitoring of the Custodian, including reviews of internal
control reports and sub-custodial arrangements, as appropriate.
Further information on other financial risks, can be found in note 14 to the
Financial Statements below.
Strategic Risks · Experienced emerging and frontier markets investment managers
have been retained to deliver the strategy.
Strategy Implementation Risk
· Carlos Hardenberg has invested in emerging markets for over 20
The Company is subject to the risk that its long-term strategy and its level years with an impressive track record. The Board is very comfortable that,
of performance fail to meet the expectations of its shareholders. given that track record, Carlos has the proven ability to deliver returns for
the Company's 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 The Board manages this risk by:
There is a risk that the individual(s) responsible for managing the Company's · appointing an Investment Manager who operates a team environment
portfolio may not be able to continue in their roles. such that the loss of any individual should not impact service levels;
· receiving regular reports from the Investment Manager, such
reports include any significant changes in the 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 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.
During the year under review, Dr Mark Mobius made the decision to cease his
involvement with Mobius Capital Partners LLP and the Company in order to
concentrate on other projects. This decision was announced on 10 November
2023. Carlos Hardenberg is in the process of appointing new partners to MCP.
He is also working with very skilled and dedicated analysts who have been
working as team for three years now and are able to take over increasing
responsibilities whenever needed. The Board is therefore satisfied that the
Company's Investment Managers are able to positively address any challenges.
Shareholder Relations Risk In managing this risk the Board:
The Company is also exposed to the risks that: · reviews the Company's investment objective and policy and Mobius
Capital Partners LLP's investment approach in relation to the investment
· the investment strategy and performance no longer coincide with performance, market and economic conditions and the operation of the Company's
shareholders' objectives; peers;
· MMIT may become too big or too small to be attractive to · regularly discusses the Company's future development and strategy;
potential or existing investors; and
· engages regularly with larger shareholders through MCP, Frostrow
· failure to keep current or potential investors informed of MMIT's and the brokers and is available to all shareholders at the AGM and at the
performance and developments may contribute to a decline in the Company's annual Investor Day;
shares.
· 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;
· reviews an analysis of the shareholder register at each Board
meeting and is kept informed of shareholder sentiment; and
· undertakes a redemption exercise every three years to give
shareholders the option to redeem their shares at net asset value if they are
not happy with their shareholding in the Company. The next redemption exercise
will be undertaken in 2025.
Operational Risks To manage these risks the Board:
Service Providers Risk · ensures that all major service agreements are in line with best
practice and reviews performance against these terms annually, taking action
The Board is reliant on the systems of the Company's service providers and as as needed;
such disruption to, or a failure of, those systems could lead to a failure to
comply with corporate governance requirements, law and regulations, leading to · receives a monthly report from Frostrow Capital LLP, which
reputational damage and/or financial loss to the Company. This encompasses includes, inter alia, details of compliance with applicable laws and
disruption or failure caused by cyber crime or hybrid working practices and regulations;
covers dealing, trade processing, 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 and is satisfied that all service providers are able
to provide good service levels regardless of whether staff are working
remotely or in the office.
Macro Risks To manage this risk, the Board:
Geopolitical Risk · undertakes a regular review of the markets the Company is
invested in and receives regular reports from the investment managers;
The geopolitical risk to the Company is closely monitored by the Board.
· insists on macroanalysis as a vital part of the investment process;
Significant political and economic change in the countries where MMIT invests,
and those countries' degree of interconnection with the rest of the world, and · consults regularly with the investment team on political and
also other global events, such as a deteriorating economic environment in many economic risk factors; and
countries, might lead to volatile markets impacting the Company's performance
and reduced investor appetite for the Company's shares. · favours a cautious and analysis-based approach by the investment
team when it comes to investing in countries with volatile economic and
political conditions.
UK Regulatory Risk The Board monitors regulatory change with the assistance of the Company's
AIFM, Frostrow and external professional advisers to ensure that the Board is
The regulatory environment in which the Company operates changes materially, aware of any likely changes in the regulatory environment and will be able to
affecting the Company's modus operandi. adapt as required.
UK Legal Risk The Board monitors regulatory change with the assistance of its Investment
Managers and external professional advisers to ensure compliance with
The Company and/or the Directors fail to comply with legal requirements in applicable laws and regulations including the Companies Act 2006, the AIFM
relation to FCA dealing rules and procedures, the AIFMD, the Listing Rules, Rules, the Corporation Tax Act 2010 ("Section 1158"), the Market Abuse
the Companies Act 2006, relevant accounting standards, the Bribery Act 2010, Regulation ("MAR"), the Disclosure Guidance and Transparency Rules ("DTRs")
the Criminal Finances Act 2017, the Association of Investment Companies and the FCA's Listing Rules.
("AIC") Statement of Recommended Practice ("SORP"), GDPR, tax regulations or
any other applicable regulations. The Board reviews compliance reports and internal control reports provided by
its service providers, as well as the Company's financial statements and
revenue forecasts.
The Depositary reports twice yearly to the Audit Committee, confirming that
the Company has been managed in accordance with the AIFMD, the Articles and
with investment restrictions and leverage limits.
The Directors attend seminars and conferences to keep up to date on regulatory
changes and receive industry updates from the Company Secretary. The Company
Secretary also presents a quarterly report on changes in the regulatory
environment, including AIC updates, and how changes have been addressed.
Governance Risk The Board reviews all information supplied to shareholders and Frostrow's
marketing activity at each meeting.
Poor adherence to corporate governance best practice or errors or
irregularities in published information could lead to censure and/or result in Details of the Company's compliance with corporate governance best practice,
reputational damage to the Company. including information on relationships with shareholders, are set out in the
Corporate Governance Report.
ESG and Climate Change Risk At every Board meeting, the Board receives ESG+C(®) updates, which include
information on any climate change related engagement, from the Investment
ESG risks and climate change could have an adverse impact on the portfolio Managers together with monthly portfolio updates. The Board challenges the
companies' operational performance, affecting their investment value over the Investment Manager on ESG matters to ensure that the portfolio companies are
short or medium term. acting in accordance with the Board's ESG approach.
MMIT invests in companies that have the potential to improve, and benefit
from, environmental, social and corporate governance factors. As part of their
engagement the team at MCP actively supports portfolio companies in improving
their ESG-performance. Engagement is tailored and consists of constructive
advice to portfolio companies on a range of ESG issues including the reduction
of greenhouse gas emissions (GHG emissions) and an improvement in the CDP*
score as an indicator of a company's environmental sustainability.
Furthermore, the investment strategy uses screening against an exclusion list
of companies in which investments may not be made, taking ESG criteria into
account.
Details of the Investment Managers' ESG+C(®) approach can be found in the
Investment Managers' Review and on the Investment Managers' website at
www.mobiuscapitalpartners.com.
Mobius Capital Partners published their most recent active engagement report
in Q4 2023. This report provided more detail on MCP's customised ESG+C(®)
engagement approach, action points raised with portfolio companies as well as
outcomes from engagement. The report is available for download on the
Company's website: www.mobiusinvestmenttrust.com
* CDP is a not-for-profit charity that runs a global disclosure system
for investors, companies, cities, states and regions to manage their
environmental impacts.
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 every meeting. 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.
Any emerging risks and mitigations are added to the risk register.
The experience and knowledge of the Directors are 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 broker.
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.
Last year's emerging risk of a deteriorating economic environment in many
countries, together with inflation, an ongoing cost of living crisis and much
increased energy costs, remained with us during the year to the point of
investor appetite in equities reducing dramatically. During the year under
review, the Board has identified the war in Gaza, between Israel and Hamas, as
an emerging risk which might lead to wider confrontations in the Middle East
with global impacts as yet unforeseen.
Whilst it is not possible to mitigate emerging risks directly, the Board
regularly reviews the premium and discount levels and considers ways in which
share price performance may be enhanced to prevent MMIT becoming unattractive
to shareholders. The Investment Managers, Frostrow and the Brokers are in
regular contact with larger investors to ensure that MMIT's objective is still
in line with shareholders' objectives. There are also regular updates for all
shareholders by way of factsheets, annual and half-yearly reports and other
documentation on the Company's website.
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 stated above 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 current trading volumes, 100% of
the current portfolio could be liquidated within 30 trading days with 97.1% in
seven days or less 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 above 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 retirement of Dr Mobius has no negative impact on the trust
placed by investors in the Investment Manager and, in particular, Carlos
Hardenberg as the lead partner.
· 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.
The continuing uncertainty in the global economy, the ongoing war in Ukraine
as well as the more recent war in Gaza, have contributed to supply chain
disruption and ongoing inflationary pressures worldwide. These were factored
into the key assumptions made by assessing their 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 and reverse stress testing.
Furthermore, the Audit Committee again considered the operational resilience
of the Company's service providers, and thereby the operational viability of
the Company. During the year under review, some meetings were still held
online, and all key service providers were contacted with regard to their
business continuity systems as well as their IT and cyber security systems to
prevent fraudulent activity of any kind. No issues were raised and the Audit
Committee was reassured that all key service providers were operating well and
to their normal high service standards while enabling their employees to work
remotely where necessary.
The Directors confirm, therefore, that they have a reasonable expectation that
the Company will be able to continue in operation and meet its liabilities in
full over the coming five years.
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
£500 million; of 0.85% of the Fund Value over £500 million and up to and
including £1 billion; and of 0.75% of the Fund Value over £1 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.
Manager, Company Secretary and Administrator
Frostrow Capital LLP ("Frostrow") acts as the Company's Operational Manager,
Company Secretary and Administrator. It is an independent provider of
services to the investment companies sector and currently has 15 investment
company clients of which seven are AIFM clients.
Company secretarial, marketing, and administrative services are provided by
Frostrow under an Administration and Management Services Agreement dated 10
September 2018.
A management service 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 £250 million. Frostrow's fees
will reduce from 0.225% to 0.20% on Fund Value of the Company in the range of
£250 million to £500 million, and to 0.175% on that part of the Fund Value
in excess of £500 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 Financial Statements.
Depositary and Custodian
Northern Trust Investor Services Limited is the Company's Depositary, having
been appointed by the Board and Mobius Capital Partners LLP with effect from 1
October 2021, taking over from Northern Trust Global Services SE following the
UK's departure from the EU and an internal reorganisation within Northern
Trust.
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 £25,000.
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.
The Northern Trust Company provides global custody services to Mobius
Investment Trust plc.
Investment Manager and Administration Manager Evaluation and Re-Appointment
The review of the performance of Mobius Capital Partners LLP as Investment
Manager and Frostrow as Company Secretary and Administration Manager 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 is being 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
relative to 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. 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.
In this work, Frostrow is supported by Peel Hunt LLP, the Company's Brokers,
who also engage with investors via roadshows and meetings.
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.
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.
During the year under review, a total of 153 investor meetings and five
investor seminars were held during which MMIT was discussed.
Frostrow produces many key corporate documents, monthly factsheets, annual and
half-yearly reports. 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.
Frostrow maintains close contact with all the relevant investment trust broker
analysts who publish and distribute research on the Company to their
respective professional investor clients and, during the year under review,
particularly those from Peel Hunt.
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 reporting regulations and the AIC Code, the Directors are required to
explain 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 overleaf:
Who? Why? How?
STAKEHOLDER GROUP
THE BENEFITS OF ENGAGING WITH THE COMPANY'S STAKEHOLDERS
HOW THE BOARD, THE INVESTMENT MANAGER AND ADMINISTRATOR HAVE ENGAGED WITH THE
COMPANY'S STAKEHOLDERS
Investors Clear communication of the Company's strategy and the performance against the The Investment Manager, Frostrow and the Company's Broker, on behalf of the
Company's objective informs shareholders and the market in general and may Board, complete a programme of investor relations throughout the year.
raise new interest from potential investors, thereby increasing the liquidity
of MMIT's shares. An analysis of the Company's shareholder register is provided to the Directors
at each Board meeting along with marketing reports from Frostrow. The Board
New shares can be issued to meet demand without net asset value per share reviews and considers the marketing plans on a regular basis. Reports from the
dilution to existing shareholders. Increasing the size of the Company can Company's Broker are submitted to the Board on investor sentiment and industry
benefit liquidity as well as spread costs. issues.
In an effort to control the discount at which shares trade to their net asset Key mechanisms of engagement include:
value per share, the Company can buy back shares if the Board considers this
to be in the best interest of the Company and shareholders as a whole. Shares · the Annual General Meeting;
can either be held in "treasury" or cancelled. Any shares held in treasury can
later be sold back to the market if conditions permit. The Company does not · the Company's website which hosts reports, video interviews with
currently hold any shares in treasury. the Investment Managers and monthly factsheets;
Once every three years, the Company also offers a redemption facility through · one-on-one investor meetings and online webinars;
which shareholders may request the redemption of all or part of their holding
of redeemable ordinary shares ("Ordinary Shares") for cash. · should any significant votes be cast against a resolution,
proposed at the Annual General Meeting, the Board will engage with
The next redemption point will be on 30 November 2025. Shareholders in order to understand the reasons behind the votes against;
· the Board will explain in its AGM results announcement the
actions it intends to take to consult with shareholders in order to understand
the reasons behind any significant votes against resolutions; 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.
At each meeting the Board reviews movements in the Company's shareholder
register. There are regular interactions and engagement with shareholders,
including at the AGM. Regular feedback from shareholders is received from
Frostrow and the Company's Broker.
Investment Manager Engagement with the Company's Investment Manager is essential to assess its The Board meets regularly with the Company's Investment Manager throughout the
performance against the Company's stated strategy and to understand any risks year both formally at the scheduled Board meetings and informally as needed.
or opportunities that may arise. Through regular reviews with the Investment The Board also receives monthly performance and compliance reporting.
Manager, the Board ensures that the portfolio companies remain financially
sound and have strong growth prospects. These reviews also enable the Board to The Board further receives regular updates from the Investment Manager
verify that MCP's environmental, social and governance ("ESG") practices are concerning engagement on ESG+C(®) matters with the companies within the
in line with industry standards and meet the Board's expectations. It also portfolio.
serves to closely monitor investment management costs to ensure they remain
competitive. The Investment Manager's attendance at each Board meeting provides the
opportunity for the Investment Manager and Board to further reinforce their
mutual understanding of what is expected from both parties.
Service Providers The Company contracts with third parties for other services including: The Board and Frostrow engage regularly with other service providers both in
depositary, investment accounting & administration as well as company one-to-one meetings and via regular written reporting. Representatives from
secretarial and registrars. The Company ensures that the third parties to whom service providers are asked to attend Board and Audit Committee meetings when
the services have been outsourced complete their roles in line with their deemed appropriate. This regular interaction provides an environment where
service level agreements, thereby supporting the Company in its success and topics, issues and business development needs can be dealt with efficiently.
ensuring compliance with its obligations.
Portfolio Companies Engagement with portfolio companies enables a comprehensive understanding of Active engagement on ESG+Culture issues with the aim of improving operations,
their business models, financial strengths and strategic objectives. Close ESG-standards and performance, and thereby catalysing a re‑rating of the
interaction with management over time fosters a strong stakeholder investee's stock price, lies at the heart of the Investment Manager's
relationship that serves as an effective risk management tool. In addition, strategy. The Investment Manager individually tailors engagement on ESG+C(®)
integrating environmental, social and governance (ESG) considerations into the issues to the portfolio company and its respective sector. In addition to ESG
investment process provides invaluable insights for risk assessment and factors, MCP places a high emphasis on understanding a company's corporate
mitigation. 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.
Regular visits or video calls are being undertaken between the Investment
Managers and portfolio companies.
On the occasion of the 2023 Investor Day, three portfolio companies - Hitit
Bilgisayar, Park Systems and Mapmy India/CE Info Systems - were invited to
present their respective businesses to shareholders, and talk about their
experience of working with the Mobius Capital Partners team on improving
ESG+C(®) issues.
What? Outcomes and actions
WHAT WERE THE KEY TOPICS OF ENGAGEMENT?
WHAT ACTIONS WERE TAKEN, INCLUDING PRINCIPAL DECISIONS?
Key topics of engagement with investors · The Investment Managers, Frostrow and the broker meet regularly
with shareholders and potential investors to discuss the Company's strategy,
· Ongoing dialogue with shareholders concerning the strategy of the performance, the portfolio and any ESG+Culture issues which might be raised.
Company, performance, the portfolio and ESG issues.
· Shareholders are provided with performance updates via the
· Impact on market volatility on the performance of the Company. Company's website as well as the usual financial reports and monthly
factsheets.
· Share price performance and the widening of investment company
sector discounts. · The Board reviews the Company's share price discount/premium on a
regular basis and has share buy-back and issuance policies as well as a
redemption facility by which investors may redeem their shares every three
years.
Key topics of engagement with the Investment Manager on an ongoing basis · Updates are received by the Board at every Board meeting.
· Portfolio composition, performance, outlook and business updates · The Board is kept well informed about the team composition at MCP
as well as ESG engagement with portfolio companies. and the Investment Manager gives regular updates on new team members. The
departure of Dr Mobius as announced on 10 November 2023, was discussed in
· Team composition. detail by the Board, the Investment Manager, Frostrow and the Company's
Brokers.
· The impact of market volatility upon the portfolio.
· The unique network of external experts and 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.
· The Board has received regular updates from the Investment
Manager throughout the year.
Key topics of engagement with Other Service Providers · During the year, the service providers' business resilience was
discussed as well as service levels.
· The Directors have frequent engagement with the Company's other
service providers through the annual cycle of reporting and due diligence · Reviews of the Company's service providers during the year have
meetings or site visits by Frostrow. This engagement is completed with the aim been positive and the Directors believe that their continued appointment is in
of maintaining an effective working relationship and oversight of the services the best interests of the Company.
provided.
Key topics of engagement with Portfolio Companies · The Investment Managers are aware that trusts perceived to be
falling behind in ESG and climate change concerns will be downrated by
The Investment Managers, on behalf of the Board, have engaged with a number of investors. This issue therefore makes up an important part of the risk
portfolio companies: assessment when looking at possible investments.
· in order to address business matters and to understand the risks · For the Investment Managers good governance is the best way to
faced by portfolio companies and how they can be addressed. ensure best value for shareholders. To this end, environmental and social
factors as well as governance are discussed in meetings with managements.
· in order to achieve good governance overall, as good governance
means that board and management of portfolio companies are aware and proactive
in their approach to all environmental and social issues.
Responsible and Sustainable Investing
The Board recognises that the most direct way for the Company to have an
impact on Environmental, Social and Governance ("ESG") issues is through the
responsible ownership of its investments.
It has delegated authority to its Investment Managers to engage actively with
the management of investee companies and encourage that high standards of ESG
practice are adopted and that high standards of corporate governance and
corporate responsibility are maintained. More information is given in the
Investment Managers' Review.
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.
The Investment Managers' ESG+C(®) Policy
The Investment Managers' ESG Policy can be found on their website at
www.mobiuscapitalpartners.com and it explains how ESG and corporate culture
factors are being assessed all through the investment process as follows:
· an initial recommendation by the Investment Committee;
· establishment of an ESG+C(®) action plan and engagement with
companies;
· monitoring, measuring and reporting ESG+C(®) improvement; and
· exercising voting rights.
In particular, the ESG Policy states that Mobius Capital Partners are strongly
convinced that companies with higher ESG standards generally have a lower cost
of capital, more efficient operational performance, greater protection of
minority investors' interests, lower business risk and higher shareholder
distributions, all of which positively influence a company's valuation.
Quarterly ESG factsheets can also be found on the Investment Managers'
website, giving a breakdown of investment companies' disclosure of
· environmental targets such as environmental reporting,
quantitative environmental targets and Carbon Disclosure Project Portfolio
Company scores. The Carbon Disclosure Project increases environmental
transparency and accountability of companies and enables progress tracking.
The scoring ranges from A, A-to B, B-to C, C-to D, D-and F.
· social targets such as employee training initiatives and
reporting on Sustainable Development Goals in the fields of Industry,
Innovation and Infrastructure, Good Health and Wellbeing, and Decent Work and
Economic Growth.
· governance targets such as gender equality and female directors,
Board independence, sustainability reporting, Global Reporting Initiative
Compliant reporting, dedicated Investor Relations professionals and others.
· corporate culture targets such as a Code of Conduct, share option
schemes, non-financial employee benefits, anti‑corruption and whistleblower
policies, dedicated sustainability professionals and gender equality among
C-level executives.
Taskforce for Climate-Related Financial Disclosures ("TCFD")
The Company notes the TCFD recommendations on climate-related financial
disclosures. The Company is an investment trust with no employees, internal
operations or property and, as such, it is exempt from the Listing Rules
requirement to report against the TCFD framework.
The Investment Manager reports on portfolio companies' Carbon Disclosure
Project (CDP) Scores as part of their quarterly ESG+C reporting. CDP's
disclosure platform provides the mechanism and a first step towards reporting
in line with the TCFD recommendations. In addition, the team engages with
every portfolio holding on the adoption of the TCFD recommendations.
The risks associated with climate change represent an increasingly important
issue and the Board and the Investment Managers are aware the transition to a
low-carbon economy will affect all businesses, irrespective of their size,
sector or geographic location. Therefore, no company's revenues are immune and
the assessment of such risks must be considered within any effective
investment approach.
Integrity and Business Ethics
The Company is committed to carrying out business in an honest and fair
manner. In carrying out its activities, the Company aims to conduct itself
responsibly, ethically and fairly, including in relation to social and human
rights issues.
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 from
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 in the
Corporate Information section of the Company's website on
www.mobiusinvestmenttrust.com. The policy is reviewed annually by the Audit
Committee.
In response to the implementation of the Criminal Finances Act 2017, the Board
also 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 in the Corporate Information section of the Company's
website www.mobiusinvestmenttrust.com. The policy is reviewed annually by the
Audit Committee.
The Board's expectations are that its principal service providers have
appropriate governance policies in place.
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.
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.
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
with its peer group.
The Board is regularly updated by Frostrow Capital LLP and Peel Hunt 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 2023, 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.
For and on behalf of the Board of Directors
Maria Luisa Cicognani
Chairman
5 March 2024
Governance
BOARD OF DIRECTORS
Maria Luisa Cicognani
Independent Non-Executive Chairman
Appointed to the Board on 5 September 2018
Remuneration per annum: £40,000*
Shareholding in the Company: 72,927*
Skills and Experience:
Maria Luisa has over 30 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.
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 non-executive chairman of Concrete Fashion Group (previously:
Arafa Holding) in Cairo and a non-executive director of Eurizon Capital SgR,
and of Intesa San Paolo Holding S.A. Luxembourg.
Standing for re-election
Yes
Christopher Casey
Independent Non-Executive Director, Chairman of the Audit Committee and Senior
Independent Director
Appointed to the Board on 5 September 2018
Remuneration per annum: £35,000*
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 (formerly audit committee chairman) of China
Polymetallic Mining Limited until 2016, audit committee chairman of Latchways
plc until 2015, audit committee chairman of Eddie Stobart Logistics plc until
August 2020, and audit committee chairman of BlackRock Sustainable American
Investment Trust plc until March 2023.
Christopher's career spans over 40 years and he was previously an audit
partner at KPMG. 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 The European
Smaller Companies Trust plc, non-executive director and audit committee
chairman of Life Settlements Assets plc and CQS Natural Resources Growth and
Income PLC.
Standing for re-election
Yes
Gyula Schuch
Independent Non-Executive Director and Chairman of the Management Engagement
and Remuneration Committee
Appointed to the Board on 1 June 2022
Remuneration per annum: £30,000*
Shareholding in the Company: none*
Skills and Experience:
Gyula has over 25 years' experience in investment banking. Formerly, he was
Managing Director of EEMEA and LATAM Equities at HSBC Bank plc, Global Banking
and Markets in London and Managing Director and Co-Head of EEMEA and LATAM
Equities at HSBC Securities (USA) Inc in New York. Previously, he worked for
HVB Capital Markets New York and CA-IB Securities New York Inc.
He holds a Master of Business Administration degree from the University of
Business Administration and Economics in Vienna.
Other Appointments:
Up until 31 December 2023, Gyula was Equity Partner at Ithuba Capital, a
management-owned independent investment bank and regional advisory firm with
headquarters in Vienna. With effect from 1 February 2024, he joined Vienna
Capital Partners as a partner.
He is also a director of Pomega Inc. in the US.
Standing for re-election
Yes
* Information as at 30 November 2023.
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 Auditors'
Report for the year ended 30 November 2023.
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 2023, 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 and environmental
issues.
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 below 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 Ordinary 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'.
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 ("AGM")
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 AGM.
Resolution 9: Authority to allot shares up to approximately 20% of the
ordinary shares in issue.
Resolution 10: Authority to issue new shares or sell shares from Treasury for
cash, up to approximately 20% of the Company's issued ordinary shares at a
price per share not less than the net asset value per share, and to disapply
pre-emption rights in respect of those shares.
Resolution 11: Authority to buy back up to 14.99% of shares in issue at the
time of the AGM, either for cancellation or for placing into Treasury.
Resolution 12: Authority to hold general meetings (other than AGMs) on at
least 14 days' notice.
The full text of the resolutions can be found in the Notice of Annual General
Meeting at the end of this document. Explanatory notes regarding the
resolutions can be found following the Notice of Annual General Meeting.
Ordinary resolutions require that more than 50% of the votes cast at the
relevant meeting be in favour of the resolution for it to be passed. Special
resolutions require that at least 75% of the votes cast be in favour of the
resolution for it 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, details of
which are set out in the Directors' Remuneration Report.
AGM Arrangements
The AGM will be held on Tuesday, 23 April 2024. In case of any problems,
arrangements will be made for shareholders to attend via a webinar, view the
Investment Manager's presentation online 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.
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.
Articles of Association
Amendment of the Company's Articles of Association requires a special
resolution to be passed by shareholders.
Directors
The current Directors of the Company are listed above. All Directors served as
Directors throughout the year to 30 November 2023 and up to the date of this
report.
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 2023. It is intended that this policy will
continue for the year ending 30 November 2024 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.
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 2023 there were 115,420,336 redeemable ordinary shares of 1p
each (2022: 107,548,983 ordinary shares) and 50,000 management shares of £1
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.
Share Issues and Buybacks
The Directors currently have the authority to issue shares up to an aggregate
nominal amount equal to 20% 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 20% of the issued share capital for cash,
without pre-emption rights applying. These authorities will expire at the AGM
to be held on 23 April 2024, when resolutions to renew them will be proposed.
Furthermore, at the last AGM held on 26 April 2023, the Directors were granted
authority to repurchase up to 16,144,077 Ordinary shares, being 14.99% of the
Company's issued share capital. This authority will also expire at the
forthcoming AGM, when a resolution to renew it will be proposed.
As set out in MMIT's prospectus, the Company may buy back shares when the
share price discount to the net asset value per share rises above 5%, at the
Board's discretion. The Company's share issuance policy allows the issuance of
new shares at a small premium to the net asset value per share on a regular
basis acting as a premium management tool.
As at 30 November 2023, the number of ordinary shares in issue was
115,420,336. 7,871,353 ordinary shares were issued during the year and no
shares were bought back.
Since the year-end no further Ordinary Shares were issued 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 are 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 was on 30 November 2022 and each subsequent
redemption point will 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.
During the redemption exercise in 2022, redemption requests in respect of a
total of 2,767,334 ordinary shares were received, representing 2.54% of issued
share capital at the time. Of these redemption requests, 1,356,317 ordinary
shares were matched with buyers and sold at the redemption price and 1,411,017
ordinary shares were redeemed and cancelled by the Company.
The terms of the redemption facility are set out in the Company's Articles of
Association and were summarised in the Company's IPO prospectus.
The Board and the Investment Managers believe that the Company's investment
case remains highly compelling and therefore did not redeem their shares.
Substantial Interests in Share Capital
As at 30 November 2023 and 31 January 2024, 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 2023
Shareholder Number of ordinary shares held % of issued share capital
Allan & Gill Gray Foundation 14,908,850 12.92
Dr. Joseph Bernhard Mark Mobius 13,949,878 12.08
Hargreaves Lansdown, stockbrokers (EO) 9,559,854 8.29
Interactive Investor (EO) 8,266,179 7.16
Columbia Threadneedle Investments 5,075,000 4.39
Connor Broadley 4,603,980 3.99
A.I.M. Overseas PTC 4,500,000 3.90
Charles Stanley 4,257,232 3.69
Hauck & Aufhaeuser Bank, Luxembourg (PB) 3,734,768 3.24
JM Finn, stockbrokers 3,710,457 3.21
AJ Bell, stockbrokers 3,660,794 3.17
EO = Execution only
31 January 2024
Shareholder Number of ordinary shares held % of issued share capital
Allan & Gill Gray Foundation 13,858,850 12.01
Dr. Joseph Bernhard Mark Mobius 11,531,382 9.99
Hargreaves Lansdown, stockbrokers (EO) 9,509,698 8.24
Interactive Investor (EO) 8,277,832 7.17
Columbia Threadneedle Investments 5,075,000 4.40
Connor Broadley 4,617,612 4.00
Charles Stanley 4,466,677 3.87
A.I.M. Overseas PTC 4,206,396 3.64
JM Finn, stockbrokers 3,735,225 3.24
Hauck & Aufhaeuser Bank, Luxembourg (PB) 3,556,834 3.08
AJ Bell, stockbrokers 3,502,431 3.03
EO = Execution only
Interest of the lead investment manager in the shares of the Company as at 30
November 2023:
Carlos Hardenberg 1,163,650 1.01%
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.
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 2023
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.
Listing Rule 9.8.4
Listing Rule 9.8.4 requires the Company to include certain information, more
applicable to traditional trading companies, 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.
The Board has considered a detailed assessment of the Company's ability to
meet its liabilities as they fall due, including stress tests and reverse
stress tests which modelled the effects of substantial falls in markets and
significant reductions in market liquidity 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 a period of at least
the next 12 months from when the Financial Statements are authorised for issue
and that, accordingly, it is appropriate to continue to adopt the going
concern basis in preparing the financial statements.
In reaching these conclusions and those in the Viability Statement, the stress
testing conducted also featured consideration of the long-term effects of the
continuing uncertainty created by the increase in global inflation and higher
interest rates, together with the consequences of the war in Ukraine and the
subsequent long-term effects on economies and international relations as well
as the more recent war in Gaza.
Furthermore, the departure of Dr. Mark Mobius from MCP was considered by the
Board, and it was concluded that the Company's Investment Managers are able to
positively address any challenges.
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
5 March 2024
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
Independent Chairman - Maria Luisa Cicognani
Two additional non-executive Directors, all considered independent.
The Board has appointed Christopher Casey 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 Audit Committee
Chairman Chairman
Gyula Schuch Christopher Casey*
All Independent Directors All Independent Directors
Key responsibilities: (The Chairman of the Board is also a member of the Committee)
· to review regularly the contracts, performance and remuneration Key responsibilities:
of the Company's principal service providers;
· to monitor the integrity of the Company's Annual Report and
· to set the remuneration policy of the Company; and financial statements and of the half-yearly report;
· to determine and agree with the Board the remuneration of the · to oversee the risk and control environment and financial
Directors. Where appropriate, the Committee will consider both the need to reporting; and
judge the position of the Company relative to other companies regarding the
remuneration of Directors and the need to appoint external remuneration · to review the performance of the Company's external Auditors and
consultants. 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 found on the Company's website at
www.mobiusinvestmenttrust.com. They can also be obtained from the Company
Secretary and will be available for inspection at the AGM.
Given the small size of the Board, 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") published in 2018, 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 that 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.
In addition to the above, the Board also notes the publication of the new UK
Corporate Governance Code 2024 ("new UK Code"), which will apply to
financial years beginning on or after 1 January 2025. In due course, the
Company will report against the new UK Code.
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
above.
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. It is the Board's belief
that this contributes to the greater success of the Company, as well as being
an appropriate way to conduct relations between parties engaged in a common
purpose.
Diversity Policy
The Board supports the principle of Boardroom diversity. The Company's policy
is that the Board and its committees should be comprised of directors who
collectively display the necessary balance of professional skills, experience,
length of service and industry knowledge and that appointments to the Board
and its committees should be made on merit, against objective criteria,
including diversity in its broadest sense.
The objective of the policy is to have a broad range of approaches,
backgrounds, skills, knowledge and experience represented on the Board. The
Board believes that this will make the Board and its committees more effective
at promoting the long-term sustainable success of the Company and generating
value for shareholders by ensuring there is a breadth of perspective among the
Directors and the challenge needed to support good decision making. To this
end, achieving a diversity of perspectives and backgrounds on the Board and
its committees will be a key consideration in any director search process.
The gender balance of two men and one woman, as at the date of this report, is
in line with the recommendations of Lord Davies' reports on Women on Boards.
The Board is aware that gender representation objectives have been set for
FTSE 350 companies and that targets concerning ethnic diversity have been
recommended for each FTSE 100 board to have at least one director of colour by
2021 and for each FTSE 250 board to have the same by 2024.
When appointing new Board members, the Directors will consider knowledge,
skills and experience. However, the Board will not display any bias for age,
gender, race, sexual orientation, religion, ethnic or national origins,
disability, or educational, professional or socio-economic background in
considering the appointment of its Directors.
Board Diversity
The Board is supportive of the FCA's recently updated Listing Rules (LR
9.8.6R(9)) to encourage greater diversity on listed company boards to the
effect that:
(i) at least 40% of the individuals on its board are women;
(ii) at least one of the senior board positions is held by a woman; and
(iii) at least one individual on the board is from a minority ethnic
background.
The FCA's disclosure requirements apply to financial years starting on or
after 1 April 2022, and will serve as guidelines when appointing new
directors.
The Board has chosen to align its diversity reporting reference date with the
Company's financial year end and proposes to maintain this alignment for
future reporting periods. The Company has met one of the three targets on
board diversity as at its chosen reference date, 30 November 2023: the senior
position of Chairman of the Board is held by a woman.
The relatively small size of the Company's Board, and therefore more
infrequent vacancies and opportunities for recruitment, make achieving
diversity on the Board a more challenging, but ongoing process. As succession
planning of the Board progresses over future years, the Company will continue
to strive for increased diversity on its Board through its Diversity Policy.
Further details on the Company's appointment process can be found under Board
Composition and Succession.
As required under LR 9.8.6R(10), further details in respect of the three
targets outlined above as at 30 November 2023 are disclosed below. Each
Director volunteered how they wished to be included in the tables.
(a) Table for reporting on gender identity or sex
As at 30 November 2023 No. of Percentage Number of senior
Board positions on the Board*
members
Men 2 66.6 1 (Audit Chair and SID)
Women 1 33.3 1 (Chair of the Board)
Not specified/ prefer not to say - - -
(b) Table for reporting on ethnic background
As at 30 November 2023 No. of Percentage Number of senior
Board positions on the Board*
members
White British or other White (including minority-white groups) 3 100 2
Mixed/Multiple ethnic groups - - -
Asian/Asian British - - -
Black/African/Caribbean/Black British - - -
Other ethnic group, including Arab - - -
Not specified/prefer not to say - - -
* As an externally managed investment company, the Company has no
executive directors, employees or internal operations. The Board has therefore
excluded the columns relating to executive management from the table above. In
addition, the senior positions on the Company's Board of the chief executive
and the chief financial officer are not applicable to the Company. In the
absence of the aforementioned roles, the Board considers the Chair of the
Audit Committee to also be a senior position on the Board. Christopher Casey
currently serves as both Senior Independent Director ("SID") and Chair of the
Audit Committee.
It should be noted that, although all current Board members are "White British
or other White", diversity is provided through different nationalities, with
one Board member being Italian, one British and one Austrian.
Directors' Independence
The Board consists of three 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. Maria Luisa Cicognani and Christopher Casey were appointed
on 5 September 2018 and Gyula Schuch was appointed on 1 June 2022. All
Directors will retire at the Company's 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. 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 aqbove. All of the Directors
consider that they have sufficient time to discharge their duties. When
appointing new Directors, the Board takes into account other demands on the
Directors' time. Any additional external appointments are not undertaken
without prior approval of the Board.
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 five 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 2023 and the number of meetings
attended by each Director.
Number of meetings Board Audit Management
(5) Committee Engagement &
(2) Remuneration
Committee
(1)
Maria Luisa Cicognani 5 2 1
Christopher Casey 5 2 1
Gyula Schuch 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, share issuances and changes in the
Investment Management team.
Board Composition and Succession
The Directors have performed a full skills review during the year and have
decided that currently, all skills and experience necessary to run the Company
effectively are represented on the Board.
The Board seeks to ensure that it is well-balanced and refreshed regularly by
the appointment of new directors with the skills and experience necessary, in
particular, to replace those lost by directors' retirements. To this end, a
composition and succession plan has been approved to ensure that the Board is
comprised of members who 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; and provide policy guidance on the structure, size and composition
of the Board (and its Committees) and the identification and selection of
suitable candidates for appointment to the Board (and its Committees).
The composition and skills of the Board are reviewed annually and at such
other times as circumstances may require in order to fill any possible gaps in
skills and experience. Selecting the best candidates, irrespective of
background, is paramount.
The Board will ensure that a robust recruitment process is undertaken for all
director appointments to deliver fair and effective selection outcomes.
Independent advisors may be appointed to aid directors' recruitment and to
help 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.
Where the Board appoints a new Director during the year or after the year-end
and before the Notice of Annual General Meeting has been published, that
Director will stand for election by shareholders at the next Annual General
Meeting.
Subject to there being no conflict of interest, all Directors are entitled to
vote on candidates for the appointment of new Directors and to recommend to
shareholders the re-election of Directors at the Annual General Meeting.
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.
Mr Casey is the Senior Independent Director. His biography and other
appointments are detailed above and the Board considers that he 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 available 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. For the
year under review, this was not considered necessary. However, it was decided
that in respect of the current financial year ending 30 November 2024, a
formal Board evaluation be undertaken by an external independent agency and
reported on in the next annual report.
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 2023, 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 Senior
Independent Director.
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 are
non-executive roles which are far less time-consuming than full-time executive
positions in a trading company would be.
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. 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, operational and macro risk
management can be found in the Strategic Report.
An overview of the Internal Controls structure of the Company and its service
providers is shown in the full annual report.
[Graph in the annual report]
Engagement with Stakeholders
As an externally managed investment trust, the Company does not have
employees. Its main stakeholders therefore comprise a small number of service
providers and its shareholders.
The AIC Code requires the Directors to explain their statutory duties as
stated in sections 171-177 of the Companies Act 2006. Under section 172,
directors have a duty to promote the success of the Company for the benefit of
its members as a whole and, in doing so, have regard to the consequences of
any decisions in the long term, as well as having regard to the Company's
stakeholders amongst other considerations. The Board's report on its
compliance with section 172 of the Companies Act 2006 is contained within 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. 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 and Remuneration 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 above.
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 and Remuneration Committee monitors and evaluates
all of the Company's other service providers, including Frostrow, and also the
Custodian, the Registrars and the Brokers.
At its most recent review, in September 2023, the Committee concluded that all
service providers were performing well and should be retained on their
existing terms and conditions.
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 several seminars 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. 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.
Stewardship and Exercise of Voting Powers
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.
Proxy Voting
The MCP team carefully evaluates companies in global markets, taking into
account different governance frameworks and market dynamics. Beyond voting,
they proactively engage with all stakeholders, fostering dialogue on
governance best practices and long-term value creation.
During the reporting period, 186 proxies were voted, with 174 in favour,
demonstrating support for growth strategies and governance initiatives. Where
appropriate, 12 votes were cast against proposals, demonstrating a commitment
to challenging practices that are not in the best interests of shareholders.
This approach underlines the company's commitment to responsible investment,
sustainable value creation and strong governance practices.
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.
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 Dr Mark Mobius's
departure from Mobius Capital Partners LLP and the correct dissemination of
this information by the Company to the market.
Audit, Risk and Internal Control
The Statement of Directors' Responsibilities below 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
5 March 2024
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 regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 102 "The
Financial Reporting Standard applicable in the UK and Republic of Ireland",
and applicable law).
Under company law, the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period. In preparing the financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· state whether applicable United Kingdom Accounting Standards,
comprising FRS 102 have been followed, subject to any material departures
disclosed and explained in the financial statements;
· make judgements and accounting estimates that are reasonable and
prudent; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006.
The Directors are also responsible for the maintenance and integrity of the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors' Confirmations
The Directors consider that the Annual Report and Financial Statements, taken
as a whole, are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's position, performance,
business model and strategy.
Each of the Directors, whose names and functions are listed in the 'Board of
Directors' above 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, give
a true and fair view of the assets, liabilities, financial position and profit
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.
In the case of each Director in office at the date the Report of the Directors
is approved:
· so far as the Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit information
and to establish that the Company's auditors are aware of that information.
Approved by the Board of Directors and signed on its behalf by
Maria Luisa Cicognani
Chairman
5 March 2024
AUDIT COMMITTEE REPORT
for the year ended 30 November 2023
Introduction from the Chairman
I am pleased to present my fifth formal report to shareholders as Chairman of
the Audit Committee, for the year ended 30 November 2023.
Role, Composition and Meetings
The role of the Committee is to ensure that shareholder interests are properly
protected in relation to the application of financial reporting and internal
control principles, risk management and to assess the effectiveness of the
audit. The Committee's role and responsibilities are set out in full in its
terms of reference which are available for review on the Company's website at
www.mobiusinvestmenttrust.com.
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
set out above.
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 table in
the Corporate Governance section.
Responsibilities of the Audit Committee
As Chairman of the Committee I can confirm that the Committee's main
responsibilities during the year are set out below, together with brief
descriptions of how these responsibilities are being discharged.
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. In particular, the Committee assesses whether the
financial statements are fair, balanced and understandable, allowing
shareholders to assess the Company's strategy, investment policy, business
model, financial performance e and financial position at each period-end.
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. The Committee also reviews the internal controls in place at the
Company's AIFM and Investment Manager, its Registrar and its Depositary and
undertakes a full review of the Company's risk register.
3. To recommend the appointment 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 Auditors.
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.
6. To ensure compliance with Section 1158 of the Corporation Tax Act 2010,
by obtaining confirmation that the Company continues to meet the regulatory
requirements.
Significant Issues Considered by the Audit Committee during the Year
In summary, additional to the Committee's core responsibilities, the main
matters arising in relation to 2023 were:
· The Committee is aware of the increase in fraudulent activity
over the past years exploiting organisations. Following an assessment and
identification of types of fraud that the Company could be exposed to, it was
believed that the Company's key service providers had adequate, robust
controls in place to mitigate the event of any fraudulent activity.
· The Committee noted the consultation published by the Department
of Business, Energy and Industrial Strategy as well as the Position Paper
published by the FRC, on restoring trust in audit and corporate governance,
and will continue to monitor the timescale for implementation of these
proposals.
These matters were discussed by the Committee and any recommendations were
fully considered and recommendations were then made to the Board.
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 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:
February 2023
· 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 2022;
· Review of the Investment Manager's internal controls;
· Review of the relevant internal controls reports of Frostrow, the
Depositary and the Registrar;
· Review of the policies and 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 key service providers' ongoing business resilience,
in particular in respect of financial crime, cyber crime and information
security;
· 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;
· Review of the Company's Non-Audit Services Policy;
· Evaluation of the Committee's effectiveness.
July 2023
· 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 Investment Manager's Systems and Controls Report as
well as the Investment Manager's Compliance Monitoring Review;
· Review of the Depositary's Report for the six months ended 31 May
2023;
· Review of the Company's risk matrix;
· Approval of the Auditors' engagement letter and review of their
plan for the 2023 audit.
Annual Report
The Annual Report is the responsibility of the Board. The Directors'
Responsibility Statement is shown above. 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, as set out in the Financial Statements, 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 Administrator'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 statement in the Business Review, 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 and India) 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 Auditors
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
25 July 2023. The Committee then met PricewaterhouseCoopers LLP on 21 February
2024 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 potential conflicts of
interest,
- the extent of any non-audit services, and
- the statement by the Auditors that they remain independent within the
meaning of the regulations and their professional standards.
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 of non-audit services by
the Auditors 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. Ms Colleen Local has been the
Engagement Leader allocated to the Company by PricewaterhouseCoopers LLP since
the audit for the year ended 30 November 2021.
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 Ms Local will serve
as Engagement Leader until completion of the audit process the year ended 30
November 2025. The Company has complied throughout the year ended 30 November
2023 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 determine the remuneration of the
Auditors, at the AGM to be held on 23 April 2024.
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, in
accordance with MMIT's Non-Audit Services Policy. 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. As part of the evaluation, the Committee reviewed the
following:
- the composition of the Committee;
- the leadership of the Committee Chairman;
- the Committee's monitoring of compliance with corporate governance
requirements;
- the Committee's review of the quality and appropriateness of financial
accounting and reporting;
- the Committee's review of significant risks and internal controls; and
- the Committee's assessment of the independence, competence and
effectiveness of the Company's external auditors.
It was concluded that the Committee was performing satisfactorily and there
were no formal recommendations made to the Board.
Christopher Casey
Chairman of the Audit Committee
5 March 2024
DIRECTORS' REMUNERATION REPORT
for the year ended 30 November 2023
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 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 Directors exercise independent judgement and discretion when authorising
remuneration outcomes, taking into account the Company's performance together
with wider circumstances.
At the most recent review, held in September 2023, it was agreed that for the
year ending 30 November 2024, the Directors' fees will remain as follows:
The Chairman - £40,000
The Chairman of the Audit Committee - £35,000
Non-executive Directors - £30,000
As noted in previous annual reports, Directors' fees should be reviewed
annually and increased as necessary in line with the peer group and the
market.
No advice from remuneration consultants was received during the year under
review although a review of remuneration of the Company's peer group of
investment companies was undertaken along with research by Trust Associates
Limited which indicated that the Company's remuneration levels were roughly in
line with market averages.
Directors' Fees
The Directors, as at the date of this report, and who have all served during
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 126 and 127 of the 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 23 April 2024.
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. Following
approval of the Directors' Remuneration Policy at the AGM in 2023, it is
expected that the policy will next be put to shareholders at the AGM in 2026.
Date of Fixed Taxable Total
Appointment Fees Expenses Remuneration
to the Board 2023 2023 2023
£ £ £
Maria Luisa Cicognani 5 September 2018 £40,000 - £40,000
Christopher Casey 5 September 2018 £35,000 £2,192 £37,192
Gyula Schuch 1 June 2022 £30,000 - £30,000
£105,000 £2,192 £107,192
Directors' Remuneration history
The table below contains the annual percentage change in remuneration over the
three years prior to 30 November 2023 in respect of the various director
roles:
Annualised fees to Year to Year to Year to Year to
Fee Rates 30 November 2019 30 November 2020 30 November 2021 30 November 2022 30 November 2023
Chairman of the Board £35,000 £35,000 £35,700 £37,000 £40,000
0% +2.0% +3.6% +8.1%
Chair of Audit Committee £30,000 £30,000 £30,600 £32,000 £35,000
0% +2.0% +4.6% +9.4%
Non-executive Director £25,000 £25,000 £25,500 £27,000 £30,000
0% +2.0% +5.9% +11.1%
Additional fees - - - - -
Relative Cost of Directors' Remuneration
The bar chart below shows the comparative cost of the Company's Directors'
fees compared with the level of dividend distribution and repurchase of the
Company's shares (buy-backs) for the years ended 30 November 2023 and
30 November 2022.
[Graphic appear here]
This disclosure is a statutory requirement. The Directors, however, do not
consider that the comparison of Directors' remuneration with distribution to
shareholders is a meaningful measure of the Company's overall performance.
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
2023
Maria Luisa Cicognani Beneficial 72,927
Christopher Casey Beneficial 10,000
Gyula Schuch - -
Since the year end there have not been any changes in the Directors'
interests.
There are no provisions included within the Company's Articles of Association
which require Directors to hold shares in the Company.
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.
Share Price Total Return
The chart illustrates the shareholder return for a holding in the Company's
Shares compared with the MSCI Emerging Markets - Mid Cap net total return
(Index) from launch to 30 November 2023.
Total Shareholder Return for the Period from inception to 30 November 2023^
[Graphic appears here in the full annual report]
Statement of Voting at Annual General Meeting
The Directors' Remuneration Report for the period ended 30 November 2022 was
approved by shareholders at the Annual General Meeting held on 26 April 2023.
26,995,247 votes (99.65%) were in favour, with 93,500 votes (0.35%) against
and no votes withheld. Any proxy votes which were at the discretion of the
Chairman were included in the "for" total.
The Directors' Remuneration Policy was also approved by shareholders at the
last Annual General Meeting held on 26 April 2023.
26,960,104 votes (99.65%) were in favour, with 93,651 votes (0.35%) against
and 34,992 votes withheld. Any proxy votes which were at the discretion of the
Chairman were included in the "for" total.
Current and projected Directors' fees
Projected fees
for the year to Fees for the year to
30 November 2024 30 November 2023
Chairman £40,000 £40,000
Audit Committee Chairman/Senior Independent Director £35,000 £35,000
Non-executive Director £30,000 £30,000
Total £105,000 £105,000
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 £300,000 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 2023 and 2024 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.
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. The policy was approved by shareholders at the AGM held on 26
April 2023 and thereafter is expected to be next on the AGM agenda in 2026.
Annual Statement
On behalf of the Board, I confirm that the Remuneration Policy, set out above,
and this Remuneration Report summarise, as applicable, for the year ended 30
November 2023:
(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.
Gyula Schuch
Chairman of the Management Engagement
and Remuneration Committee
5 March 2024
Financial Statements
INCOME STATEMENT
for the year ended 30 November 2023
Year ended Year ended
30 November 2023 30 November 2022
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments held at fair value 8 - 14,434 14,434 - (20,444) (20,444)
Exchange losses on foreign currencies - (210) (210) - (185) (185)
Income 2 2,802 - 2,802 2,859 - 2,859
Investment management and management service fees 3 (541) (1,263) (1,804) (529) (1,235) (1,764)
Other expenses 4 (492) - (492) (480) - (480)
Return/(losses) on ordinary activities before taxation 1,769 12,961 14,730 1,850 (21,864) (20,014)
Taxation on ordinary activities 5 (154) (1,449) (1,603) (302) (325) (627)
Return/(losses) after taxation attributable to equity shareholders 1,615 11,512 13,127 1,548 (22,189) (20,641)
Return/(losses) per share basic and diluted 7 1.45p 10.34p 11.79p 1.42p (20.38)p (18.96)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 items in the above 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 financial statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 November 2023
Share Share Special Capital Capital Revenue Total
capital premium reserve Redemption reserves reserve £'000
£'000 £'000 £'000 reserve £'000 £'000
£'000
At 1 December 2022 1,088 10,833 95,093 14 35,390 1,876 144,294
Issue of Ordinary shares 79 10,325 - - - - 10,404
Profit for the year - - - - 11,512 1,615 13,127
Ordinary Final dividend (1.20p) for the year ended 30 November 2022 - - - - - (1,296) (1,296)
Balance at 30 November 2023 1,167 21,158 95,093 14 46,902 2,195 166,529
Share Share Special Capital Capital Revenue Total
capital premium reserve Redemption reserves reserve £'000
£'000 £'000 £'000 reserve £'000 £'000
£'000
At 1 December 2021 1,098 10,184 96,932 - 57,579 709 166,502
Issue of Ordinary shares 4 649 - - - - 653
Cancellation of Ordinary shares (Redemption facility) (14) - (1,839) 14 - (1,839)
(Loss)/profit for the year - - - - (22,189) 1,548 (20,641)
Ordinary Final dividend (0.35p) for the year ended 30 November 2021 - - - - - (381) (381)
Balance at 30 November 2022 1,088 10,833 95,093 14 35,390 1,876 144,294
The accompanying notes are an integral part of these financial statements.
STATEMENT OF FINANCIAL POSITION
as at 30 November 2023
2023 2022
Notes £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 8 156,690 126,834
Current assets
Debtors 9 1,399 1,196
Cash at bank and in hand 14 10,722 20,104
12,121 21,300
Current liabilities
Creditors (amounts falling due within one year) 10 (491) (2,452)
Net current assets 11,630 18,848
Total assets less current liabilities 168,320 145,682
Non-current liabilities
Deferred tax liability 11 (1,791) (1,388)
Net assets 166,529 144,294
Capital and reserves
Called up share capital 12 1,167 1,088
Share premium 21,158 10,833
Special reserve 95,093 95,093
Capital redemption reserve 14 14
Retained Earnings:
Capital reserves 46,902 35,390
Revenue reserve 2,195 1,876
Total Shareholders' funds 166,529 144,294
Net asset value per Ordinary Share (p) 13 144.28 134.17
The Financial Statements were approved, and authorised for issue, by the Board
of Directors on 5 March 2024 and signed on its behalf by:
Maria Luisa Cicognani
Chairman
The accompanying notes are an integral part of these financial 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 preparation
The Financial Statements have been prepared in accordance with UK Generally
Accepted Accounting Practice ("GAAP") under UK and Republic of Ireland Company
Law, FRS 102 'The Financial Reporting Standard applicable in the UK, the
Statement of Recommended Practice ("SORP") for "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" issued by the
Association of Investment Companies in July 2022 and the Companies Act 2006
under the historical cost convention as modified by the valuation of
investments at fair value through profit or loss.
The Financial Statements have been prepared on a going concern basis. The
disclosure on going concern in the Report of the Directors forms 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 are two significant judgements involved in the presentation of the
Company's accounts being the judgement on the functional and presentational
currency of the Company and the provision of the Deferred tax liability on
unrealised capital gains on Indian securities.
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 (£'000) except where otherwise indicated. The
Deferred tax liability has been valued as disclosed in note 11.
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 under FRS 102, sections 11 and 12 and are measured
initially, and at subsequent reporting dates, at fair value.
Changes in the fair value of investments and gains and losses on disposal are
recognised in the Income Statement as a capital item. The Company manages and
evaluates the performance of these investments on a fair value basis in
accordance with its investment strategy, and information about the investments
is provided internally on this basis to the Board. Fair value for quoted
investments is deemed to be bid market prices, or last traded price, depending
on the convention of the stock exchange on which they are quoted.
All purchases and sales of investments are accounted for on the trade date
basis.
The Company's policy is to expense transaction costs on acquisition/disposal
through the gains on investment at fair value through profit or loss. The
total of such expenses, showing the total amounts included in disposals and
acquisitions are disclosed in note 8.
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 in Revenue 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.
Overseas dividends are reported 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 the revenue account 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 mainly to overseas withholding tax on dividend income and
Indian capital gains tax.
Indian capital gains tax is allocated to the Capital column of the Income
Statement.
(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) 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 as disclosed below.
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.
(i) Dividends payable
Dividends paid by the Company are recognised in the Financial Statements and
are shown in the Statement of Changes in Equity in the period in which they
became legally binding, which in the case of an interim dividend is the point
at which it is paid and for a final dividend when it is approved by
Shareholders at the AGM, in line with the ICAEW Tech Release 02/17BL.
2. Income
Year ended Year ended
30 November 30 November
2023 2022
£'000 £'000
Income from investments
Overseas Dividends 2,505 2,842
Other income - bank interest 297 17
2,802 2,859
3. Investment Management and Management Service Fees
Year ended Year ended
30 November 2023 30 November 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees - Mobius Capital Partners LLP 442 1,031 1,473 432 1,008 1,440
Management service fees - Frostrow Capital LLP 99 232 331 97 227 324
541 1,263 1,804 529 1,235 1,764
Further information regarding Investment Management and Management Service
fees can be found in the Business Review.
4. Other Expenses
Year ended Year ended
30 November 30 November
2023 2022
£'000 £'000
Directors' fees 105 96
Auditor's remuneration - Statutory annual audit 56 37
Custody fees 92 95
Depositary fees 25 25
Printing and postage 16 14
Registrar fees* 19 25
Company broker fees 46 44
Stock listing and FCA fees 20 18
Legal and professional fees** 4 21
Marketing and promotional costs 48 60
Tax advice 16 18
Other administrative expenses 45 27
492 480
* 2022 fees includes £6,000 in connection with the Redemption
facility.
** 2022 fees includes £11,000 in connection with the Redemption
facility.
5. Taxation
(a) Analysis of Charge in the Year
Year ended Year ended
30 November 2023 30 November 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Overseas taxation 154 - 154 302 - 302
Overseas capital gains tax - 1,449 1,449 - 325 325
154 1,449 1,603 302 325 627
Overseas tax arose as a result of irrecoverable withholding tax on overseas
dividends and Indian capital gains tax ("CGT").
Indian CGT 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. A deferred tax
liability for CGT as at 30 November 2023 is recognised as shown in Note 11
£1,791,000 (2022: £1,388,000).
(b) Reconciliation of Tax Charge
The revenue account tax charge for the year is lower than the standard rate of
corporation tax in the UK of 25% (2022: 19%).
Year ended Year ended
30 November 2023 30 November 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total return/(loss) on ordinary activities before tax 1,769 12,961 14,730 1,850 (21,864) (20,014)
Corporation tax charged at 23%(#) (2022: 19%) 407 2,981 3,388 351 (4,154) (3,803)
Effects of:
Non-taxable (gains)/losses on investments - (3,320) (3,320) - 3,884 3,884
Non-taxable foreign exchange losses - 48 48 - 35 35
Unutilised management expenses 238 291 529 193 235 428
Income not subject to corporation tax (645) - (645) (544) - (544)
Overseas taxation 154 - 154 302 - 302
Indian capital gains tax - 1,449 1,449 - 325 325
Tax charge for the year 154 1,449 1,603 302 325 627
# With effect from 1 April 2023, the main rate of corporation
tax increased from 19% to 25%, therefore the hybrid rate of 23% has been used.
(c) Provision for UK Deferred Taxation
For the year ended 30 November 2023, the Company had cumulative unutilised
management expenses for taxation purposes of £10,111,000 (2022: £7,815,000).
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 £2,528,000 (2022: £1,954,000) based on a
prospective corporation tax rate of 25% (2022: 25%). The UK corporation tax
rate is currently enacted to 25% effective 1 April 2023.
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 UK tax on any
capital gains or losses arising on the revaluation or disposal of investments.
Deferred tax has been provided for on capital gains arising on Indian
Securities as disclosed in note 5(a).
6. Dividends
In accordance with FRS 102 dividends are included in the Financial Statements
in the year in which they are paid or approved by Shareholders. Amounts
recognised as distributable to Shareholders for the year end 30 November 2023
were as follows:
Ex-Dividend date Payment 2023 2022
date
£'000 £'000
Final dividend paid for the year ended 30 November 2022 of 6 April 2023 5 May 2023 1,296 -
1.20p per share
Final dividend paid for the year ended 30 November 2021 of 28 April 2022 27 May 2022 - 381
0.35p per share
The final dividend of 1.25p (2022: 1.20p) has not been included as a liability
in these Financial Statements as it is only recognised in the financial year
in which it is paid. The total dividends payable in respect of the financial
year which forms the basis of the retention test under Section 1158 of the
Corporation Tax Act 2010 are set out below:
Year ended Year ended
30 November 30 November
2023 2022
£'000 £'000
Revenue available for distribution by way of dividend for the year 1,615 1,548
Final dividend of 1.25p (2022: 1.20p) per share* (1,443) (1,291)**
Revenue reserves available following distribution 172 257
* Based on the number of shares in issue as at 30 November 2023
being 115,420,336 (2022: 107,548,983** on the ex-dividend date, 6 April 2023,
107,998,983 shares were held).
7. Return/(loss) per share - basic and diluted
The return per share figures are based on the following figures:
Year ended Year ended
30 November 30 November
2023 2022
£'000 £'000
Net revenue return 1,615 1,548
Net capital return/(loss) 11,512 (22,189)
Net total return/(loss) 13,127 (20,641)
Year ended Year ended
30 November 30 November
2023 2022
Pence Pence
Revenue return per share 1.45 1.42
Capital return/(loss) per share 10.34 (20.38)
Total return/(loss) per share 11.79 (18.96)
Weighted average number of Ordinary shares in issue during the year 111,386,397 108,850,685
During the year (2022: nil) there were no dilutive instruments held, therefore
the basic and diluted return per share are the same.
8. Investments held at fair value through profit or loss
30 November 30 November
2023 2022
£'000 £'000
Opening book cost 108,263 94,404
Opening investment holding gains 18,571 50,397
Opening fair value 126,834 144,801
Purchases at cost 48,876 51,897
Sales proceeds (33,454) (49,420)
Gains/(losses) on investments held at fair value through profit or loss 14,434 (20,444)
Closing fair value 156,690 126,834
Closing book cost 137,757 108,263
Closing investment holding gains 18,933 18,571
Closing fair value 156,690 126,834
The Company received £33,454,000 (2022: £49,420,000) from investments sold
in the year. The book cost of the investments when they were purchased was
£19,382,000 (2022: £38,038,000). 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
£61,000 (2022: £62,000).
Sales transaction costs incurred during the year were £88,000 (2022:
£70,000) and comprised commission.
9. Debtors
30 November 30 November
2023 2022
£'000 £'000
Outstanding sales due for settlement 1,270 1,098
Accrued income 27 8
Overseas tax recoverable 71 43
Non-redeemable preference shares recoverable - Management Shares 13 13
Other debtors 18 34
1,399 1,196
10. Creditors: amounts falling due within one year
30 November 30 November
2023 2022
£'000 £'000
Outstanding purchases due for settlement 222 364
Investment management fee - Mobius Capital Partners LLP 127 117
Management service fee - Frostrow Capital LLP 30 26
Ordinary shares bought back for cancellation - Redemption facility - 1,839
Other creditors 112 106
491 2,452
11. Deferred tax liability
30 November 30 November
2023 2022
£'000 £'000
Deferred taxation on unrealised capital gains on Indian securities 1,791 1,388
See note 5(a) for further details.
12. Called up Share Capital
30 November 30 November
2023 2022
£'000 £'000
Allotted and fully paid
115,420,336 (2022: 107,548,983) Ordinary shares of 1p each 1,154 1,075
Called up Management Shares
50,000 (2022: 50,000) non-redeemable preference shares - Management Shares of 13 13
£1 each.
1,167 1,088
The capital of the Company is managed in accordance with its investment policy
which is detailed in the Strategic Report.
During the year the Company issued 7,871,353 new shares for a consideration of
£10,404,000 (2022: 450,000 new ordinary shares for a consideration of
£653,000).
The share capital includes 50,000 non-redeemable preference shares -
Manangement shares, of a nominal value of £1 each; of which one quarter is
called 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
2023 2022
Net Assets (£'000) 166,529 144,294
Number of shares in issue 115,420,336 107,548,983
Net asset value per share 144.28p 134.17p
During the year (2022: 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 8) 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 Investment 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 2023
(2022: 10%), the impact on the profit and loss and net asset value would have
been £16.0 million (2022: £15.0 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
Interest rate risk is the risk that the fair value of future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates.
When the Company retains cash balances the majority of the cash is held in the
custody account at The Northern Trust Company. The benchmark rate which
determines the interest payments received on cash balances is the bank base
rate for the relevant currency for each deposit.
Interest rate movements may affect the level of income receivable on cash
deposits and cash equivalents and interest payable on borrowing.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating
interest rates, giving cash flow interest rate risk when rates are re-set, is
shown below:
30 November 30 November
2023 2022
£'000 £'000
Exposure to floating interest rates:
Cash at bank and in hand 10,722 20,104
Net exposure 10,722 20,104
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation
for the year and net assets to a 5% (2022: 5%) increase or decrease in
interest rates in regards to the Company's monetary financial assets and
financial liabilities. This level of change is considered to be a reasonable
illustration based on observation of current market conditions.
The sensitivity analysis is based on the Company's monetary financial
instruments held at the accounting date with all other variables held
constant.
30 November 2023 30 November 2022
5% increase 5% decrease 5% increase 5% decrease
in rate in rate in rate in rate
£'000 £'000 £'000 £'000
Income statement - return after taxation
Revenue return/(loss) 536 (536) 1,005 (1,005)
Capital return - - - -
Total return after taxation 536 (536) 1,005 (1,005)
Net assets 536 (536) 1,005 (1,005)
The Directors do not consider the exposure to interest risk as being material
to the Company.
Foreign currency risk
Foreign currency risk is the risk that fair values of future cash flows of a
financial instrument fluctuate because of changes in foreign exchange rates.
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:
2023 2022
Investments Cash Debtors Creditors Investments Cash Debtors Creditors
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
New Taiwanese dollar 39,999 25 41 - 33,125 27 23 (128)
Indian rupee 32,688 72 51 - 20,000 - - (1,388)
Korean won 26,182 - 1,219 - 15,288 - 235 (467)
Brazilian real 12,561 - 9 - 7,967 - 9 (3)
Turkish lira 12,155 - - (222) 8,883 - 1,098 -
US dollar 9,024 - - - 11,870 - - -
Hong Kong dollar 7,266 - - - 13,579 - - -
Vietnamese dong 4,724 1,320 - - 6,023 1,381 - -
Thailand baht 4,553 - - - - - - -
South African rand 4,199 - - - 3,121 - - -
Kenyan shilling 3,339 - - - 6,978 182 - -
Polish zloty - - 21 - - - 20 -
156,690 1,417 1,341 (222) 126,834 1,590 1,385 (1,986)
At 30 November 2023, the Company had £9,305,000 (2022: £18,514,000) of
sterling cash balances.
Foreign currency sensitivity
During the year sterling strengthened by an average of 3.7% (2022: 1.7%
weakened) against all of the currencies in the investment portfolio (weighted
for exposure at 30 November 2023), if the value of sterling had strengthened
against each of the currencies in the portfolio by 10%, the impact on the net
asset value would have been negative £16.0 million (2022: £13.0 million).
If the value of sterling had weakened against each of the currencies in the
investment portfolio by 10%, the impact on the net asset value would have been
positive £16.0 million (2022: £13.0 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.
The level of sensitivity is considered to be reasonably possible, based on
observations of current market conditions and historical trends.
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:
2023 2022
£'000 £'000
Cash at bank and in hand 10,722 20,104
Debtors 1,399 1,196
12,121 21,300
Credit risk is the risk that the counterparty to a transaction fails to
discharge its obligations under that transaction, which could result in the
Company suffering a loss. Credit risk is managed as follows:
- All the assets of the Company which are traded on a recognised
exchange are held by The Northern Trust Company, the Company's Custodian.
- Investment transactions are carried out only with brokers which are
considered to have a high credit rating.
- Transactions are ordinarily undertaken on a delivery versus payment
basis, whereby the Company's custodian bank ensures that the counterparty to
any transactions entered into by the Company has delivered its obligation
before any transfer of cash or securities away from the Company is completed.
- Any failing trades in the market are closely monitored by both the
AIFM and the Administrator.
- Cash is only held at banks that have been identified by the Board as
reputable and of high credit quality.
The Northern Trust Company has a credit rating of Aa2 (Moody's) AA- (Standard
& Poor's) and AA (Fitch Ratings).
The Board monitors the Company's risk as described in the Strategic Report.
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.
Based on current trading volumes, 100% of the current portfolio could be
liquidated within 30 trading days, with 97.1% in seven days or less, under
normal market conditions. As such, liquidity risk is not considered a material
risk.
Further details on the principal risks facing the Company can be found in the
Business Review.
15. Transactions with the Investment Manager 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 2023, Mobius Capital Partners LLP earned
£1,473,000 (2022: £1,440,000) in respect of Investment Management fees,
of which £127,000 (2022: £117,000) was outstanding at the year end. Details
of the fees of all Directors can be found in the Directors' Remuneration
Report and in note 4 above.
The Directors' interests in the capital of the Company can be found in the
Directors' Remuneration Report. There were no other material transactions
during the year with the Directors of the Company.
16. Contingent Liabilities
There were no contingent liabilities at 30 November 2023 (2022: none).
17. Post Balance Sheet Events
Subsequent to the Company's year end, the net asset value per share of the
Company has increased by 4.8% from 144.3p to 151.2p and the Company's share
price has also increased by 6.2% from 132.5p to 140.75p as at 1 March 2024.
Further Information and Notice of AGM
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").
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 Investment 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 2023 95.0% 100.5%
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 ended 30 November
2023, MCP had six members of personnel in total, including employees and
Partners, two 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
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES ("APMs")
Alternative Investment Fund Managers Directive (AIFMD)
Agreed by the European Parliament and the Council of the European Union and
transposed into UK legislation, the AIFMD classifies certain investment
vehicles, including investment companies, as Alternative Investment Funds
(AIFs) and requires them to appoint an Alternative Investment Fund Manager
(AIFM) and depositary to manage and oversee the operations of the investment
vehicle. The Board of the Company retains responsibility for strategy,
operations and compliance and the Directors retain a fiduciary duty to
shareholders.
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.
Discount or Premium^ 30 November 30 November
2023 2022
Share price (p) 132.5 131.0
Net asset value per share (p) 144.3 134.2
Discount 8.2% 2.4%
ESG+C(®)
Environmental, Social, Governance and Cultural
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.
The Company had no borrowings during the year (2022: nil).
IPO
An initial public offering or stock launch is a public offering in which
shares of a company are sold to institutional investors and usually also
retail investors.
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 (see AIFMD Related Disclosure for further details).
^ Alternative Performance Measure
MSCI Index
Certain information contained herein (the "Information") is sourced
from/copyright of MSCI Inc., MSCI ESG Research LLC, or their affiliates
("MSCI"), or information providers (together the "MSCI Parties") and may have
been used to calculate scores, signals, or other indicators. The Information
is for internal use only and may not be reproduced or disseminated in whole or
part without prior written permission. The Information may not be used for,
nor does it constitute, an offer to buy or sell, or a promotion or
recommendation of, any security, financial instrument or product, trading
strategy, or index, nor should it be taken as an indication or guarantee of
any future performance. Some funds may be based on or linked to MSCI indexes,
and MSCI may be compensated based on the fund's assets under management or
other measures. MSCI has established an information barrier between index
research and certain Information. None of the Information in and of itself can
be used to determine which securities to buy or sell or when to buy or sell
them. The Information is provided "as is" and the user assumes the entire risk
of any use it may make or permit to be made of the Information. No MSCI Party
warrants or guarantees the originality, accuracy and/or completeness of the
Information and each expressly disclaims all express or implied warranties. No
MSCI Party shall have any liability for any errors or omissions in connection
with any Information herein, or any liability for any direct, indirect,
special, punitive, consequential or any other damages (including lost profits)
even if notified of the possibility of such damages.
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.
Total return statistics also enable the investors to make performance
comparisons between investment companies with different dividend polices.
NAV Per Share Total Return Year ended Year ended
30 November 30 November
2023 2022
Opening NAV (p) 134.2 153.4
Increase/(decrease) in NAV (p) 10.1 (19.2)
Closing NAV (p) 144.3 134.2
Increase/(decrease) in NAV 7.5% (12.5%)
Impact of reinvested dividends 1.0% 0.2%
NAV Total Return 8.5% (12.3%)
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.
Year ended Year ended
30 November 30 November
2023 2022
Ongoing Charges £'000 £'000
Investment management fees and management service fees 1,804 1,764
Operating expenses 492 480
Total expenses 2,296 2,244
Less costs in relation to the Redemption facility - (17)
Total recurring expenses 2,296 2,227
Average net assets during the year 151,146 147,854
Ongoing Charges 1.5% 1.5%
^ Alternative Performance Measure
Peer Group
The Company has selected the following seven companies taken from the AIC's
Global Emerging Markets sector to form the Company's peer group:
Barings Emerging EMEA Opportunities, BlackRock Frontiers Investment Trust,
Fidelity Emerging Markets Limited, JP Morgan Emerging Markets Investment
Trust, JPMorgan Global Emerging Markets Income Trust, Templeton Emerging
Markets Investment Trust and Utilico Emerging Markets Trust.
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 7 for further information).
Reverse Stress Test
Reverse stress tests are stress tests that identify scenarios and
circumstances which would make a business unworkable and identifies potential
business vulnerabilities.
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 Year ended
30 November 30 November
2023 2022
Share Price Total Return p p
Opening share price 131.0 154.5
Increase/(decrease) in share price 1.5 (23.5)
Closing share price 132.5 131.0
Increase/(decrease) in share price 1.0% (15.2%)
Impact of reinvested dividends 1.1% +0.2%
Share price Total Return 2.1% (15.0%)
Stress Testing
Is a forward-looking analysis technique that considers the impact of a variety
of extreme but plausible economic scenarios on the financial position of the
Company.
NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that the fifth 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 Tuesday, 23 April 2024 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 2023 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 2023.
3. To approve a Final Dividend of 1.25p per ordinary share.
4. That Ms M L Cicognani be re-elected as a Director.
5. That Mr C Casey be re-elected as a Director.
6. That Mr G Schuch 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 (the "Act") 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 £230,840 (or if changed, the number representing
20% of the issued Ordinary 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 2025
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 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
£230,840, (or if changed, the number representing 20% 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 2025 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 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 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 17,301,508 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 2025 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.
All shareholders should look on the Company's website,
www.mobiusinvestmenttrust.com, for any 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 overleaf.
By order of the Board Registered office
Frostrow Capital LLP 25 Southampton Buildings
Company Secretary London
5 March 2024 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.
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
Registrar's 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 19 April 2024
(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 1 March 2024 (being the latest practicable date prior to the
publication of this notice) the Company's issued share capital consisted of
115,420,336 ordinary shares carrying one vote each. Accordingly, the total
voting rights in the Company at 1 March 2024 were 115,420,336 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 11.45 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, the above documents can be requested from the Company Secretary
via info@frostrow.com.
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 11 March 2024, 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 2023
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.
Resolution 3 - To approve a Final Dividend
The rationale for the payment of a final dividend of 1.25p per ordinary share
is set out in the Chairman's Statement and in the Business Review.
Resolutions 4 to 6 - Re-election of Directors
Resolutions 4 to 6 deal with the re-election of each Director. Biographies of
each of the Directors can be found above.
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 Ordinary share capital up to an aggregate
nominal amount of £230,840 (equivalent to 23,084,067 shares, or 20% of the
Company's existing issued Ordinary share capital on 1 March 2024, being the
nearest practicable date prior to the signing of this Report or, if changed,
the number representing 20% of the issued Ordinary 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 20% of the
Company's existing Ordinary share capital on 1 March 2024, or, if changed, the
number representing 20% of the issued Ordinary 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 Ordinary 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 percentage of the authority sought in Resolutions 9 and 10 is in line with
market practice. The Board firmly believes that maximum flexibility, should
conditions allow, to raise capital without incurring the cost of preparing a
prospectus, circular and related meetings and, therefore, the passing of
Resolutions 9 and 10 is in shareholders' interest.
The Directors intend to use the authority given by Resolutions 9 and 10 to
allot Ordinary 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 Ordinary 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 Ordinary 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 the Ordinary shares in issue on
1 March 2024, being the nearest practicable date prior to the signing of this
Report, (amounting to 17,301,508 Ordinary 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.
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 2025, 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 82,927 shares.
The Annual Report will be posted to shareholders on or around 15 March 2024.
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
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The Annual Report will also be available on the Company's website at
www.mobiusinvestmenttrust.com (http://www.mobiusinvestmenttrust.com) where up
to date information on the Company, including daily NAV, share prices and fact
sheets, can also be found.
- END -
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