Gabelli Merger Plus+ Trust Plc Annual Report and Accounts 2023 ## + ## Gabelli Merger Plus Trust plc ## Annual Report and Accounts ## For the year ended 30 June 2023 Job No: 50043 Proof Event: 15 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 ## “We invest like owners. We invest primarily in the equity securities of cash ## generating, franchise companies, selling in the public market at a significant ## discount to our appraisal of their Private Market Value. We define Private ## Market Value (PMV) as the value an informed industrialist would pay ## to purchase assets with similar characteristics in a privately negotiated ## transaction. We measure PMV by scrutinizing on- and off-balance sheet ## assets and liabilities and free cash flow. As a reference check, we examine ## valuations and merger transactions in the public domain. Our investment ## objective is to achieve a long term annualised return in excess of inflation for ## our clients.” ## Continuing a Value Investing Legacy ● Our Firm’s approach is founded on the principles of Graham & Dodd • Furthered academically by our founder Mario Gabelli • Establish values to determine margin of safety • Invest within circle of competence • Invest like owners of businesses ● Intensive proprietary research culture • Focused and rigorous independent fundamental analysis in valuing the underlying business using publicly available information including data from customers, competitors, products and new technologies • Announcement of a merger with definitive terms starts the process • Merger investing benefits from the Gabelli core fundamental approach by establishing real world value before initiating positions ## Our Investment Approach Portfolio Identify ### Gabelli supplements the principles of Graham & Dodd through the Catalysts ### implementation of our proprietary Private Market ### Value (PMV) Private Market Value (PMV) with a Catalyst™ approach Gabelli Research Universe Job No: 50043 Proof Event: 15 Park Communications Ltd Alpine Way London E6 6LA For Professional & Institutional Investor Use Only – Not For Public Distribution 1 Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements ## + ## Gabelli Merger Plus Trust Plc’s primary ## investment objective is to seek to ## generate total return consisting of capital ## appreciation and current income for the ## long term. Contents Strategic report Financial Highlights 02 Chairman’s Statement 03 The Search For Value – Gabelli Merger Plus+ Investment Methodology 05 The Gabelli Investment Process 07 Investment Objective and Policy 08 Portfolio Manager’s Review 09 Portfolio Summary 11 Strategy 12 Key Performance Indicators (KPI) 12 Principal Risks 14 Viability & Going Concern Statement 19 Governance Board of Directors 18 Directors’ Report 20 Corporate Governance Report 26 Report of the Audit & Risk Committee 31 Directors’ Remuneration Report 34 Statement of Directors’ Responsibilities in respect of the Financial Statements 37 Financial statements Independent Auditors’ Report 39 Statement of Comprehensive Income 46 Statement of Changes in Equity 47 Statement of Financial Position 48 Statement of Cash Flows 49 Notes to the Financial Statements 50 Regulatory Disclosures 68 Glossary 69 Company Information 73 Annual General Meeting 74 Notes to the Notice of the AGM 76 Appendix – AIFMD Remuneration Disclosures 78 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Financial Highlights As at As at Performance 30 June 2023 30 June 2022 1,2 Net asset value per share (cum income) $10.22 $9.35 3 Net asset value per share (ex income) $10.52 $9.78 2,4 Dividends per share paid during the year $0.12 $0.48 Share price $9.00 $9.00 5,6 | Discount to Net Asset Value | (11.94)% (3.74)% | | | --- | --- | --- | | | Year ended | Year ended | | Total returns | 30 June 2023 | 30 June 2022 | 6,7 Net asset value per share 10.54% (1.37)% U.S. 3-month Treasury Bill Index 3.80% 1.69% 6,8 | Share price | | 1.33% 29.06% | | | --- | --- | --- | --- | | | Year ended | | Year ended | | Income | 30 June 2023 | | 30 June 2022 | Revenue return per share $0.39 ($0.09) Year ended Year ended 6,9 Ongoing charges 30 June 2023 30 June 2022 Annualised ongoing charges 2.17% 1.67% Source: Portfolio Manager (Gabelli Funds, LLC), verified by the Administrator (State Street Bank and Trust Company). 1 Net Asset Value (NAV) includes balance sheet adjustments resulting from the Company now being a close company. Such adjustments include deferred tax assets as per Note 8 and Note 9, pages 55 to 57. 2 Cum-income net asset value includes all income, less the value of any dividends paid together with the value of any dividends which have been declared and marked ex dividend but not yet paid. Where the cum-income NAV is lower than the ex-income NAV, this reflects the revenue deficit. 3 Ex-Income NAV: Ex-income net asset value is the Cum-income NAV excluding net income (net income being all income, less the value of any dividends paid together with the value of any dividends which have been declared and marked ex-dividend but not yet paid). 4 The dividend paid during the year ended 30 June 2023 was the fourth interim dividend for the year ended 30 June 2022. Following the Tranche Two Tender Offer the Board has continued to review and assess the Company’s distribution policy. The Company paid the first interim dividend for the fiscal year ended 30 June 2023 on 8 September 2023. 5 The amount by which the market price per share is lower than the cum-income NAV per share, expressed as a percentage of the cum-income NAV per share. Figures are inclusive of income and dividends paid, in line with the Association of Investment Companies (the “AIC”) guidance. 6 These key performance indicators are alternative performance measures. Further information regarding the use of alternative performance measures can be found on page 12 and in the glossary on page 68. 7 Net Asset Value per ordinary share, total return represents the theoretical return on NAV per ordinary share, assuming that dividends paid to shareholders were reinvested at the NAV per ordinary share at the close of business on the day shares were quoted ex-dividend. 8 Share Price Total Return represents the theoretical return to a shareholder, on a closing market price basis, assuming that all dividends received were reinvested, without transaction costs, into the ordinary shares of the Company at the close of business on the day the shares were quoted ex-dividend. 9 Ongoing Charges are operating expenses incurred in the running of the Company, whether charged to revenue or capital, but excluding financing costs. These are expressed as a percentage of the average net asset value during the period and this is calculated in accordance with guidance issued by the Association of Investment Companies. ## 02 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements ## Chairman’s Statement | We share this Annual Report to | factors. Further details are available on | focused on the Catalyst events where the | | --- | --- | --- | | Shareholders, encompassing the period | the Portfolio Manager’s website at www. | terms are known and transparent to the | | from July 2022 through June 2023, and | gabelli.com. | market and the holdings are liquid. | note certain developments post financial year end. Gabelli Merger Plus+ Trust Plc The Board is always receptive to feedback Dividends (the “Company”) operates globally in the and is available should you have any In order to allow the Shareholders to realise highly specialised investment discipline questions or comments via the Portfolio a predictable, but not assured, level of of value investing utilising the Gabelli Manager’s Investor Relations group cash flow and some liquidity periodically TM | Private Market Value with a Catalyst | directly. We thank you, our shareholders, | on their investment, the Company has | | --- | --- | --- | | methodology. The objectives are to | for your confidence in entrusting a portion | adopted a “managed dividend policy”. | | compound and preserve wealth over time, | of your assets to our team. | This policy seeks to pay Shareholders a | | while remaining non-correlated to the | | quarterly dividend in relation to the Net | | broad equity and fixed income markets. | The Investment Environment | Asset Value of the Company at the time, | | The investment programme is global, with | We as a society may have moved past | which may be changed at any time by | | an emphasis on Private Market Value. | COVID, but its aftereffects are still felt. | the Board. Between inception and 30 | | | Uncertainty surrounding the current | June 2023, the Company returned $2.39 | | The Company’s primary objective is to | state of the global macroeconomic | per share to shareholders, consistent | | seek to generate total return, consisting | environment, taxed supply chains | with its dividend policy. Additionally, the | | of capital appreciation and current income | coupled with inflationary pressures and | Company paid the first interim dividend in | | for the long term. The Company will seek | rising interest rates against the backdrop | respect of the year ended 30 June 2023 | | a secondary objective of the protection of | of war has plagued the pace of global | on 8 September 2023, in the amount of | | capital, uncorrelated to equity and fixed | deal making. This adds an element of | $0.12 per Ordinary Share. Dividends are | | income markets. The Fund utilises the | uncertainty to capital allocation decisions. | paid only when declared by the Board | | Gabelli Private Market Value (PMV) with a | Political, corporate and individual actors | subject to the Board’s assessment of the | TM | Catalyst | investment methodology, and | still need to sort through a variety of issues. | Company’s financial position and only | | --- | --- | --- | --- | | has built a diversified portfolio using PMV | | Economic and market conditions may | if the Company has sufficient income | | catalyst event merger arbitrage strategies | | worsen before they improve, and there | and distributable reserves to make the | | to create an optimal risk/reward profile. | | may be volatility in currency markets as | dividend payment, and the level of | | The Company’s activities encompass a | | Central Banks adjust interest rate policies. | dividend may vary over time. As such, | | broad spectrum of special situation event | | The risks to equity market corrections and | the portfolio’s managed distribution of | | driven opportunities with an emphasis | | a structural financial crisis have increased | capital through the payment of quarterly | | on PMV discount opportunities inclusive | | as the US banking system is stressed with | dividends is under review as we enter the | | of announced merger transactions. Value | | a changing yield curve. The Company is | new Fiscal Year. | | appreciation is derived through the | | positioned to pursue opportunities for the | | | narrowing of PMV discount spreads as a | | long term in this potentially generationally | Organisational Matters | | function of their catalyst. The value spread | | changing market environment. | The company completed its Fifth year since | | is a function of three primary elements: | | | listing on the London Stock Exchange’s | | the risk free rate, the risk premium | | Performance | Special Fund Market segment which set | | associated with the fundamentals, and | | The Company’s net asset value (NAV) plus | forth certain actions in accordance with its | | the time value of money. The dynamic | | dividends paid delivered a total return to | shareholder Loyalty Programme, including | | interplay across these components is | | shareholders during the year under review | completing a Fifth Anniversary Tender | | evaluated within every investment by the | | of 10.54% in U.S. dollars. This performance | Offer, resulting in the single participator | | Portfolio Manager. Position sizing will vary | | compared to the equivalent 13-week U.S. | Associated Capital Group, Inc., controlling | | according to a probabilistic assessment | | Treasury Bill which yielded 5.32% as of | over 90% of the shares in issue. The | | of the risk and may include minority or | | 30 June 2023, and also relative to the | Company notified shareholders via an | | majority controlling operating interests | | IQ Merger Arbitrage ETF, S&P Merger | RNS announcement on 19 October 2022 | | through the market cycle with an effort to | | Arbitrage Index, and Credit Suisse Merger | that the Board of Directors determined | | generate long term shareholder returns. | | Arbitrage Liquid Index, which returned | that the Company now operates as a Close | | | | -0.80%, -3.46%, and 5.67%, respectively. | Company for the purposes of taxation | | The manager has broad investment | | The share price total return with dividends | and no longer avails itself of investment | | flexibility to implement the investment | | reinvested was 1.33%. The performance for | trust status, as per Section 1158 of the | | policy. The inherent risk in all PMV with | | shareholders at IPO through the end of | Corporation Tax Act 2010. Net Asset Value | | a CatalystTM investing is a broken deal | | the fiscal year was 31.77% with dividends | (NAV) includes balance sheet adjustments | | rather than the standard deviation or price | | reinvested, versus a return of 24.64% for | resulting from the Company now being a | | variance of the market price movements | | the Credit Suisse Merger Arbitrage Liquid | close company. Such adjustments include | | over the deal timeline. | | Index. | deferred tax assets. | | Gabelli Funds LLC, the Portfolio Manager, | | The company may take advantage | This report includes the Fifth Anniversary | | employs an active approach to analysing | | of market dislocations and establish | Tender Offer for Qualifying Registered | | the fundamentals of a merger investment | | controlling and operating positions | Shares via two tranches beginning in | | and has a long history of implementing | | in businesses and may also invest | September 2022 and ending February | | such a programme. At its core, this | | occasionally in other forms of relative | 2023. Shareholders whose shares were | | differentiated investment approach | | value investing, such as such as share | registered in the Loyalty Programme for | | utilises the Gabelli analytical methodology | | class arbitrage and holdco arbitrage. | five years were eligible to participate in | | to manage risk amongst other inputs and | | The Company’s portfolio today is largely | the Company’s tender offer. The Company | ## 03 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Chairman’s Statement continued | purchased 3,387,414 shares, resulting | contents of the financial statements | | --- | --- | | in 6,850,792 shares in issue at 30 June | of Investment Companies. Investment | | 2023 versus 10,238,206 shares in issue | Companies include investment trust | | in July 2022. The Board of Directors | companies that have been, currently are, | | acknowledges that the largest shareholder, | or are directing its affairs so as to enable | | Associated Capital Group, Inc., the legal | it to obtain or retain approval under | | and beneficial owner of 6,210,619 shares | Section 1158 of the Corporation Tax Act | | at the time of this writing, elected not to | 2010. Although the Company no longer | | tender and has expressed its view that | meets the requirements of Section 1158 | | the Company should continue. Associated | of the Corporation Tax Act 2010 to be an | | Capital Group, Inc. also agreed to subscribe | investment trust, it continues to conduct | | for Special Voting Loyalty Shares, which | its affairs as an investment company. | will increase its voting interest when | issued, with issuance pending. As a result, | Final Thoughts | | --- | --- | | the Company will operate as a Close | We reiterate today’s post World War II | | investment company, and therefore will be | order is facing intense challenges, yet this | | subject to UK corporate taxes, and thus | Company has performed consistently and | | no longer avail itself to investment trust | non-correlated to the broader indices since | | status. The Board of Directors will assess | inception. It has endured COVID-19, the | | shareholder considerations and undertake | onset of inflation and higher interest rates, | | the analysis of options for the continuing | and a fragile regulatory environment lead | | Company, including operational and | by the geo-political wrangling between | | structural alternatives oriented towards | the US and China. The list continues, as will | | expense and tax savings, as it progresses. | the Gabelli Merger Plus+ Trust Plc in the | | Finally, in accordance with the charter, | United Kingdom. | remaining registered Loyalty Programme Five year shareholders are eligible to John Birch Marc Gabelli receive an additional vote per individual Co-Chairman Co-Chairman share held. The Loyalty Programme has 19 October 2023 been implemented in accordance with the offering prospectus. The Board expects a tender offer to be implemented in 2024, in the range of approximately 5% of the Ordinary Shares not owned by Associated Capital Group, Inc. Any such offer is under further review and analysis. The company is expected to implement its investment policy to also include the acquisition of shares for control which may require of the Company to operate such investments to enhance its objective of total returns for the long term while also seeking to enhance current income. As such in a subsequent event, the Board has appointed executive management to help efficiently implement the company’s growth plans. In context, in 2022 shareholders authorised the allotment of additional Ordinary Shares which can be utilised for acquisitions to further expand and develop shareholder value in accordance with the investment programme. The Company has elected continued adherence to the AIC’s SORP. Although no longer a trust, the Company has elected to continue to prepare the financial statements on a basis compliant with the recommendations of the SORP. The SORP is issued by the AIC and it sets out recommendations, intended to represent current best practice, on the form and ## 04 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements ## The Search For Value – Gabelli Merger Plus+ ## Investment Methodology Process in Action Catalyst merger events can come in Market Value (“PMV”) with a Catalyst™ many forms including, but not limited methodology. We PMV is the value that we Gabelli Funds approach the global to, corporate restructurings (such as believe an informed buyer would be willing marketplace in a similar fashion; we invest demergers and asset sales), operational to pay to acquire an entire company in a like owners. Our clients own businesses improvements, regulatory or managerial private transaction. Our team arrives at a through the fractional interest of a share. changes, special situations (such PMV valuation by a rigorous assessment We are not index benchmarked, and as liquidations), and mergers and of fundamentals from publicly available construct portfolios agnostic of market acquisitions. Corporate mergers provide information. Further, PMV’s are enhanced capitalisation and index weightings. We valuable insights into corporate capital through the analysis of announced seek long term capital appreciation for our allocation decisions and therefore help in corporate mergers and acquisition activity. clients relative to inflation over the long our assessment of long term valuations. Mergers offer tangible insights into the long term, regardless of market cycles. We have Our proprietary research data bases track term capital allocation decisions of global invested this way since 1977. thousands of announced deals globally corporations. We focus on the balance and utilises that compounded knowledge sheet, earnings, free cash flow, and the The Gabelli Merger Plus portfolio offers in the continued refinement of Private management, the stewards of corporates access to companies that have been Market Valuations. PMV’s will change assets, of prospective companies. The identified to have substantial disconnects over time, and while our analysis is long judgement gained from our comprehensive, between market price and our estimate term, it is through this consistent process accumulated knowledge across a variety of the business value (PMV), and where of bottom up stock selection and the of sectors is deployed for investors in a catalyst events exist that may narrow implementation of disciplined portfolio portfolio. Our analysts typically forecast these discounts for the benefit of GMP construction that we expect to create model company operations 5 years into shareholders. We thus establish a “Margin value for our shareholders annually. the future. Unlike Wall Street’s earnings of Safety” for our investors by identifying momentum players, we do not try differences between our estimate of In this process, we do sector-by-sector to forecast earnings with accounting PMV and the stock market price. The analysis, assessing the PMV of a business, precision and then trade stocks based on process seeks to identify businesses and identifying the catalyst in place to quarterly expectations and realities. We undergoing some form of strategic realise returns. A company’s PMV is not simply try to position ourselves in front change, typically with strong organic constant, and changes as a function of of long-term earnings trends. Throughout cash flow characteristics, balance sheets many variables. Our analysis emphasizes our research process, the focus is on free reorganizational opportunities, and balance sheets, cash flows, and the long cash flow: earnings before interest, taxes, strategic operational flexibility accelerated term defendable position of a corporation. depreciation and amortization (“EBITDA”) with the prospect of management capital We achieve returns through investing in minus the capital expendituresnecessary allocation actions. businesses utilising our proprietary Private to grow the business. We believe free cash ## 05 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## The Search For Value – Gabelli Merger Plus+ ## Investment Methodology continued flow is the best barometer of a business’ We employ a three-dimensional approach Manager History | value. Deteriorating or rising free cash flow | to valuation: | | | --- | --- | --- | | often foreshadows net earnings changes. | | The Gabelli organisation, of which | | We also look at earnings per share | • Earnings per share | Gabelli Funds, LLC is an affiliate, began | | trends. In addition, we analyse on and off | | in the U.S. in 1976 as an institutional | | | • Free cash flow | value investing research firm. Mario | balance sheet assets and liabilities such as property, plant and equipment, inventories, Gabelli, the firm’s founder, is credited • Private market value receivables, and legal, environmental by the academic community for and health care issues. We want to know establishing the notion of Private The first step is to analyse the income everything and anything that will add to, Market Value (“PMV”), the value an statement and cash flow. Cash flow is or detract from, our valuation models. This informed industrialist would pay for viewed as a barometer of financial health, method of analysis involves looking at an entire business in a negotiated and often foreshadows earnings trends. businesses as a function of their assets and transaction. This is a long term oriented We attempt to forecast the direction and earnings power. We examine businesses bottom-up investment process based growth rates of the earnings and cash flow as if we were owners of those businesses, on the fundamental investment streams. and we believe that we can do that in a principles first articulated in 1934 by rational way by looking at industries on a Graham and Dodd, the founders of The second step is to examine the balance global basis. Our investment professionals modern security analysis, and further sheet. The corporate balance sheet is visit with hundreds of companies each augmented by Mario Gabelli in 1977 recast, assessing real-world values of year. Our work is proprietary, bottom up, with his introduction of the concepts inventories, property, plant and equipment and involves the full utilisation of public of PMV into equity analysis. Gabelli has and stated book value. resources. added the element of a catalyst event to generate long term returns. The To these two analytical processes, dynamic TM Our analysts follow industries on a global Gabelli method, PMV with a Catalyst , forecasting and static asset and liability basis, and narrow the universe of potential is part of the Value Investing Curriculum valuation, we add our assessment of investment candidates to a short list of the at many major business schools and is the PMV of the business. In other words, most attractive companies. All publicly thus applied in the analysis of public what would this company be worth to an available company material is reviewed, equity securities by Gabelli Funds for informed business person attempting to including annual and quarterly reports, shareholders. create or purchase a business with similar | 10-Ks, 10-Qs, and proxy statements. | characteristics? | | --- | --- | | Each analyst develops an operational | Catalyst: Identification of a mispriced | | understanding of their industry, effectively | situation, however, does not necessarily | | becoming an expert in that industry. | guarantee a rewarding investment. The next | | The analysts hone this expertise by | step is to determine events in businesses | | continually visiting companies and their | undergoing some form of strategic change | | senior managements, and by talking to | that will help narrow the spread between | | competitors, suppliers and customers. They | a stock’s public market price and our | | also develop and maintain government | determination of its PMV. We call these | | and trade sources to derive an overall | events catalysts. Catalysts include industry | | understanding of their industry. In addition, | events such as consolidation, changes in | | our firm hosts a number of industry | the regulatory or accounting environment, | | seminars, where the top executives of the | new technologies, or be indigenous | | leading firms share their insights with the | to the company itself such as financial | | investment community. | engineering, demergers, acquisitions or | sales. The objective of this process is to identify companies that trade at significant Results: After we have identified and differences to their intrinsic or private selected stocks that qualify as candidates market values. based on these fundamental and conceptual considerations, our objective We continually visit the management of is to structure a diversified portfolio. This hundreds of companies and integrate their has been a proven long-term method for input with our knowledge base. Our goal is creating wealth, risk adjusted, in the stock to understand management’s motivations market. and expectations. Given our approach, we want to know who our partners are and if they are working to enhance shareholder value. This process, coupled with our financial analysis, helps us select the most attractive investment candidates for our portfolios. ## 06 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements ## Investment Objective and Policy Investment objective The Company’s primary investment objective is to seek to generate total return, consisting of capital appreciation and current income for the long term. The Company will seek a secondary objective of the protection of capital, uncorrelated to equity and fixed income markets. Investment policy The Company will seek to meet its long term investment objective by utilising the Gabelli Private Market Value (PMV) with a TM Catalyst , investment methodology, maintaining a diversified portfolio of event merger arbitrage strategies to seek to create an optimal risk/ reward profile for the portfolio. The company invests for the long term as owners with an emphasis on cash generating, franchise companies, selling at a significant discount to our appraisal of their Private Market Value. We define Private Market Value (PMV) as the value an informed industrialist would pay to purchase assets with similar characteristics in a privately negotiated transaction. “Event Driven Merger Arbitrage” is a highly specialised active investment approach designed principally to profit from the differences between PMV estimates and public market price with returns realised through the price achieved through corporate catalyst events. Catalysts are utilised to earn returns independent of the broad markets’ direction. This includes corporate events such as, but not limited to, management changes, announced mergers, acquisitions, takeovers, tender offers, leveraged buyouts, restructurings, demergers and other types of reorganisations and corporate actions (“deals”). The Company will invest and operate globally although it is expected to have an emphasis on predominantly equity securities issued by companies in the United States of any market capitalisation. The Company is permitted to use a variety of investment strategies and instruments, including but not limited to: minority or majority controlling operating interests in equity; convertible and non-convertible debt securities; asset-backed and mortgage-backed securities; fixed interest securities; preferred stock, non- convertible preferred stock, depositary receipts; shares or units of UCIs or UCITS as an investment or by management contract; rights qualifying as transferable securities; when issued, delayed delivery transferable securities; forward contracts; swaps; recently issued transferable securities; repurchase agreements, money market instruments and warrants. The Company may invest part of its net assets in cash and cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with banks or other counterparties having at least a single A (or equivalent) credit rating from an internationally recognised rating agency or government and other public securities, if the Portfolio Manager believes that it would be in the best interests of the Company and its Shareholders. This may be the case, for example, if the Portfolio Manager believes that adverse market conditions justify a temporary defensive position. Any cash or surplus assets may also be temporarily invested in such instruments pending investment in accordance with the Company’s investment policy. The Company may take both long and short positions in equity and debt securities. For shorting purposes, the Company may use indices, individual stocks, or fixed income securities. The Company is a long-term investor and does not seek to generate short-term returns or profits from trading or hedging. While taking a long-term view, the Company will realise opportunities from hedging or for shorter-term gains when appropriate. The Company may utilise financial derivative instruments to create both long and synthetic covered short positions with the aim of maximising positive returns. The Company may use strategies and techniques consisting of options, futures contracts, and currency transactions and may enter into total rate of return, credit default, or other types of swaps and related derivatives for various purposes, including to gain economic exposure to an asset or group of assets that may be difficult or impractical to acquire. The Company may also use derivatives for efficient portfolio management purposes including, without limitation, hedging and risk management and leverage. The Company has broad and flexible investment authority and, accordingly, it may at any time have investments in other related or unrelated areas. Strategies and financial instruments utilised by the Company may include, but are not limited to: (i) purchasing or writing options (listed or unlisted) of any and all types including options on equity securities, stock market and commodity indices, debt securities, futures contracts, future contracts on commodities and currencies; (ii) trading in commodity futures contracts, commodity option contracts and other commodity interests including physical commodities; (iii) borrowing money from brokerage firms and banks on a demand basis to buy and sell short investments in excess of capital; (iv) entering into agreements to acquire operating businesses including managing assets for third parties and (v) entering into swap agreements (of any and all types including commodity swaps, interest rate swaps and currency swaps), forward contracts, currencies, foreign exchange contracts, warrants, credit default swaps, synthetic derivatives (for example, CDX), collateralised debt obligations tranches, and other structured or synthetic debt obligations, partnership interests or interests in other investment companies and any other financial instruments of any and all types which exist now or are hereafter created. No material change will be made without shareholder approval. ## 07 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Portfolio Manager’s Review ### Gabelli catalyst event merger arbitrage offers investors broad and flexible investment authority Enhanced Risk and Return • PMV with a Catalyst selection across all sectors and capitalizations HighLow Liquidations Deep Value • Full use of Gabelli organization resources: proprietary research, portfolio management, risk control and trading Special • Fundamental research-driven investment Situations process • Opportunities to maximize returns regardless of Margin of Safety Stable, market direction Announced Cash flow Deals generators • Minimize overall market correlation Catalyst Timeline Long TermShort Term | Methodology and Market Opportunity | worldwide decreased only 17% compared | In the first half, the Healthcare sector was | | --- | --- | --- | | In this context, let us outline the | to 2021. Mega deals—those greater than | the biggest contributor to merger activity, | | investment landscape during the year to | $10 billion—totaled $787 billion, while | totalling $188 billion and accounting for | | 30 June 2023 and the environment ahead. | deals with values between $1 billion and | 14% of total announced deal volume. | | We are especially enthusiastic about the | $5 billion accounted for $1.0 trillion during | The Energy and Power and Technology | | opportunities to grow client wealth in the | the year, down 31% and 44% year over | sectors were also large contributors, each | | decades to come, and we highlight below | year, respectively. | accounting for 14% of M&A activity. | several factors that should help drive | results. These include: | | Cross border M&A activity totaled $1.1 | Portfolio in Review | | --- | --- | --- | --- | | | | trillion for the calendar year, a decrease of | Marked by stubborn inflation, conflict in | | • Increased market volatility, which | | 46% from last year’s all-time high. Private | Europe, and the Federal Reserve’s war on | | | enhances our ability to establish | equity deals decreased 36% year over | inflation, 2022 was a difficult year for risk | | | positions for the prospect of improved | year; however, these buyouts accounted | assets, marked. Higher interest rates and | | | returns; | for a record 20% of total deal activity. | the prospect of a recession spared neither | stocks nor bonds, as the S&P 500 and During the first half of 2023, global M&A investment grade bonds were down 18% • A robust market for corporate deal activity totaled $1.3 trillion, a year-over- and 13%, respectively. As we have noted in making as conditions continue to year decrease of 37%, the slowest first half the past, our merger arbitrage portfolios provide an accommodative market since the COVID pandemic. Deal activity generate returns from taking idiosyncratic for mergers and acquisitions; GMP offers investors access to the Gabelli PMV with a Catalyst methodology, with broad and did start to pick up in the second quarter, deal risk and not market risk, and thus flexible investment authority in order to enhance returns and accommodate the changing catalyst increasing 33% sequentially. Additionally, were able to earn a positive return for • A rising interest rate environment, the number of deals in the first half was our clients, despite the volatile markets. providing attractive merger spread ### event merger arbitrage landscape only down 9% compared to last year. Uncertainty in the boardroom, elevated opportunities; This dichotomy was driven by the lack borrowing costs, and a bid-ask divide— of mega deals—those greater than $10 that often persists until market participants • The Fund’s experienced investment billion—which totaled $259 billion, down can digest a sharp decline in asset values— team, which pursues opportunities 53% year over year. all contributed to a 30% decline in M&A globally through the disciplined application of the Gabelli investment volumes (ex-SPACs) in 2022. However, Cross border M&A activity totaled $494 methodology. despite the sharp decline from record 2021 billion through June, a decrease of 25%. levels, volumes only declined mid-single 1 Private equity deals decreased 49% Global Deal Activity digits from more normalized 2018 and year over year; however, these buyouts Global deal merger and acquisition 2019 levels. The fourth quarter did enjoy an accounted for 21% of total deal activity. activity (“M&A”) totaled $3.6 trillion uptick in announced M&A with a healthy during 2022, a year-over-year decrease $800 billion in deal activity. We expect While deals involving United States- of 37% (30% decrease if SPACs are M&A to remain fairly robust on a historical based targets declined 40% in the first excluded). Deal activity began to slow basis. In terms of merger arbitrage half, they still accounted for 43% of global down in the second half of the year, as the spreads, they remain wide and attractive deal activity. European M&A tallied $263 third quarter was the first in two years that compared to recent history. There are billion of transactions over the same did not surpass $1 trillion in announced three main reasons for this: (1) market period, a decrease of 49%. Asia Pacific deal activity. The total number of deals volatility; (2) perceived regulatory risk; and targets totaled $294 billion in the first half (3) interest rates. Deals close in all market 1 Thomson Reuters M&A Review – Second Half of 2023, a 35% decrease year over year. environments, and volatility provides 2022 and First Half 2023 ## 08 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Gabelli Funds www.Gabelli.com/MergerPlus 13 For Board of Director Use Only – Not For Public Distribution Strategic report Governance Financial statements | us with an opportunity, as it is often | unique investment opportunities with an | and no benefit from bundling the two | | --- | --- | --- | | indiscriminate. Mispriced risk allows us to | attractive risk/reward. | companies’ products. An important | | add to our highest conviction positions | | distinction from the Lockheed deal is | | at lower prices—the benefits of which | A company’s PMV is not constant, and | that there is also no vertical integration, | | will be apparent as these transactions | changes as a function of many variables. | as Aerojet does not supply L3Harris with | | progress towards closing. Regarding | Our analysis emphasizes balance | any products used in L3’s programs, and | | regulatory risk, the aggressive policy | sheets, cash flows, and the long term | Aerojet will become a new business unit | | reform rhetoric we have written about | defendable position of a corporation. | for L3 as a merchant supplier of engines | | in the past has translated in some cases | We achieve returns through investing | to prime contractors. We believe shares | | into aggressive action. Some deals were | in businesses utilising our proprietary | of Aerojet Rocketdyne were inexpensive | | able to close in spite of regulatory action | Private Market Value (“PMV”) with a | after the deal with Lockheed Martin was | | (Change Healthcare) and some were able | Catalyst™ methodology. We PMV is the | called off and certain shareholders were | | to find alternative, less problematic suitors | value that we believe an informed buyer | forced to sell their position. At the time, | | (Aerojet Rocketdyne). We feel as though | would be willing to pay to acquire an | shares traded at less than 10x EBITDA, | | this regulatory regime has created unique | entire company in a private transaction. | a significant discount to its historical | | investment opportunities and an attractive | Our team arrives at a PMV valuation by | valuation, and Tony Bancroft, Gabelli’s | | risk/reward. Lastly, the merger arbitrage | a rigorous assessment of fundamentals | defense analyst, thought other buyers for | | strategy is a beneficiary of rising rates, as | from publicly available information. | Aerojet would emerge and that shares | | the risk free rate is one of the components | Further, PMV’s are enhanced through | were worth more than $60 in a takeover. | | of a deal spread. As rates rise, nominal | the analysis of announced corporate | We expect the L3Harris deal to close in | | spreads should widen, all things being | mergers and acquisition activity. | mid-2023. | | equal. With the 3 month U.S. Treasury bill | Mergers offer tangible insights into the | | Food Distribution yielding well over 5%, this should continue long term capital allocation decisions The attributes of consumer food to create a more compelling spread of global corporations. We highlight distribution benefits through scale environment going forward. We continue several investments across sectors which synergies and as such our investment in to find attractive investment opportunities have offered insights to the corporate Albertsons Companies, Inc. (ACI- NYSE) in newly announced and pipeline deals. allocation process below. entered a new stage as they agreed to be We remain focused on investing in highly Notable contributors to performance acquired by The Kroger Co. (KR-NYSE). strategic, well-financed deals with an include: Albertsons operates food and drug retail added focus on near-term catalysts, stores in the U.S. under banners such as and are upbeat about our prospects to Defense Infrastructure Albertsons, Safeway, Vons, Tom Thumb, generate absolute returns. The strategic rational around US defense ACME and more. Under terms of the spending as a long term investment agreement Albertsons’ shareholders will U.S. capital markets rebounded continues, notably in the race to develop receive $34.10 cash per share (inclusive of significantly in the first half of 2023 hypersonic weapons capabilities as seen a special dividend and potential spin-off), despite headwinds. The S&P 500 finished in Aerojet Rocketdyne Holdings, Inc. valuing the transaction at approximately the first half up 16.8% against the backdrop (AJRD-NYSE) agreement to be acquired $25 billion. of a debt ceiling drama, a U.S. banking by L3Harris Technologies, Inc. (LHX- crisis, geopolitical uncertainty, and a Fed NYSE). Aerojet Rocketdyne Holdings, Biotech Pharma that has so far been unwavering in its Inc. (AJRDNYSE), which designs and Undervalued and fairly unique and well commitment to fight inflation. manufactures specialised power and positioned business in our portfolio propulsion systems for space and defense continued to attract suitors and as M&A volumes did not prove as resilient, applications, agreed to be acquired by such Dechra Pharmaceuticals plc (DPH as economic uncertainty and combative L3Harris Technologies for $58 cash per LN-London) agreed to be acquired regulators contributed to a 37% year- share, or about $5 billion. In December by EQT and Abu Dhabi Investment over-year decline in the first half. Despite 2020, Aerojet agreed to be acquired by Authority. Dechra is a global veterinary this sharp decrease in dollar volumes, the Lockheed Martin for $51 cash per share, pharmaceuticals and products business. number of transactions was only down but that deal was terminated in February Under terms of the agreement, Dechra 9% compared to last year. Deals are still 2022 after the U.S. Fair Trade Commission shareholders will receive £38.75 cash getting done—albeit, smaller in size. The sued to block the transaction, claiming per share, valuing the transaction at second quarter did begin to show some that Lockheed would be able to raise approximately £4.8 billion green shoots, as volumes totaled $750 the prices the U.S. government pays billion, a 33% sequential improvement. Gaming and Entertainment for rocket engines, and potentially We expect this momentum to continue Fundamentals for the online gaming deliver a lower quality product Portfolio as the year progresses. industry continued to accelerate as Manager’s review continued Half-Yearly Activision Blizzard Inc. (ATVI- NASDAQ) Financial Report (Unaudited) for the six The aggressive policy stance of regulators agreed to be acquired by Microsoft Corp. months ended 31 December 2022 11 to has persisted in 2023, but companies are (MSFT-NASDAQ). Activision Blizzard Lockheed’s rival defense contractors adapting and showing a willingness to develops and publishes interactive that utilise Aerojet’s propulsion systems. fight back when case law supports their entertainment content and services. We believe the acquisition by L3Harris cause. Regulators’ efforts to bring cases Under the terms of the agreement provides fewer antitrust risks than the with more novel theories of harm thus far Activision shareholders will receive Lockheed transaction did. L3Harris have not translated into much success in $95.00 cash per share, valuing the primarily produces electronics and court. While this has created volatility in transaction at approximately $74 billion. communications systems, so there is no certain arbitrage spreads, it has provided horizontal overlap with Aerojet’s business ## 09 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Portfolio Manager’s Review continued | Financial Services | Energy Infrastructure | with an all-cash proposal to buy CIRCOR | | --- | --- | --- | | Access to the US financial investor is | US energy PNM Resources, Inc. (PNM- | for $57.00 cash per share. In response, | | increasingly becoming a valuable asset | NYSE) agreed to be acquired by Avangrid, | on June 29, 2023, CIRCOR entered into | | and as such Focus Financial Partners, | Inc. (AGR-NYSE). PNM Resources | an agreement to be acquired by KKR | | Inc. (FOCS-NASDAQ) received an offer | engages in the energy and energy-related | for $56.00 cash per share, valuing the | | to be acquired by Clayton, Dubilier | businesses in the U.S. Under terms of | transaction at approximately $1.6 billion. | | & Rice, LLC. Focus provides wealth | the agreement, PNM shareholders will | CIRCOR accepted KKR’s lower price due | | management, investment advice, financial | receive $50.30 cash per share, valuing the | to more certain financing and a better | | and tax planning, consulting, tax return | transaction at approximately $8 billion. | antitrust profile. | preparation, and family office services to Infrastructure and Engineering ultra-high and high net worth individuals, Our analysis and understanding of PMV families, and business entities. Under multiples benefit when our portfolio terms of the offer, Focus shareholders will holdings are subject to bidding wars. receive $53.00 cash per share, valuing the Merger investing CIRCOR International, Inc. (CIR-NYSE), transaction at approximately $7 billion. Merger arbitrage is a highly specialised which designs, manufactures, and component of a portfolio. The investment Biotech Pharma distributes flow and motion control approach is designed principally to The rationale for buy vs. build where products globally, was the subject of a profit from corporate events, including developer costs are always increasing bidding war. Under terms of the original the successful completion of proposed led to Horizon Therapeutics plc (HZNP- agreement, dated June 5, 2023, CIRCOR mergers, acquisitions, takeovers, NASDAQ) agreeing to be acquired by shareholders would have received $49.00 tender offers, leveraged buyouts, Amgen, Inc. (AMGN-NASDAQ). Horizon cash per share, for approximately $1.4 restructurings, demergers, and other is a biotechnology company that focuses billion. Later, on June 27, 2023, CIRCOR types of corporate reorganisations and on the discovery, development, and agreed to be acquired by KKR under other actions. As arbitrageurs, we seek commercialization of medicines for rare, improved terms of $51.00 cash per share, to earn the differential, or “spread,” autoimmune, and severe inflammatory after CIRCOR received an unsolicited bid between the market price of our diseases. Under terms of the agreement, of $52.65 cash per share from an unnamed investments and the value ultimately Horizon shareholders will receive $116.50 third party. Subsequently, on June 28, realised through deal consummation. cash per share, valuing the transaction at 2023, Arcline Investment Management LP approximately $28 billion. was revealed as the unnamed third party ## Invest Like Owners Corporate Mergers Provide Valuable Insights ## Fundamental and Active Complement to Long Term Value Investing Capital Allocation Rigorous Analysis Dynamic Management Ideas sourced from proprietary database Focus on strategic, cash Real time monitoring of spreads/positions transactions with financing of Gabelli PMV with Catalyst original secured research coupled with rigorous analysis of Extensive proprietary database valuations provided as corporations Understand all downside risks Actively traded as the event progresses allocate capital through announced including its fundamental basis and according to closing corporate events and M&A transactions worldwide Focus on legal and governance, MAC clauses, financing Positions are increased gradually as conditions, shareholders’ votes transaction hurdles are passed Analyse all deal issues such as antitrust / regulatory items ### • Targeted strategy to achieve superior total returns, non correlated to ## Gabelli “PMV with a ### TM the broad market ## Catalyst” ### • Preservation and growth of investor capital ## One Process Globally ### • Provides diversification to traditional equity and fixed income ### portfolios ## 10 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements ## Portfolio Summary Largest Portfolio Security holdings (excluding cash and cash equivalents) As at 30 June 2023 | | | | | % of total | | | | | Offsetting market | | | % of total | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | portfolio | 6 | Market value | | 4 | | value | 5 | portfolio | | 3 | | Security | 1 | Offsetting position | 2 | (gross) | | | $000 | | | $000 | | | (net) | | Horizon Therapeutics plc 5.4 3,425 5.4 Activision Blizzard Inc 4.4 2,770 4.4 IVERIC Bio Inc 4.3 2,722 4.3 PNM Resources Inc 4.3 2,692 4.3 Univar Solutions Inc 3.9 2,477 3.9 National Instruments Corp 3.9 2,448 3.9 Aerojet Rocketdyne Holdings Inc 3.6 2,251 3.6 Tegna Inc 2.9 1,821 2.9 Albertsons Companies Inc 2.7 1,733 2.7 Focus Financial Partners LLC 2.7 1,728 2.7 VMWare Inc Broadcom Inc 2.7 1,724 (1,074) 1.0 Tower Semiconductor Ltd 2.1 1,358 2.1 Seagen Inc 2.1 1,299 2.1 Radius Global Infrastructure 2.0 1,293 2.0 Lennar Corp Class B Lennar Corp Class A 1.9 1,221 (1,081) 0.2 Uni-Select Inc 1.9 1,172 1.9 Triton International Ltd Brookfield Infrastructure 1.7 1,064 (113) 1.5 Liberty Media Corp 1.5 981 1.5 NuVasive Inc Globus Medial Inc 1.5 978 (898) 0.1 VectivBio Holding AG 1.5 943 1.5 Sub-total 57.0 36,100 (3,166) 52.0 7 Other holdings 43.0 33,712 (3,340) 48.0 Total holdings 100.0 69,812 (6,506) 100.0 1 Long position. 2 Offsetting position taken, based on the acquirer of the security when acquirer stock is being offered in whole, or in part, to finance the transaction. Lennar Corp is a share class arbitrage. 3 Represents the total position value (market value plus the offsetting market value) as a percentage of the total portfolio value. 4 Market value of the long position. 5 Market value of the offsetting position. 6 Represents the market value as a percentage of the total portfolio value. 7 Including derivatives and equity short positions and excluding U.S. Treasuries. ## 11 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Strategy | Our Key Performance Indicators (“KPIs”) | Gearing Policy | Leverage | | --- | --- | --- | | The Company’s strategy is to generate | At the sole discretion of the Portfolio | Leverage is calculated using two methods: | | returns for its shareholders by pursuing | Manager, the Company may use leverage | i) Gross method and ii) Commitment | | its investment objective while mitigating | as part of its investment programme. | method. For further details please see the | | shareholder risk, by investing in a | It is anticipated that the Company will | Glossary on page 69. | | diversified spread of equity investments. | structurally gear and use tactical leverage | | | Through a process of bottom-up stock | or portfolio borrowings in an amount | Business Model | | selection and the implementation of | (calculated at the time of investment) of | Please see the Methodology in Action on | | disciplined portfolio construction, we | around 2 times of the Net Asset Value, | page 5. | | aim to create value for the Company’s | subject to maximum gearing of 2.5 times | | | shareholders. | the Net Asset Value. Please refer to page | Board Diversity | | | 69 in the Glossary for further discussion | Please see the “Board Diversity” section | | The largest holdings in the Company’s | of gearing. | on page 26. | portfolio are listed on page 11. ## Key Performance Indicators (“KPIs”) | The Board recognises that it is share price | value. The central priority is to generate | For the year ended 30 June 2023, the | | --- | --- | --- | | performance that is most important to the | returns for the Company’s shareholders | Company’s KPIs, as monitored closely | | Company’s shareholders. Fundamental | through net asset value and share price | by the Board at each meeting, are listed | | to share price performance is the | total return, and discount management. | below: | performance of the Company’s net asset | Net Asset Value Total Return | | Share Price Total Return | | Discount to Net Asset Value | | | --- | --- | --- | --- | --- | --- | | | 1 | | 2 | | 3 | | Year ended 30 June 2023 | | Year ended 30 June 2023 | | Year ended 30 June 2023 | | ## 10.54% 1.33% (11.94)% ## (30 June 2022: (1.34)%) (30 June 2022: 29.06%) (30 June 2022: (3.74)%) The above table sets out the key KPIs for the Company. These KPIs fall within the definition of ‘Alternative Performance Measures’ (APMs) under guidance issued by the European Securities and Markets Authority (ESMA). Information explaining how these are calculated is set out in the Glossary. These KPIs including APMs have been carefully selected by the Board on discussion with the Portfolio Manager, to give the most appropriate overview of performance in the financial year to shareholders and other stakeholders. Performance measured against various The Company does not use a benchmark. However, at each meeting the Board reviews indices and compares portfolio performance in the context of the performance of the ETF MNA and Credit Suisse Merger Arb Liquid Indices. Information on the Company’s performance is given in the Chairman’s Statement and the Portfolio Manager’s Review. Share Price Total Return The Company’s primary investment objective is to seek to generate total return consisting of capital appreciation and current income for the long term. In order to allow the Shareholders to realise a predictable, but not assured, level of cash flow and some liquidity periodically on their investment, the Company has adopted a “managed dividend policy”. This policy seeks to pay Shareholders a quarterly dividend in relation to the Net Asset Value of the Company at the time, which may be changed at any time by the Board. Between inception and 30 June 2023, the Company returned $2.39 per share to shareholders, consistent with its dividend policy. Dividends are paid only when declared by the Board subject to the Board’s assessment of the Company’s financial position and only if the Company has sufficient income and distributable reserves to make the dividend payment, and the level of dividend may vary over time. As such, the portfolio’s managed distribution of capital through the payment of quarterly dividends is under review as we enter the new Fiscal Year. Additional information can be found in the Glossary on page 71. 1 Net Asset Value per ordinary share, total return represents the theoretical return on NAV per ordinary share, assuming that dividends paid to shareholders were reinvested at the NAV per ordinary share at the close of business on the day shares were quoted ex-dividend. 2 Share Price Total Return represents the theoretical return to a shareholder, on a closing market price basis, assuming that all dividends received were reinvested, without transaction costs, into the ordinary shares of the Company at the close of business on the day the shares were quoted ex-dividend. 3 The amount by which the market price per share is lower than the cum-income NAV per share, expressed as a percentage of the cum-income NAV per share. Figures are inclusive of income and dividends paid, in line with the Association of Investment Companies (“AIC”) guidance. ## 12 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements # **Share price discount to net asset value (NAV) per share** The NAV per share is published on a daily basis on the London Stock Exchange and The International Stock Exchange. The NAV is calculated in accordance with the Association of Investment Companies (AIC) formula. At each Board meeting, the Board monitors the level of the Company's discount to NAV, the changes thereto and the reason for such changes. The Directors recognise the importance to investors that the shares should not trade at a significant discount to NAV. Accordingly, the Board would consider implementing a share buy back programme to ensure that the share price does not trade at a significant discount to the NAV. In the year under review, the Company's shares traded at a discount of (3.74)% as of 30 June 2022 and at a discount of (11.94)% as of 30 June 2023. Performance is assessed on a total return basis for the NAV and share price. # **Cumulative Performance Chart (USD) from 19 July 2017** ![img-0.jpeg](img-0.jpeg) Cumulative performance from 1 October 2022 includes the deferred tax asset. # **Dividend History** | | Rate ($) | Ex dividend date | Record date | Payment date | | --- | --- | --- | --- | --- | | Fourth interim 2022 | $0.12 | 6 April 2023 | 11 April 2023 | 25 April 2023 | | Third interim 2022 | 0.12 | 18 April 2022 | 19 April 2022 | 28 April 2022 | | Second interim 2022 | 0.12 | 20 January 2022 | 21 January 2022 | 03 February 2022 | | First interim 2022 | 0.12 | 18 November 2021 | 19 November 2021 | 03 December 2021 | | **Total** | **0.36** | | | | The Company paid the fourth interim dividend for the fiscal year ended 30 June 2022 on 25 April 2023. Following the Tranche Two Tender Offer the Board has continued to review and assess the Company's distribution policy. The Company paid the first interim dividend for the fiscal year ended 30 June 2023 on 8 September 2023. 13 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Principal Risks | The Company continues to have exposure | model, future performance, solvency or | table with an explanation of how they are | | --- | --- | --- | | to a variety of risks and uncertainties, and | liquidity. The Company maintains a risk | mitigated. On review during the year, the | | the Audit & Risk Committee has focused | register which sets out the risks facing | Board re-rated several principal risks and | | attention on identifying and mitigating | the Company, the likelihood and potential | considered the adequacy of mitigating | | key risks likely to crystallise in the current | impact of each risk and the controls | controls in place across the Company’s | | economic environment. The Board | established for mitigation. The risk register | operations and those of its key third party | | continues to prioritise a robust system of | is reviewed by the Audit & Risk Committee | providers. The Audit & Risk Committee | | controls to minimise exposure to global | on a regular basis throughout the financial | has also specifically considered the risks | | macro events in particular, which remains | year and was specifically refreshed in 2023 | associated with the Portfolio Manager’s | | highlighted as a generic risk as in recent | to introduce more stringent risk ratings | use of Contracts for Difference within the | | Annual Reports. | for each risk and to reflect the impact of | investment strategy which on review, were | | | related mitigating controls. | felt to continue to be appropriate. The | | The Directors confirm that they have | | risk narrative in the table below includes a | | carried out a further robust assessment | The core principle risks set out in the 2023 | summary of the actions taken to position | | of the principal risks facing the Company | Annual Report remain largely unchanged, | the Company to withstand the related | | during the year, including those that would | however there are some risks that have | effects for markets and investments: | | threaten its investment objective, business | emerged which are set out in the following | | Risk Mitigation Investment Portfolio Risks Decline in the U.S. equity markets. By investing in a diversified portfolio and adhering to a carefully monitored series of investment restrictions, enabled by automated pre-trade compliance features and daily review of trade tickets. These strictures mandate that no Excessive Portfolio Concentration single security purchase can, at the time of investment, account for more than 15% of the gross assets of the Company. The Board meets the portfolio management team quarterly at the Board meetings to review the risk factors and their effects on the portfolio, and a thorough analysis of the investment strategy is undertaken. Deal Failure Risk The increased scrutiny by U.S. and UK anti-trust authorities on M&A cross border transactions represents an additional source of deal failure risk which the Investment Manager can mitigate via appropriate portfolio diversification and careful stock picking. Counterparty Risk The Board and the Portfolio Manager regularly monitor the Company’s exposure to its counterparties. This oversight is intended to minimize the likelihood of loss to the Company resulting from a counterparty’s failure to meet its obligations. Global Macro Events Risks Sharp Interest Rate Changes The Portfolio Manager monitors the interest rate environment and how those changes would potentially impact the Company’s investment strategy. Operational Risks Outsourcing The operational functions of the Company are All third party service providers report to the Board on a regular basis and their outsourced to third parties. Systems disruptions, reports and representations are reviewed by the Board, the AIF Manager and control failures, fraud or inadequate disaster the Portfolio Manager. recovery provisions at key service providers could adversely impact the Company. A state-backed cyberattack could also result Whilst the Board takes all reasonable endeavours to safeguard the Company in widespread disruption across the financial from a cyberattack on this scale, complete mitigation of this external risk industry. cannot be guaranteed; however the Board, together with its’ service providers remain vigilant to the likelihood of such an event in the current climate and have improved the company’s readiness to reduce disruptions to the company’s activities, in the event of such threat. Fraud and cybersecurity vulnerability could The Board relies on assurances from the Company’s key third-party providers increase for key service providers. Such events that they have appropriate and adequate cybersecurity policies in place to are external to the management and beyond mitigate the risk of a cyberattack. The Board keep these policies under review the control of the Company. by receiving regular presentations from the Heads of cybersecurity of its service providers, who describe in detail the efforts they take to secure the company’s data and to mitigate the risks of loss or potential damages that could result from such attacks. ## 14 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements | Risk | Mitigation | | --- | --- | | Unforeseen global events such as geopolitical crisis, war, act of terrorism or outbreak of pandemics could lead to dramatically increased market instability and Company share price volatility a decline in cross-border M&A activity. | Global economic, geopolitical, and financial conditions are constantly monitored. Diversification of Company assets is incorporated into the investment strategy and, if disruptive events occur, the Manager is prepared to adopt a temporary defensive position and invest some or all of the Company's portfolio in cash or cash equivalents, money market instruments, bonds, commercial paper, or other debt obligations with banks or other counterparties, with appropriate ratings as determined by an internationally recognised rating agency and approved by the Board. Another option is the investment in 'government and public securities' as defined for the purposes of the Financial Conduct Authority Handbook. The Manager continues to carefully manage the Company's investments to protect shareholders' interests and to position the Company to benefit from future performance of markets in line with its key investment principles. | | Equity Market Volatility | | | Equity Market Volatility, which may cause a widening of bid-ask spreads and a wider price discount to NAV. | To address a discount, the Board may consider using share buybacks, through which shares would be repurchased when trading at a discount from NAV, up to a maximum percentage of 14.99% of the issued share capital. The Company has continued its shareholder engagement programmes to increase its visibility and interaction with existing and potential investors. | | Financial Risks | | | Comprise: (i) share price risk (comprising interest rate risk, currency risk and other price related risks); (ii) liquidity risk; (iii) credit risk and (iv) Derivative risk. | Further details of these risks are disclosed in Note 12 to the financial statements together with a summary of the policies for managing these risks. | | Tax Risks | | | The Company is no longer eligible to avail itself of Investment Trust Status as per Section 1158 of the Corporation Tax Act 2010 and is consequentially exposed to UK corporation tax payments. | The Company has engaged reputable, external tax consultants with whom the management team consults with on a regular basis and from whom the Board now receives periodic updates to ensure the Company remains compliant with any tax-related payments and disclosures. | | Corporate Governance and Regulatory Compliance Risks | | | Damage to the Company's reputation through inadequate corporate governance arrangements. | The Board complies with good governance practices in accordance with the Association of Investments Companies' ('AIC') Code of Corporate Governance guidelines which endorse the UK Corporate Governance Code. The Board and its Committees actively perform self-assessments of compliance through the annual effectiveness evaluations and receive regular advice from by the Company Secretary in relation to any regulatory changes within the corporate governance landscape that may impact the company. | | Failure to comply with legal and regulatory requirements. | The Company receives and responds to guidance from both its external and internal advisors on compliance with the Listing Rules, the Financial Conduct Authority's Disclosure and Transparency Rules, UK Companies Act 2006, and other applicable regulations. | | Emerging Risks | Mitigation | | --- | --- | | Geopolitical Risks | | | Geopolitical risks have risen with Russia's invasion of Ukraine. The impact of sanctions and the rise in commodity prices are likely to be primary influences on markets. Rising commodity prices and further disruption to supply chains shall exacerbate inflationary pressure and may also create a negative impact on global growth, with Europe at particular risk. | The Board is keeping these evolving risks and market pressures under constant review and will continue to monitor the volatility around investee company valuations and implications for the Company's likely future dividend income stream. | 15 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Viability & Going Concern Statement | In accordance with the provisions of the | The nature of the Company’s investments | | Taking these factors into account, the | | --- | --- | --- | --- | | UK Corporate Governance Code, the | means that solvency and liquidity risks | | Directors confirm that they have a | | Directors have assessed the prospects of | are low because: | | reasonable expectation that the Company | | the Company over a longer period than | | | will continue to operate and meet its | | the 12 months referred to in the ‘Going | • The Company’s portfolio is invested in | | expenses. | | Concern’ guidelines. | | readily realisable, listed securities; | | The Company’s portfolio consists primarily The Board conducted this review • The closed-end nature of the of U.S. investments. Accordingly, the focusing on a period of five years. This Company means that, unlike an Company believes that the post “Brexit” period was selected as it is aligned with open-ended fund, it does not need to arrangements introduced by the U.K. the Company’s investment objective liquidate positions when shareholders government and market U.K. government of generating total return, consisting wish to sell their shares; and and market regulators will not materially of capital appreciation and current affect the prospects for the Company, income for the long term. In making this • The expenses of the Company but the Board and Portfolio Manager will assessment the Board also considered are predictable and modest in continue to keep developments under the Company’s principal risks. comparison with the assets and there review. are no capital commitments currently | Investment Companies in the UK operate | | | foreseen which would alter that | This Viability & Going Concern Statement, | | --- | --- | --- | --- | --- | | in a well established and robust regulatory | | | position. | the Strategic Report for the year ended | | environment and the Directors have | | | | 30 June 2023 (on pages 2 to 16 of this | | assumed that: | | • The taxation of the Company as a close | | document) and the s172 statement (on | | | | | investment company is predictable | pages 26 to 29) have been approved by | | • Investors will continue to want to | | | and modest in comparison with | the Board and signed on its behalf by: | | | invest in closed-end investment | | the return profile of the investment | | | | companies because the fixed | | programme and as a result of regular | John Birch Marc Gabelli | | | capitalisation structure is suited to | | consultation with shareholders, an | | Co-Chairman Co-Chairman pursuing the Portfolio Manager’s effort to undertake the mitigation of 19 October 2023 proprietary long-term PMV with a such close status taxation, such as a TM Catalyst investment strategy; re-domiciliation, is not expected in the next 12 months. • The Company’s remit of investing | globally with an emphasis on securities | • The Company conducted and | | | --- | --- | --- | | traded in the U.S., and predominantly | | completed the Fifth Anniversary | | equity securities issued by companies | | Tender Offer, as set out in the circular | | of any market capitalisation will | | published on 19 August 2022. The | | continue to be attractive to investors. | | Company purchased 3,387,414 shares, | resulting in 6,850,792 shares in issue | • The UK’s well established investment | | | at 30 June 2023 versus 10,238,206 | | --- | --- | --- | --- | | | and robust regulatory environment | | shares in issue in July 2022. The Board | | | will continue as such and will remain | | believes that the Company retains | | | an attractive global domicile for the | | sufficient scale to continue to operate | | | Company’s remit. | | its Investment Programme. | | • The recent period of UK political | | The Board has closely monitored | | | | instability as reflected in the Sterling | the impact of the war in Ukraine. | | | | exchange rate relative to the US | Those impacts and related continuing | | | | Dollar, the interplay of parliamentary | uncertainty have short and potentially | | | | politics with the Bank of England, and | medium term implications for the | | | | the regulatory unravelling of Brexit | Company’s investment strategy. The | | | | relative to the European Union, will | Board is continuing to monitor the | | | | pass in the medium term and return to | implications of the Company no longer | | | | a period of marketplace stability and | having investment trust status and | | | | instill domicile confidence for global | its implications on the Company’s | | | | investors. | investment return profile over the longer | | term. In context, the Board continuously As with all investment vehicles, there is monitors the Company’s investment a risk that the performance of individual portfolio, liquidity and gearing, along with investments will vary and that capital may levels of market activity, to appropriately be lost, but this is not regarded as a threat minimise and mitigate consequential to the viability of the Company. risks to capital and future income such as geopolitical risks, financial risks etc. | Operationally, the Company retains title | The risks are discussed in more detail | | --- | --- | | to all assets, and cash and securities are | in the Chairman’s Statement and on | | held with a custodian bank approved by | pages14to15. | the Portfolio Manager and the Board. ## 16 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements ## Board of Directors The Directors of the Company who were in office during the year and up to the date of the signing of the financial statements were as follows: | Marco Bianconi | John Birch | Marc Gabelli | | --- | --- | --- | | Independent non-executive Director | Non-executive Director and Co-Chairman | Non-executive Director and Co-Chairman | | Chair of the Audit & Risk Committee, | Chair of the Management | Chair of the Nomination Committee | | member of the Conflicts and Remuneration | Engagement and Conflicts Committees, | | | Committees | member of the Remuneration and | Marc is a director and President of the | | | Nomination Committees | Portfolio Manager’s parent company, | | Marco is Corporate Development, M&A | | GGCP, a director of Associated Capital | | and Investor Relations Director at Cementir | John is the Managing Partner of The | Group “ACG” and is a Senior Portfolio | | Holding N.V. an international Building | Cardinal Partners Global S.a.r.l. Previously | Manager at Gabelli. As a fund manager, his | | Materials manufacturer quoted on the | he was Chief Operating Officer of | focus is global value equity investments. | | Italian Stock exchange. He previously served | Sentinel Asset Management, Inc. and | He has managed several Morningstar five | | for five years as CFO of its parent company | Sentinel Administrative Services, Inc., | star mutual funds, and a Lipper #1 ranked | | Caltagirone SpA. Prior to this he worked | both members of National Life Group. He | global equity mutual fund. Marc is active | | for over eight years at Fidelity Investments | has also held senior roles in State Street, | in a variety of charitable educational | | in London as Portfolio Manager and Pan- | American Skandia Investment Services, | efforts in the United States and United | | European Equity Analyst. Marco holds | Inc., Gabelli Funds, Inc. and Gabelli | Kingdom. He has lived and worked in the | | a number of non-executive roles within | International. He has an MA in Tax and over | U.K. at various times, beginning in 1990. | | the Cementir group and is non-executive | 30 years experience in asset management. | He is a graduate of the Massachusetts | | director at Henderson European Focus | | Institute of Technology (M.I.T.) Sloan | | Trust Plc. Marco holds an MBA at NYU | Appointed on 5 June 2017. | School of Management. | Stern School of Business, class 1996 and he is a Chartered Accountant since 1990. Appointed on 28 April 2017. Appointed on 5 June 2017. ## 17 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Board of Directors continued John Newlands Yuji Sugimoto James Wedderburn Independent non-executive Director Independent non-executive Director Independent non-executive Director Member of the Audit & Risk Committee Member of the Nomination, Conflicts and Chair of the Remuneration Committee and Management Engagement Committees member of the Audit & Risk Committee John has served more than twenty years | in the City of London, most recently | Yuji has over 37 years experience in | James has over 40 years experience in | | --- | --- | --- | | with Brewin Dolphin Limited as Head of | financial markets. He is a former Executive | the investment industry. From 1999 to | | Investment Companies Research from | Director of Sumitomo Mitsui Banking | 2017 he was Director of the family office | | 2007 to 2017. He was a member of the | Corporation in the US. Prior to this | of Sir Peter Lampl, founder of the Sutton | | Association of Investment Companies | Yuji co-managed Japanese/Pan-Asian | Trust social mobility charity, where he | | Statistics’ Committee from 2000 to | institutional research sales as a Managing | was responsible for all financial and | | 2017. He has an MBA from Edinburgh | Director at Lehman Brothers / Barclays. | investment matters and closely involved | | University Business School and is a | From 2003 to 2007 he managed a New | with the charity’s finances. He worked | | Chartered Electrical Engineer. He has | York based Japanese equity hedge fund | previously at financial group Hamilton | | written four books about financial history, | Sugimoto Capital Management LLC, | Lunn monitoring the global investments | | the most recent charting the history | which he founded. He started his career | of ultra high net worth clients and, prior | | of Dunedin Income Growth Investment | at Salomon Brothers working for 24 years | to that, was a fund manager at Invesco | | Trust. He is a non executive director of | in New York, London, Hong Kong and | MIM and Samuel Montagu responsible | | CQS New City High Yield Fund and Chair | Tokyo in a number of institutional sales | for UK pension fund and charity clients. | | of Develop North PLC and Deputy Chair | management positions as a Managing | James spent his early career as a UK | | of the Investment Committee of Durham | Director. He has a MBA from the University | equity research analyst at Cazenove and | | Cathedral. | of Southern California and a B.A. in | Laing & Cruickshank after graduating | | | Economics from Columbia University. | from Oxford University. | Appointed on 8 February 2018. Appointed on 5 June 2017. Appointed on 15 November 2017. ## 18 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements # Directors' Report The Directors present the annual report and accounts of the Company for the year ended 30 June 2023. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK international accounting standards and have been prepared in accordance with the requirements of the Companies Act 2006. ## The Company The Company was incorporated in England and Wales on 28 April 2017 with registered number 10747219. The Company is registered as an investment company as defined by Section 833 of the Companies Act 2006 (the "Companies Act") and operates as such. The Company was admitted to the Specialist Fund Segment of the Main Market of the London Stock Exchange and trading on the Official List of the International Stock Exchange on 19 July 2017. The Company's Listing Sponsor on the International Stock Exchange is Ocorian Administration (Guernsey) Limited. The Company also operates an additional market quote for its ordinary shares on the London Stock Exchange, denominated in sterling. Investors should look to the Circular dated 19 August 2022 for information about the Company, the Loyalty Programme, and the Tender Offer. The Company has elected continued adherence to the AIC's SORP. Although no longer a trust, the Company has elected to continue to prepare the financial statements on a basis compliant with the recommendations of the SORP. The SORP is issued by the AIC and it sets out recommendations, intended to represent current best practice, on the form and contents of the financial statements of Investment Companies. Investment Companies include investment trust companies that have been, currently are, or are directing its affairs so as to enable it to obtain or retain approval under Section 1158 of the Corporation Tax Act 2010. Although the Company no longer meets the requirements of Section 1158 of the Corporation Tax Act 2010 to be an investment trust, it continues to conduct its affairs as an investment company. ## Going concern The Board have closely monitored the impact of the ongoing COVID-19 pandemic, Brexit uncertainty, and the war in Ukraine. Those impacts and related continuing uncertainty have short- and potentially medium-term implications for the Company's investment strategy. Additionally, the Board is monitoring the period ahead on the basis of the Company no longer having investment trust status and its implications on the Company's investment return profile over the longer term. In context, the Board continuously monitors the Company's investment portfolio, liquidity and gearing, along with levels of market activity, to appropriately minimise and mitigate consequential risks to capital and future income such as geopolitical risks, financial risks etc. Taking these factors into account, the Directors confirm that they have a reasonable expectation that the Company will continue to operate and meet its expenses as they fall due. For these reasons, the Directors consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts as at 30 June 2023. This Going Concern statement should be read in conjunction with the Company's Viability & Going Concern Statement which can be found on page 16. ## Directors The Directors of the Company in office at the date of this report and their biographies are set out on pages 17 and 18. Details of Directors' interests in the shares of the Company are set out in the Directors' Remuneration Report. Directors' retirements are subject to the Company's Articles of Association (the "Articles"). The Articles provide that the directors may appoint a person who is willing to act as a director and any director so appointed is required to retire at the next AGM after his or her appointment and is eligible for reappointment. All directors who held office at the time of the two preceding AGMs and who did not retire by rotation at either of them are also required to retire by rotation and are eligible for reappointment. In addition, each Director considered to be non-independent will retire and being eligible offer themselves for re-election on an annual basis. The Board has agreed to follow the recommendations of the U.K. and AIC Corporate Governance Codes and ask all Directors of the Company to offer themselves for re-election annually. Therefore, all the Directors will retire at the forthcoming AGM and, being eligible will offer themselves for re-election. Having considered the Directors' performance as part of the annual Board evaluation process the Board believes that it continues to be effective and that each of the Directors brings an appropriate level of knowledge, experience, business, financial and asset management skills. The Board therefore recommends that shareholders vote in favour of each Director's proposed election at the AGM. Mr. Gabelli, as a Director and President of the Gabelli Group ("GGCP, Inc."), the parent company of both Gabelli Funds, LLC (the "Portfolio Manager") and Associated Capital Group, the Company's largest shareholder, is deemed to be interested in the Company's Portfolio Management Agreement, as is Mr. Birch, who serves on the Boards of other funds in the Gabelli/GAMCO group of companies. There were no other contracts subsisting during the year under review, or up to the date of this report, in which a Director of the Company is, or was, materially interested and which is, or was, significant in relation to the Company's business. None of the Directors have a service contract with the Company. The terms of their appointment was provided to them in writing. No Director is entitled to compensation for loss of office on the takeover of the Company. The powers of the Directors are set out in the Corporate Governance Statement. ## Directors' conflicts of interest Directors have a duty to avoid situations in which they have, or could have, a direct or indirect interest that conflicts, or may potentially conflict, with the Company's interests. This is in addition to the continuing duty that Directors owe the Company to disclose to the Board any transaction or arrangement under consideration by the Company in which they are interested. Directors are required to disclose any conflicts and potential conflicts of interest upon appointment. A schedule of these is maintained by the Company Secretary and provided at each quarterly Board meeting. Directors are responsible for keeping these disclosures up to date and in particular to notify any new potential conflicts of interest, or changes to existing situations, to the Company Secretary. 19 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Directors' Report continued In accordance with the Companies Act 2006 and the Company's Articles, the Directors can authorise such conflicts or potential conflicts of interest. In deciding whether to authorise any conflict, the Directors must consider their general duties under the Companies Act 2006, and their overriding obligation to act in a way they consider, in good faith, will be most likely to promote the Company's success. In addition, the Directors are able to impose limits or conditions when giving authorisation to a conflict, or potential conflict of interest, if they think this is appropriate. The authorisation of any conflict matter, and the terms of any authorisation, may be reviewed by the Board at any time. The Board believes that the procedures established to deal with conflicts of interest operated effectively during the year under review. ## Directors' Indemnities In accordance with the provisions of the Companies Act, the Company's Articles allow for Directors and officers of the Company to be indemnified out of the assets of the Company against all costs, losses, and liabilities incurred for negligence, default, breach of duty or trust in relation to the Company's affairs and activities. The Articles also provide that, subject to the provisions of the Companies Act 2006, the Board may purchase and maintain insurance for the benefit of Directors and officers of the Company against any liability which may incur in relation to anything done or omitted to be done, or alleged to be done or omitted to be done, as a Director or officer. The Company has taken out Directors' and Officers' Liability insurance, which covers the Directors and officers of the Company. ## Share Capital Full details of the Company's issued share capital are given in Note 11 to the Financial Statements on page 58. Details of the voting rights in the Company's shares as at the date of this report are also given in Note 6 to the Notice of Annual General Meeting on page 75. The ordinary shares carry the right to receive dividends and have one voting right per share. Voting rights may increase to certain Loyalty Programme qualifying shareholders in the subsequent period commencing calendar year end 2023 (see "Loyalty Programme"). There are no restrictions on the voting rights of the ordinary shares or any shares which carry specific rights with regard to the control of the Company. No shares were issued during the year under review, or up to close of business on 30 June 2023. At the year end and at the date of this report there were accordingly 3,483,374 ordinary shares held in treasury (33.7% of the issued share capital). In September 2022, concurrent with the Fifth Anniversary Tender Offer, the Board of Directors of the Company were authorised to allot Ordinary Shares of the Company up to an aggregate nominal value of $511,910.30, with such authority to expire on the fifth anniversary of the date of the passing of the resolution. In addition, at the November 2022 AGM, the Board of Directors was authorised to allot relevant securities in the Company up to a maximum aggregate nominal amount of $71,822 (being ten percent of the total number of voting rights of the Company at the latest practicable date prior to the publication of the Notice of AGM), with such authority to apply until the conclusion of this year's AGM. The resolutions for the 2023 AGM include authorisation to the Company to allot equity securities up to an aggregate nominal value of $45,672, that can be utilised for acquisitions by the company. These transactions may result in the acquisition of other operating businesses to further expand and develop shareholder value in accordance with the investment programme. ## Share Repurchase The Company has authority to buy back shares in the market and may cancel or hold ordinary shares acquired by way of market purchase in treasury. The Directors will consider repurchasing shares in the market under an extension of the programme if they believe it to be in shareholders' interests. It is the Board's intention that any shares bought back by the Company will be held in treasury and will only be sold at prices at or above the prevailing NAV per share ensuring a positive overall effect for shareholders when shares are bought back at a discount and then sold at a price at or above the NAV per share. The current authorities to buy back and sell shares from treasury and to issue shares will expire at the conclusion of the 2023 Annual General Meeting. The Directors are proposing that these authorities be renewed at the forthcoming Annual General Meeting. The Board expects a tender offer to be implemented in 2024, in the range of approximately 5% of the Ordinary Shares not owned by Associated Capital Group, Inc. Any such offer is under further review and analysis. ## Close Company As a result of the Fifth Anniversary Tender Offer, the Company has been operating as an Investment Company with close company status. The Board has not adjusted the Company's investment policy (as detailed in the Charter), as a result of close status. The Board is examining alternatives to reduce costs on an ongoing basis and will seek to undertake a comprehensive review during the 2023-2024 period. ## Loyalty Programme The Company has implemented a loyalty programme to incentivise long-term share ownership. The loyalty programme is open to all shareholders, who are entered in the Loyalty Register, a separate register to allow a shareholder to increase its voting power after holding shares for a continuous period of at least five years. Each shareholder so registered will be entitled to subscribe for one special voting loyalty share in respect of each ordinary share held. These shares can also be used as a form of consideration when entering into one or more agreements to acquire operating businesses in accordance with the Investment Policy, and subject to approval by shareholders at the AGM, the articles will be updated to reflect this dynamic. Each ordinary shareholder and holder of special voting loyalty shares has the right to receive notice of, to attend, to speak at, and vote at general meetings of the Company. Each ordinary shareholder and holder of special voting loyalty shares who is present in person or by proxy at general meetings has one vote, whether on a show of hands or on a poll, in respect of each ordinary and special voting loyalty share held. At any general meeting ordinary shares and any special voting loyalty shares in the capital of the Company in issue would vote effectively one class. 20 Strategic report Governance Financial statements During the year, the Company authorised the issuance of Special Voting Loyalty Shares in accordance with the terms specified in the Loyalty Programme, with Associated Capital Group Inc. agreeing to subscribe for Special Voting Loyalty Shares, which will increase its voting interest when issued, with issuance pending. The ordinary shares carry the right to receive dividends. The special voting loyalty shares are not entitled to participate in any dividend or distribution made or declared by the Company except for a fixed annual dividend equal to 0.00001% of their nominal value. On a winding up of the Company holders of special voting loyalty shares would be entitled to be repaid the capital paid up thereon pari passu with the repayment of the nominal amount of the ordinary shares. The special voting loyalty shares are not transferrable without the prior written consent of the Company. These shares can also be used as a form of consideration when entering into one or more agreements to acquire operating businesses in accordance with the Investment Policy, and subject to approval by shareholders at the AGM, the articles will be updated to reflect this dynamic. There are no restrictions on the transfer of ordinary shares or on the exercise of voting rights attached to them, which are governed by the Company's Articles and relevant legislation. There are no shares which carry specific rights with regard to the control of the Company. #### Activities and Business Review A review of the business and details of research activities can be found within the Strategy section of this Annual Report. #### Alternative Investment Fund Managers As an investment company that is managed and marketed in the United Kingdom, the Company is an Alternative Investment Fund ("AIF") falling within the scope of, and subject to the requirements of, the Alternative Investment Fund Managers Directive ("AIFMD"). The Company had appointed Carne Global Fund Managers (Ireland) Limited ("Carne") as its Alternative Investment Fund Manager ("AIFM") pursuant to the AIFMD. As a result of the United Kingdom's departure from the European Union, the Company assigned Gabelli Funds LLC, a US SEC registered investment advisor as the AIFM in accordance with such exemptions, effective 14 February 2023. Carne was responsible for the portfolio management and risk management functions of the Company until the point Gabelli Funds LLC was appointed AIFM (on 13 February 2023). Carne continues to provide the Company AIFM support services and monitor risks. The Carne Agreement may be terminated by either party giving not less than 90 days' written notice. Carne was entitled to receive from the Company such annual fees, accrued and payable at such times, as may be agreed in writing between itself and the Company from time to time. The fees are to be payable monthly and subject to a minimum monthly fee of €2,500. During the year under review the AIFM fees paid to Carne were $50,865 (2022: $48,062). Regulatory disclosures including the Key Investor Information Document are provided on the website. Gabelli Funds, LLC does not earn a fee for its role as AIFM; it earned $653,934 in portfolio management fees during the year ended 30 June 2023 (2022: $841,642). Disclosures on Remuneration as required under AIFMD can also be found on page 77. #### Portfolio management and administration Gabelli Funds, LLC ("Gabelli") was appointed as Portfolio Manager with effect from 15 June 2017 under a Portfolio Management Agreement (the "Agreement") with the Company under which portfolio management functions were delegated to Gabelli. Gabelli receives a management fee, payable monthly within 10 business days calculated at the rate of 0.85% of NAV accrued daily and calculated on each business day. Gabelli is entitled to earn a performance fee under the Agreement in respect of each performance period, ending 30 June each year. For the year under review Gabelli was entitled to a performance fee of 20% of any outperformance of the net asset value total return, capped at 3% of the average NAV. For the year ended 30 June 2023 no performance fee was paid (2022: nil). #### Appointment of the Manager The arrangements for the provision of portfolio management and other services to the Company is considered by the Board on an ongoing basis and a formal review is conducted annually. During the year, the Board considered the performance of Gabelli as Portfolio Manager by reference to the investment process, portfolio performance and how it had fulfilled its obligations under the terms of the Portfolio Management Agreement. It is the opinion of the Board that the continuing appointment of Gabelli as Portfolio Manager, on the terms disclosed is in shareholders' interests as a whole. Among the reasons for this view is the depth, experience and investment process of Gabelli. #### Facilitating Retail Investments The Company conducts its affairs so that its shares can be recommended by independent financial advisers to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream pooled investments and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA's restrictions which apply to non-mainstream pooled investments because they are shares in an investment trust. #### Other third party service providers Depository and Custodian The Company appointed State Street Trustees Limited as its Depository under a Depository Agreement dated 30 June 2017 between Carne, Gabelli and the Company. The main role of the Depository under the AIFMD is to act as a central custodian with additional duties to monitor the operations of the Company, including cash flows and to ensure that the Company's assets are valued appropriately. The Depository receives a fee payable at 0.025% per annum of the gross assets of the Company. Under the Depository Agreement, custody services in respect of the Company's assets have been delegated to State Street Bank and Trust Company. The Custodian receives a custody fee payable by the Company at rates depending on the number of trades and the location of securities held subject to a minimum annual fee payable of not less than $31,250. Custody fees of $51,569 were paid during the year under review (2022: $41,736). The depository agreement is subject to 90 days' written notice of termination by any party. 21 Gabelli Merger Plus' Trust Plc Annual Report and Accounts 2023 # Directors' Report continued ## Registrar Computershare Investor Services Plc (the "Registrar") has been appointed as the Company's registrar pursuant to the Registrar Services Agreement. The Registrar is responsible for maintaining the Company's register of shareholders and also provides services in respect of the payment of dividends, provision of shareholder documentation and compliance with the Common Reporting Standard. Fees of $17,973 was paid to the Registrar during the year under review (2022: $13,000). Fees in respect of corporate actions will be agreed at the time of the corporate action. ## Other Service Providers Kin Company Secretarial Limited was appointed as Company Secretary in October 2021 and has the responsibility for overseeing the Governance arrangements of the Company and assisting the Company fulfil its regulatory compliance obligations. State Street Bank and Trust Company ("the Administrator") is responsible for the day-to-day administration of the Company including the maintenance of the Company's financial records and the calculation of the daily NAV. Kin Company Secretarial has worked with the Administrator to perform the functions of Company Secretary for the 2022/2023 financial year. The Kin Company Secretarial agreement has no minimum term and is terminable by Kin or the Company on not less than one month's notice. Fees of $100,252 were paid for Company Secretarial services during the year under review (2022: $84,466). ## Related Party Transactions Carne Global Fund Managers (Ireland) Limited is a related party to the Company as it is considered to have had significant influence over the Company while it served as AIFM. AIFM fees and AIFM service fees of $50,865 were paid to Carne during the year ended 30 June 2023 (2022: $48,062). Gabelli Funds, LLC is a related party to the Company as it is considered to have significant influence over the Company. Gabelli Funds, LLC does not earn a fee for its role as AIFM; it earned $653,934 in portfolio management fees during the year ended 30 June 2023 (2022: $841,642). Further details of related party transactions are provided in note - to the financial statements. ## Substantial shareholders As at 30 June 2023, the Company had been advised by the following shareholder of its interests of 3% or more in the Company's ordinary issued share capital: | Shareholder | % of Holding | | --- | --- | | Associated Capital Group Inc | 90.73% | ## Future developments The Chairman's Statement and Portfolio Manager's report within this Annual Report contain details of likely future developments. ## Financial instruments The financial risk management and internal control processes and policies, and exposure to the risks associated with financial instruments can be found in Note - to the financial statements. ## Results The Company generated a revenue gain for the year ended 30 June 2023 of $2,996,000 (2022: $(943,000)). ## Disclosure of Information under Listing Rule 9.8.4 The disclosures required by Listing Rule 9.8.4, where relevant to the Company, are discussed in more detail on page 67. ## Dividends and dividend policy In order to allow the Shareholders to realise a predictable, but not assured, level of cash flow and some liquidity periodically on their investment, the Company has adopted a "managed dividend policy". This policy seeks to pay Shareholders a quarterly dividend in relation to the Net Asset Value of the Company at the time, which may be changed at any time by the Board. Between inception and 30 June 2023, the Company returned $2.39 per share to shareholders, consistent with its dividend policy. Dividends are paid only when declared by the Board subject to the Board's assessment of the Company's financial position and only if the Company has sufficient income and distributable reserves to make the dividend payment, and the level of dividend may vary over time. As such, the portfolio's managed distribution of capital through the payment of quarterly dividends is under review as we enter the new Fiscal Year. The Company declared and paid the final interim dividend of US$0.12 per ordinary share for the financial year ending 30 June 2022, on 25 April 2023. ## Exercise of Voting Rights in Investee Companies The exercise of voting rights attached to the Company's portfolio has been delegated to the Portfolio Manager. ## Articles of Association The Company's Articles can only be amended by special resolution at a general meeting of the shareholders. Amendments will be proposed at the AGM that are deemed immaterial. The articles are available upon request, on the company website, and will be provided for at the AGM. ## Change of Control There are no agreements the Company is party to that might be affected by a change in Control of the Company. There are no agreements between the Company and its Directors for compensation for loss of office that occurs as a result of a takeover bid. ## Gabelli approach to voting at shareholder meetings During the year, the Manager voted on approximately 1,089 proposals at approximately 245 shareholder meetings on behalf of the Company. At these meetings, the Manager voted in favour of the majority of resolutions, but voted against the recommendations of management on approximately 52 resolutions. Most of the votes against were in respect of resolutions relating to super dilutive stock option plans, which were deemed by the Investment Manager not to be in the best interests of shareholders. ## Streamlined Energy and Carbon Reporting The Company is categorised as a lower energy user under the HMRC Environmental Reporting Guidelines March 2019 and is therefore not required to make the detailed disclosures of energy and carbon information set out within the guidelines. The Company's energy and carbon information is therefore not disclosed in this report. 22 Strategic report Governance Financial statements ### Greenhouse Gas Emissions The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013. ### Modern Slavery Act 2015 (the "MSA") The Company is an investment company and has no employees and does not provide goods and services in the normal course of business. Accordingly, the Directors consider that the Company is not required to make a slavery and human trafficking statement under the MSA. ### Employees, Social, Human Rights and Environmental Matters The Company is an investment company and has no employees and accordingly it has no direct social, human rights or environmental impact from its operations. In carrying on its investment activities and relationship with suppliers the Company aims to conduct itself responsibly, ethically and fairly. ### Board Diversity As a close – end Investment Company, the Company falls within scope of LR 9.8.6 R (9) and LR 14.3.33 R (1) which require companies in-scope to disclose against the following Diversity targets. - (i) at least 40% of the individuals on its board of directors are women - (ii) at least one of the following senior positions on its board of directors is held by a woman: - (A) the chair - (B) the chief executive - (C) the senior independent director - (D) the chief financial officer - (iii) at least one individual on its board of directors is from a minority ethnic background As at 30 June 2023, the Company has not met the above targets, further details of which are set out in the Corporate Governance Report on page 26. ### Political donations No political contributions or donations were made during the financial period ended 30 June 2023. ### Annual General Meeting The following information to be discussed at the forthcoming Annual General Meeting is important and requires your immediate attention. If you are in any doubt about the action you should take, you should seek advice from your stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under the Financial Services and Markets Act 2000 (as amended). If you have sold or transferred all of your ordinary shares in the Company, you should pass this document, together with any other accompanying documents, including the form of proxy, at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. The Directors currently anticipate that this year's Annual General Meeting will be open to shareholders, but reserve the right to change arrangements for the meeting at short notice. Therefore shareholders are strongly encouraged to vote by proxy and to appoint the Chairman as their proxy. The following resolutions will be proposed to the AGM. Resolutions 13 and 14 are proposed to the meeting as special business of the meeting as ordinary resolutions. Resolutions 15-20 are proposed as special resolutions. Ordinary resolutions require a simple majority vote (above 50%) to be passed, whereas Special resolutions require at least a 75% majority vote to be passed. ### Resolution 14 In accordance with the Investment Policy and as opportunities present themselves the Company may take majority and minority positions which may require management of such investments. The Articles will be adjusted accordingly in the resolution so that any such positions might be taken utilising shares including Special Voting Loyalty Shares so that an issuance and/or allotment could occur to parties that were not prior shareholders nor members of the Loyalty Programme. ### Resolution 15 Authority to Allot shares The Directors may only allot shares for cash if authorised to do so by shareholders in a general meeting. Resolution 15 seeks authority for the Directors to allot shares for cash up to an aggregate nominal amount of US$13,701 which represents 20% of the current issued share capital. The authority will expire at the conclusion of the 2024 Annual General Meeting unless renewed prior to that date. ### Resolution 19 Authority to buy back shares Resolution 19 seeks to renew the authority previously granted to Directors to enable the Company to purchase up to 685,079 ordinary shares being 10% of the issued share capital (excluding Treasury Shares). The Directors will only consider repurchasing shares in the market if they believe it to be in shareholders' interests and as a means of correcting any imbalance between supply and demand for the Company's shares. Under the Listing Rules of the Financial Conduct Authority ("FCA"), the maximum price which can be paid is the higher of - (i) 5% above the average market value of the ordinary shares for the five business days immediately preceding the date on which the purchase is made and (ii) the higher of the price quoted for (a) the last independent trade of, and (b) the highest current independent bid for, any number of ordinary shares on the trading venue where the purchase is carried out. In making purchases, the Company will deal only with member firms of the London Stock Exchange. The authority will expire at the conclusion of the 2023 Annual General Meeting unless renewed prior to that date. ### Resolution 20 General Meetings on 14 clear days' notice Resolution 20 seeks shareholder authority to call general meetings other than an AGM on 14 clear days' notice. The approval will be effective until the Company's next AGM, when it is intended that a similar resolution will be proposed. The Board will utilise this authority to provide flexibility when merited and would not use it as a matter of routine. 23 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Directors' Report continued Recommendation Your Board recommends all resolutions to shareholders as being in the best interests of the Company and its shareholders as a whole. The Directors therefore unanimously recommend that shareholders vote in favour of each resolution, as they intend to do in respect of their own beneficial holdings. Directors' statement as to the disclosure of information to the auditors In accordance with the requirement and definitions under section 418 of the Companies Act 2006, the Directors at the date of approval of this report confirm that: - so far as they are aware, there is no relevant audit information of which the Company's auditors are unaware; and - each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information. Appointment of independent auditors PricewaterhouseCoopers LLP, the independent external auditors of the Company, were appointed in 2017. Resolutions to reappoint PricewaterhouseCoopers LLP as the Company's auditors, and to authorise the Audit & Risk Committee to determine their remuneration will be proposed at the forthcoming AGM. The Directors' Report was approved by the Board on 19 October 2023. John Birch Co-Chairman 19 October 2023 Marc Gabelli Co-Chairman 24 Strategic report Governance Financial statements ## Corporate Governance Report This Report sets out the role and activities of the Board and The Board considers that reporting against the principles and explains how the Company is governed. provisions of the AIC Code, which has been endorsed by the Financial Reporting Council, provides more relevant information Governance to shareholders. Applicable Corporate Governance Code and compliance in the year under review The Board of Directors also recognise the critical importance of As a company admitted to trading on the Specialist Fund effective corporate governance to investors, potential investors Segment, the Board has considered the principles and provisions and the Company’s stakeholders, and the directors therefore of the Association of Investment Companies’ Code of Corporate give priority to high standards of corporate governance. Governance (the ‘AIC Code’). The AIC Code addresses the Principles and Provisions set out in the 2018 version of the The Board confirms that it complies with the recommendations Financial Reporting Council’s UK Corporate Governance Code of the AIC Code and the relevant provisions of the UK Code (the ‘UK Code’), as well as setting out additional provisions except as follows: on issues that are of specific relevance to the Company as an investment company listed on the London Stock Exchange and in compliance with the FCA’s Listing Rules. Summary of AIC Code Provision Compliance Performance in year Director and Board independence and x A formal policy and procedure ensure Board independence independence from the Manager and the independence of the investment Manager. The Chair should be independent on x Although the Chairman is not deemed independent for appointment the purposes of the AIC Code, given his qualifications and investment experience, and the significant commitment being made by the Gabelli Group to the Company, the Board believes that his appointment as Chairman is in the best interests of the Company and the shareholders as a whole. Appoint a Senior Independent Director x The Board does not deem it necessary to appoint a SID given (‘SID’) the nature of its activities as a listed investment Company. The key responsibilities of the SID under the UK Code are completed by the Non-executive Directors. The performance of the Chairman is appraised annually by the Non-executive Directors. Monitor risk management and internal x The Company has delegated its operational management to control systems third party service providers, the Board therefore receives reports from those parties to satisfy itself that an appropriate controls environment is maintained. These reports extend to any relevant instances of whistleblowing at each of the service providers. Identification of remuneration consultant x The Remuneration Committee does not deem it necessary to in the Annual Report appoint a remuneration consultant. The AIC Code is available on the AIC website (www.theaic.co.uk). The provision of the UK Code which relates to the combination It includes an explanation of how the AIC Code adapts the of the roles of the chairman and chief executive does not apply Principles and Provisions set out in the UK Code to make them as the Company has no executive directors. relevant for investment companies. The UK Code is available from the Financial Reporting Council’s website at frc.org.uk. The Board meets quarterly to review investment performance, financial reports, discuss strategy and has the overriding The Board responsibility for assessing and reviewing the company’s risk Overview of the Board appetite. Board or Committee meetings are also held on an ad The Board consists of six non-executive Directors. All Directors hoc basis and as required to consider any other material issues have a wide range of other interests and are not dependent as they arise. on the Company itself. Their biographical details, which are set out in detail on pages 17 and 18, demonstrate a breadth of Representatives of the Portfolio Manager and Company investment, commercial and professional experience with an Secretary attend each meeting. The Board, the AIFM, the international perspective. Portfolio Manager, the Company Secretary and other key services providers operate in a cooperative and constructive The Board has a formal schedule of matters specifically reserved relationship to ensure timely and relevant information flows to for its decision, which are categorised under various headings, the board. including strategy and management, internal controls and risk management, strategy and policy considerations, transactions, and finance. ## 25 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Corporate Governance Report continued Chairman Table B: Ethnic Diversity Disclosures The Board is satisfied that other than his relationship with the Portfolio Manager, the Chairman, Marc Gabelli, does not have Number of senior any appointments or interests which may create a conflict of positions on interest with the Company’s activities or interests. the board and Number its Committees The Nomination Committee reviewed the performance of the of Board Percentage (CEO, CFO, SID Chairman during the year and is comfortable that he continues Members of the Board and Chair(s)) to have sufficient time to commit to his duties, and that he White 5 83.33% 4 performs effectively in the role. The Board therefore recommends British/White shareholders vote to re-elect the Chairman at the 2023 Annual American or General Meeting. other White Minority Board Diversity Groups When recruiting a new Director, the Board’s policy is to appoint Mixed/ 0 0.00% 0 individuals on merit. The Board believes diversity is important Multiple in bringing an appropriate range of skills, knowledge and Ethnic experience to the Board and gives that consideration when Groups recruiting new Directors. | | Asian/ | 1 16.67% 0 | | --- | --- | --- | | As at 30 June 2023 there were 6 male Directors, of multiple | Asian/British | | | nationalities and ethnicities, and no female Directors on the | Asian/ | | | Board. Whilst all future board appointments will be made on | American | | merit, the Directors have committed to keep the Board’s gender diversity under review with a view to complying with the FCA’s Role of the Board approved targets on Board Diversity and in improving the ratio The Board is collectively responsible for the long-term success over time. of the Company and is accountable to shareholders and the Company’s wider stakeholders for the performance and In accordance with LR 14.3.33, as at 30 June 2023 (the reference governance of the Company. It is also ultimately responsible for date) the Board has not met the FCA’s specified targets on setting and executing the Company’s strategic aims, its purpose, Board Diversity relating to gender or ethnicity. culture and values. The authority of the Board in these areas is subject to the Articles and to such approval of the shareholders In accordance with LR 14.3.33 a, whilst the Company is supportive in a general meeting as may be required from time to time. of the new measures which aim to improve the representation of women and ethnic minority groups at board level, the Board The Board also ensures that the necessary resources are in place also acknowledges the size of the current Board and believes it to enable the Company’s objectives to be met in accordance remains appropriate to serve the size and stature of the company with the Company’s investment objective, and that shareholder at this time. The Nominations Committee, however, is supportive value is maximised within a framework of proper controls. of ensuring a more diverse pool of Board Level candidates are assessed for any future Board-Level appointments. The Directors exercise the powers conferred by the Company’s Articles of Association and UK Company Law to manage The Board’s Diversity Policy can be found on the company’s the Company’s interest for the benefit of shareholders and website: https://www.gabelli.co.uk/investment-products/ stakeholders. gabelli-merger-plus/gmp-documents/ As an investment company the Company’s day to day The tables below set out the numerical data on the ethnic responsibilities are delegated to third party service providers. The background and the gender identity of the Board or Directors. Company has no employees and the Directors are non-executive The Company do not have an Executive Management team or with the Portfolio Manager represented by the Chairman. any Executive Directors on the Board and therefore have not reported against that target which is non-applicable. Stakeholder Interests (s.172 statement) The Companies (Miscellaneous Reporting) Regulations 2018 Table A: Gender Diversity Disclosures require directors to explain more fully how they have discharged their duties under Section 172(1) of the Companies Act 2006 Number of senior in promoting the success of their companies for the benefit positions on of members as a whole. This enhanced disclosure covers how the board and the Board has engaged with and understands the views of Number its Committees stakeholders and how stakeholders’ needs have been taken into of Board Percentage (CEO, CFO, SID account, the outcome of this engagement and the impact that it Members of the Board and Chair(s)) has had on the Board’s decisions. Men 6 100% 4 Women 0 0% 0 ## 26 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements As the Company is an externally managed investment company this determination, and the Board’s overarching approach to and does not have any employees or customers, the Board engagement with these stakeholders, are set out in the table considers the main stakeholders in the Company to be the below. shareholders and other key service providers. The reasons for Stakeholder Activity or mitigation in the year Shareholders • The Company operates a Loyalty Programme to reward shareholders who retain their shares for at least five years. Further information regarding the Programme can be found on pages 20 and 21; • As a listed investment Company, the Board operates policies designed to safeguard the value of shareholders’ investment, in particular the Board may initiate a buyback programme whenever the Company’s share price represents a discount of 7.5% or more; • Shareholders’ rights are also protected under the Company’s Articles of Association which require any proposal that may materially change those rights to be subject to prior approval by a majority of shareholders in general meeting; and • Shareholders are given opportunities to attend meetings with the Board and to also attend, ask questions and vote at the Annual General Meeting of the Company. Service Providers The Board regularly evaluates the performance of its key panel of third-party professional service providers. The appraisals involve an opportunity for those third parties to provide 360° feedback. Social & Environment Whilst the Company’s key investment objective targets outperformance through exposure to corporate transactions in the United States, the Investment Manager, Gabelli Funds, LLC operates a suite of investment policies designed to take account of Environmental, Social, and Governance (‘ESG’) themes across its investment strategies. These policies ensure that exposure to ESG risks is minimised for the Company’s stakeholders. Other Stakeholders • The Board seeks to maintain the highest levels of corporate governance through compliance with the principles and provisions of both the AIC Code and, to the maximum extent practicable, the UK Code; and • The Board is committed to responding promptly and transparently to any reputational or regulatory matter that might arise affecting the Company, its future prospects or its investment activities. Purpose, Values and Culture Employees, Social, Human Rights and Environmental Matters The Board takes its responsibilities under the AIC Code seriously As an investment vehicle the Company has no employees and and has accordingly sought to identify and promote each of: a accordingly it has no direct social or community impact and corporate purpose, distinct values and a culture for the Company. limited environmental impact from its operations. However, the Company believes that it is in shareholders’ interests to consider However, as a listed investment Company, which has appointed human rights issues, together with environmental, social and third party service providers to operate its day to day business, governance factors when selecting and retaining investments. the chosen purpose, values and culture are necessarily focused on the approach and activities of the Board of Directors. Directors’ Appointment, Retirement and Succession The rules concerning the appointment, retirement and rotation Nevertheless, the Board prioritises the Company’s primary of Directors are set out in the Directors’ Report. The Board investment objective, together with its proprietary Private Market believes that it has a reasonable balance of skills and experience. Value with a Catalyst methodology, in defining its PMV with a It recognises the value of the progressive refreshing of, and Catalyst purpose. The Company’s values and culture primarily succession planning for, company boards, including for the reflect those of its experienced, independent and diverse Chairman. The Board’s tenure and succession policy seeks to individual board members, combined with the approach and ensure that it maintains the balance of skills and experience professionalism of its appointed third party service providers. required. The Board regularly monitors both the performance of the Directors must be able to demonstrate their commitment, in Company against its investment objective and proprietary terms of time, to the Company. The Board is of the view that methodology; and its individual directors and service providers length of service does not itself impair a Director’s ability to to ensure continuing strong performance and integration with act independently or exercise good judgement, rather, a long the Board’s values and culture. serving Director can continue to offer valuable perspectives and experience. ## 27 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Corporate Governance Report continued When Directors are appointed they go through an induction programme organised by the Portfolio Manager to familiarise them with the specifics of the portfolio. Directors are also provided with key information on the Company's policies, regulatory and statutory requirements and internal controls on a regular basis. ## Committees of the Board The Board has established an Audit & Risk Committee, Nomination Committee, Remuneration Committee, Management Engagement Committee and a Conflicts Committee. Each Committee has defined terms of reference and duties. ## Audit & Risk Committee The Audit & Risk Committee is chaired by Marco Bianconi. Further details are provided in the report of the Audit & Risk Committee on pages 30 to 32. ## Nomination Committee The Nomination Committee is chaired by the Chairman of the Board (who would not chair the Committee when the Chairman's successor was being considered) and consists of Marc Gabelli, John Birch and Yuji Sugimoto. The Nomination Committee is responsible for reviewing Board succession, the policy on directors' tenure, the performance of the Board and its Committees and the appointment of new Directors. When voting on candidates for the appointment of new directors, only independent directors will vote. ## Remuneration Committee The Remuneration Committee is chaired by James Wedderburn and consists of John Birch and Marco Bianconi. The Remuneration Committee is responsible for setting the Directors' remuneration in conjunction with the Chairman and will take into consideration the Company's peer group and the potential to appoint external remuneration consultants when making decisions. ## Management Engagement Committee The Management Engagement Committee is chaired by John Birch and consists of John Birch and Yuji Sugimoto. The Management Engagement Committee is responsible for ensuring that the provisions of the Portfolio Management Agreement remain competitive and in the best interest of shareholders and to review the performance of the Manager, Portfolio Manager and other third party service providers to the Company. Details of the management arrangements are set out on page 21. ## Conflicts Committee The Conflicts Committee is chaired by John Birch and consists of Marco Bianconi and Yuji Sugimoto. The Conflicts Committee is responsible for considering the potential conflicts of interest that may arise in relation to the operation of the Company with regard to the Directors, the AIF Manager, the Portfolio Manager and other service providers of the Company. ## Attendance at scheduled meetings The table below sets out the number of Board and Committee meetings held during the year under review to 30 June 2023 and the number of meetings attended by each Director. The Audit & Risk Committee will meet at least once per quarter and all other Committees at least once a year and additionally as required. | Director | Board | Audit & Risk Co. | Rem Co. | ME Co. | Nom Conflicts Co. | Co. | | --- | --- | --- | --- | --- | --- | --- | | Marc Gabelli | 4/4 | n/a | n/a | n/a | 1/1 | n/a | | Marco Bianconi | 4/4 | 7/7 | 1/1 | n/a | n/a | 1/1 | | John Birch | 4/4 | n/a | 1/1 | 1/1 | 1/1 | 1/1 | | John Newlands | 4/4 | 7/7 | n/a | n/a | n/a | n/a | | James Wedderburn | 4/4 | 7/7 | 1/1 | n/a | n/a | n/a | | Yuji Sugimoto | 4/4 | n/a | n/a | 1/1 | 1/1 | 1/1 | ## Board Evaluation The Board undertook an annual self-evaluation of its performance, that of its committees and individual Directors, including the Chairman. The reviews were led by the Chairman, in the case of the Board, and the Chair of each committee otherwise. Each Chair, assisted by the Company Secretary, determined the scope and format for the review, which generally confirmed the directors' view that the Board and its governance continued to function well with some issues identified for further consideration. Further details of the annual self-assessment of the Audit & Risk Committee are set out in the Audit & Risk Committee report on pages 30 to 32. There were no significant actions arising from the evaluation process and it was agreed that the composition of the Board, at that time, reflected a suitable mix of skills and experience, and that the Board as a whole, the individual Directors and its committees were performing in accordance with the provisions of the AIC Code other than where explained in this Report. The Board determined to keep the composition of the Board under review to align with the FCA's specific targets on Board Diversity. ## Risk Management Directors' liability insurance During the year the Company has renewed and maintained appropriate Directors & Officers' insurance on behalf of the Board. ## Internal controls The Board has overall responsibility for the Company's systems of internal controls and for reviewing their effectiveness. In common with the majority of investment Companies, the Board has determined that the most efficient and effective management of the Company is achieved by the Directors determining the investment strategy, and the Portfolio Manager being responsible for the day-to-day investment management decisions on behalf of the Company. Accounting, company secretarial and custodial services have also been delegated to third party service providers who specialise in these areas and can provide, because of their size and specialisation, economies of scale, segregation of duties, and all that is required to provide proper systems of internal control within a regulated environment. 28 Strategic report Governance Financial statements As the Company has no employees and its operational functions are undertaken by third parties, the Audit & Risk Committee does not consider it necessary for the Company to establish its own internal audit function. Instead, the Audit & Risk Committee examines internal control reports received from its principal service providers to satisfy itself as to the controls in place. The internal controls aim to ensure that assets of the Company are safeguarded, proper accounting records are maintained, and the financial information used within the business and for publication is reliable. The need for an internal audit function is reviewed annually by the Committee. The system therefore manages rather than eliminates risk of failure to achieve the Company's business objectives and provides reasonable, but not absolute assurance against material misstatement or loss. #### Shareholder Engagement and General Meetings The primary medium by which the Company communicates with its shareholders is through the Annual and Half Yearly Reports which aim to provide shareholders with a clear understanding of the Company's activities and results in the relevant financial period. This information is supplemented by the daily calculation and publication of the NAV per share to a regulatory information service. The Annual and other General Meetings provide an opportunity for shareholders to engage with the Board of Directors, and the individual directors and the Investment Manager regularly communicate with significant shareholders to discuss company updates and other key events. #### Key Stakeholder Outcomes On 8 September 2022, following the Company's extraordinary general meeting, the Company was authorised to buy back Ordinary Shares in the Company. Additionally, the results of the 2022 EGM authorised the Company to allot up to 51 million ordinary shares via a special share issuance resolution which was passed by a 75% majority vote. Accordingly, this provides the company with the flexibility required to scale the business and return value to shareholders in the long term. All shareholders are ordinarily encouraged to attend and vote at the Company's Annual General Meeting. Shareholders are strongly encouraged to vote by proxy and to appoint the Chairman as their proxy if they are unable to attend in person. The Board and representatives of the Portfolio Manager are similarly usually available at the Annual General Meeting to discuss issues affecting the Company. They will be happy to answer any questions provided in writing prior to the meeting this year. The Notice of Annual General Meeting is set out on pages 73 and 74 and details the business of the meeting. Any item not of an entirely routine nature is explained in the Directors' Report on pages 19 to 24. The Notice of Annual General Meeting and any related papers are sent to shareholders at least 21 clear days before the meeting. #### Substantial Shareholdings A summary of the significant shareholders that have been notified to the Board as at the date of this report can be found on page 22. #### Anti-Bribery Policy The Company has zero tolerance towards bribery and is committed to carrying out business fairly, honestly and openly. The Board takes its responsibility to prevent bribery seriously and its service providers are contacted to regularly confirm their anti-bribery policies and controls. #### Criminal Finances Act 2017 The Board has a zero tolerance approach to the facilitation of tax evasion. By order of the Board John Birch Co-Chairman 19 October 2023 Marc Gabelli Co-Chairman 29 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Report of the Audit & Risk Committee Chair of the • A re view of the effectiveness of the external audit process, Chair Audit & Risk Committee including the scope, execution, level of materiality, together Marco Bianconi Marco Bianconi with the independence, objectivity and efficiency of the external auditors and the quality of the audit engagement Members team; Marco Bianconi • A re view and approval of the external audit plan together with John Newlands the annual audit fee; James Wedderburn • A re view of the risks associated with the loss of Investment Trust status resulting from the tender offer in October 2022 and of the most appropriate financial statements structure for the Company. In fact, as a result of the completed Fifth Anniversary Tender Offer, the Company is now considered a “close company” from a UK tax perspective, being subject As Chair of the Audit & Risk Committee, I am pleased to present to UK corporation tax. The Company has elected continued the Report of the Audit & Risk Committee for the year ended 30 adherence to the AIC’s SORP and continued to prepare June 2023. its financial statements on a basis compliant with the Role of the Committee recommendations of the SORP, The Company has established a separately chaired Audit & • A review of the appropriateness of the Company’s accounting Risk Committee (the “Committee”) to ensure that the interests policies; of shareholders are properly protected in relation to financial reporting, internal controls and risk mitigation. • R eceiving from the Company’s main third-party service providers reassurance on the adequacy and effectiveness The Committee meets on a quarterly basis in preparation for of their internal controls processes and risk management the publication of both the annual and half yearly results, and systems. This initiative included a review of the key technology otherwise as necessary. risks facing the company and its main service providers, The Committee’s terms of reference are available from the including, but not limited to policies, practices and safeguards, Company’s website at https://www.gabelli.co.uk/docs/pdfs/gmp_ cybersecurity and fraud, identification, assessment, monitoring, actr.pdf. mitigation and the overall management of those risks, Composition of the Committee • A re view of the adequacy and security of the company’s The Committee consisted of three Directors during the year arrangements with its contractors and external parties to raise under review whose biographies are on pages 17 and 18 and the concerns, in confidence, about possible wrongdoing in financial Committee composition was therefore unchanged. reporting or other matters. The Committee considered that the arrangements remained appropriate and proportionate. The Committee as a whole has competence relevant to investment companies and is able to discharge its responsibilities effectively, The Audit & Risk Committee engaged Kin Company Secretarial with each Director having appropriate financial experience and as to facilitate an annual effectiveness evaluation and appraise the such contributing strongly to the Committee’s operation. performance of the Audit & Risk Committee. The Objective of the evaluation was to identify areas for improvement, enabling The Company’s Auditors are invited to attend meetings of the the Committee to recalibrate their focus and assess the future Committee on a regular basis. Representatives of the Portfolio and near-term priorities of the Committee. The assessment Manager and other external advisors, including the Administrator, took the form of a quantitative questionnaire with qualitative may also be invited to attend if deemed necessary by the Audit & data reviews and each of the Committee members were invited Risk Committee. and encouraged to participate in the process. The evaluation Committee Responsibilities reviewed key areas of Committee performance which included: The key responsibilities of the Audit & Risk Committee are to • Audit Process and Committee Procedures. ensure the integrity, clarity and completeness of the Company’s financial statements, evaluate the robustness of the systems of • Risk Management & Oversight; and internal controls, monitor the quality, effectiveness and objectivity of the external audit process and monitor the key risks facing the • The Performance and Contribution to the Committees’ Company. effectiveness from key third party service providers. During the year the principal activities of the Committee included: • A compr ehensive review of the half yearly report and annual report and accounts, having considered the disclosures made therein in relation to internal controls, risk management, viability, going concern, related parties, whether the report is fair, balanced and understandable and whether it provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy; ## 30 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements Significant Issues and Audit Risk appropriate areas of audit risk relevant to the Company had been During the year, the Audit & Risk Committee also considered a put in place to obtain a reasonable assurance that the financial number of significant issues and areas of key audit risk in respect statements as a whole would be free of material misstatement. of the Annual Report and Accounts. The Committee reviewed the external audit plan at an early stage and concluded that the The following table sets out the key areas of risk identified and explains how these were addressed. Significant issue How the issue was addressed Valuation and existence of investments The AIFM performs the valuation of the Company’s assets in accordance with its responsibilities under the AIFMD rules. Ownership of listed investments is verified by reconciliation to the Custodian’s records. Ownership of CFDs is verified by reconciliation to the counterparty’s records. Recognition of income Income received is accounted for in line with the Company’s accounting policies, as set out on page 50. Maintaining internal controls The Committee receives regular reports on internal controls from the Administrator and the Investment Manager and has access to the relevant personnel of both State Street and Gabelli Funds who have a responsibility for risk management and internal audit. Performance fee The performance fee calculation is prepared by the Administrator and reviewed by the Manager and the Committee before recommendation to the Board, all with reference to the portfolio management agreement. Resource Risk The Company has no employees and its day to day activities are delegated to third party suppliers. The Board monitors the performance of third-party suppliers on an ongoing basis. External audit the Committee recommended to the Board that shareholder The Committee conducted a review of PricewaterhouseCoopers approval be sought at the forthcoming AGM for the appointment LLP’s independence and audit process effectiveness as part of PricewaterhouseCoopers LLP as the Company’s auditors for of its review of the financial reporting for the year ended 30 the ensuing financial year, and for the Committee to determine June 2023 and separately completed a market benchmarking the auditors’ remuneration. exercise in respect of the external audit service. In considering the effectiveness, the Committee reviewed the audit plan, the Audit Tendering level of materiality, key financial reporting risks, and the auditors’ PricewaterhouseCoopers LLP was appointed as auditors with findings. effect from the Company’s launch in July 2017. The Company is required to put the external audit out to tender at least every ten The Committee also considered the execution of the audit years, and at least every twenty years to change the auditors. against the plan, as well as the auditors reporting to the The Company will be required to put the audit out to tender, at Committee in respect of the financial statements for the year. the latest following the 2027 year end. Based on this, the Committee was satisfied with the quality of the external audit process,with appropriate focus and challenge The Audit & Risk Committee will consider annually the need on the key audit risks. to tender as a consequence of audit quality or independence. There are no contractual obligations that restrict the Company’s The Committee advises the Board on the appointment of the choice of auditors. external auditors and on their remuneration. It keeps under review the cost effectiveness and the independence and During the year ended 30 June 2023 £0 was paid to the auditors objectivity of the external auditors, mindful of controls in place for non-audit services (2022: £0). The auditors are required to to ensure the latter. To this end, the Committee has implemented rotate the Company’s Lead Engagement Partner every five a policy on the engagement of the external auditors to supply years. Kevin Rollo was appointed as the Audit Engagement non-audit services. Partner in 2021 and has successfully overseen the engagement with the support of a strengthened audit team for the financial The Committee was satisfied that the objectivity and year under review. independence of the auditors was not impaired as no non- audit services were undertaken during the year. Accordingly, ## 31 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Report of the Audit & Risk Committee continued Internal Audit function As the Company has no employees and its operational functions are undertaken by third parties, the Committee does not consider it necessary for the Company to establish its own internal audit function. Instead, the Committee examines internal control reports received from its principal service providers to satisfy itself as to the controls in place. The internal controls aim to ensure that assets of the Company are safeguarded, proper accounting records are maintained, and the financial information used within the business and for publication is reliable. The need for an internal audit function is reviewed annually by the Committee. Whistleblowing, anti-bribery and corruption The Company has no employees; therefore no policies relating to whistleblowing, anti-bribery, or corruption are considered necessary. Notwithstanding this, the Company seeks at all times to conduct its business with the highest standards of integrity and honesty. Gabelli Funds, LLC is committed to complying with all applicable legal and regulatory requirements relating to accounting and auditing controls and procedures. Staff members of Gabelli Funds, LLC are encouraged to report complaints and concerns regarding accounting or auditing matters through available channels described in the Portfolio Manager’s Whistleblower Policy. Marco Bianconi Chair of the Audit & Risk Committee 19 October 2023 ## 32 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements # Directors' Remuneration Report The Board presents the Directors' Remuneration Report which has been prepared in accordance with the requirements of Sections 420-422 of the Companies Act 2006 and Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. The law requires the Company's auditors to audit certain of the disclosures provided. Where disclosures have been audited this is indicated. ## Statement from the Chairman This Report describes how the Board has applied the principles relating to Directors' remuneration. The Company's Remuneration Policy was originally approved by shareholders at the AGM in 2018 and shareholders approved a version of the Remuneration Policy with minor further updates at the AGMs in 2019 and in 2020, in accordance with section 439A of the Companies Act 2006. Accordingly, the Company's Remuneration policy will be put to Shareholders for approval at this year's Annual General Meeting ('AGM') to be held on 30 November 2023. Further information on this resolution is contained with the notice of AGM. ## Director's Remuneration Policy In 2020, the Remuneration Policy was updated to increase the overall aggregate limit on fees payable to Directors from $150,000 to $180,000. The Company does not propose an increase to the aggregate limit to Non-Executive Director's fees this year and as such will only be seeking shareholder approval for the current limit of $180,000, which the Company deemed to be at an appropriate level at this time. ## Remuneration Committee The Company has established a Remuneration Committee which meets at least once a year. Further details of the membership are provided in the Corporate Governance Report on page 28. ## Policy Table | **Fixed fee element** | Remuneration consists of a fixed fee each year and the Directors of the Company are entitled to such rates of annual fees as the Board at its discretion determines. | | --- | --- | | **Discretionary element** | In accordance with the Company's Articles of Association, if a Director is requested to perform extra or special services, they will be entitled to receive such additional remuneration as the Board considers appropriate. | | **Expenses** | In accordance with the Company's Articles of Association the Directors are also entitled to be reimbursed for out-of-pocket expenses and any other reasonable expenses incurred in the proper performance of their duties. | | **Purpose and link to strategy** | Directors' fees are set to: • be sufficient to attract and retain individuals of a high calibre with suitable knowledge and experience to promote the long-term success of the Company; • reflect the time spent by the Directors working on the Company's behalf and representing the Company; • reflect the responsibilities borne by the Directors; • recognise the greater time commitment and responsibility required for the positions of Chairman of the Board and the Chairman of the Audit & Risk Committee through appropriate fee supplements for each role. | | **Operation** | Fees payable to the Directors will be reviewed annually. A number of factors will be considered to ensure that the fees are set at an appropriate level. These will include the average rate of inflation during the period since the last fee increase, the level of Directors' remuneration for other Investment Companies of a similar size and complexity of the Directors' responsibilities. | | **Maximum** | The total remuneration paid to the non-executive Directors is subject to an annual aggregate limit of $180,000 in accordance with the Company's Articles of Association, following approval by shareholders at the AGM in 2020. Any further changes to this limit will require Shareholder approval by ordinary resolution. | The Company has no employees to consult in drawing up the policy. There are no performance related elements to the Directors' fees and the Company have no Executive Directors. To ensure fees are set at an appropriate level, the Company Secretary provides a comparison of the Directors' remuneration with other investment trusts of a similar size and/or mandate, as well as taking into account any data published by the Association of Investment Companies. This comparison, together with consideration of any alteration in non-executive Directors' responsibilities, is used to review whether any change in remuneration is necessary. The review of fees is performed on an annual basis. 33 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Directors' Remuneration Report continued | Remuneration | Fees per annum US$ | | --- | --- | | Director of the Board | 30,000 | | Additional fee for the Chairman of the Board | 1,000* | | Additional fee for the Chairman of the Audit & Risk Committee | 5,000 | | Additional fee for the members of the Audit & Risk Committee | 1,000 | * On 6 October 2023 John Birch was appointed as Co-Chairman of the Board. Following a review in September 2022, the Committee agreed that the Directors' fee would not increase for the year ending 30 June 2023. Any remuneration arrangements for new directors will be determined by the Committee in accordance with the Remuneration Policy, and would also be expected to mirror the above fee structure. The additional fees shown in the table above paid to the Chairman of the Board (albeit Mr Gabelli waived his fee) and the Chairman and members of the Audit & Risk Committee during the year ended 30 June 2023 will also remain unchanged for the year ending 30 June 2024. ## Consideration of Shareholders' Views Shareholders' approval for the remuneration report and the Company's Remuneration Policy will be sought at the 2023 AGM. Shareholders will have the opportunity to express their views and raise any queries on the policy either at or in advance of this meeting. At the previous AGM held on 30 November 2022, the Director's Remuneration Report received 100% votes in favour of the resolution. Details of voting on the Remuneration Report and the Remuneration Policy at the 2023 AGM will be released via RNS announcement following the meeting and will be provided in the annual report for the year ending 30 June 2024. ## Director's Remuneration Implementation Report (audited) ### Single Total Figure of Remuneration The single total remuneration figure for each Director who served during the year to 30 June 2023 is set out below with prior year comparison. As the Company has no employees the table below sets out the total remuneration costs paid by the Company. Mr Gabelli waived the entitlement to his fees as Chairman. Mr Gabelli devotes a portion of his time employed by Gabelli to serve as Chairman of the Company. An apportionment of his remuneration on a time served basis from employment by an affiliate of the Portfolio Manager would materially equate to the fees received by the other Directors of the Company for similar qualifying services. ### Directors' notice periods and payment for loss of office Directors' appointments may be terminated without notice. In this event, the Director will only be entitled to fees accrued at the date of termination, together with reimbursement of any expenses properly incurred to that date. None of the Directors are entitled to post-employment benefits or termination benefits. No discretionary payments were made during the year to 30 June 2023. The fees paid to Directors on an annual basis during the year to 30 June 2023 are as follows: | | Year to 30 June 2023 | | | Year to 30 June 2022 | | | Year to 30 June 2021 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Fees | Total | Change over prior year % | Fees | Total | Change over prior year % | Fees | Shares^{1} | Total | Change over prior year % | | Marc Gabelli | - | - | - | - | - | - | - | - | - | - | | Marco Bianconi | 35,000 | 35,000 | - | 35,000 | 35,000 | (3.2)% | 25,000 | 11,167 | 36,167 | 24.0% | | John Birch* | 30,000 | 30,000 | - | 30,000 | 30,000 | (3.7)% | 20,000 | 11,167 | 31,167 | 29.0% | | John Newlands | 31,000 | 31,000 | - | 31,000 | 31,000 | (3.6)% | 21,000 | 11,167 | 32,167 | 21.1% | | Yuji Sugimoto | 30,000 | 30,000 | - | 30,000 | 30,000 | (3.7)% | 20,000 | 11,167 | 31,167 | 28.9% | | James Wedderburn | 31,000 | 31,000 | - | 31,000 | 31,000 | (3.6)% | 21,000 | 11,167 | 32,167 | 27.8% | | **Total** | **157,000** | **157,000** | **-** | **157,000** | **157,000** | | **107,000** | **55,835** | **162,835** | | * On 6 October 2023 John Birch was appointed as Co-Chairman of the Board. $^{1}$ Represents the fee supplement originally to be paid in shares, on a pro rata basis for the period 1 January to 30 June 2020 following shareholder approval in 2019. Owing to complexities surrounding the share issuance scheme approved at the 2019 Annual General Meeting, and following legal advice, the incremental compensation was paid in cash, in the amount of $10,000 per annum, per Director. The amount presented for the year ended 30 June 2021 includes cash payments equivalent to and in lieu of dividends that would have been paid between 1 January 2020 and 30 June 2021, in the amount of $1,167 per Director. 34 Strategic report Governance Financial statements # **Directors' Interests** The interests of the Directors (including their connected persons), who are not required to purchase shares, in the Company's share capital are as follows: | Directors | Ordinary shares of $0.01 | | | --- | --- | --- | | | As at 30 June 2023 | As at 30 June 2022 | | Marc Gabelli | 20,100 | 20,100 | | Marco Bianconi | 1,200 | 1,200 | | John Birch | 1,000 | 1,000 | | John Newlands | - | - | | Yuji Sugimoto | - | - | | James Wedderburn | 1,500 | 1,500 | | **Total** | **23,800** | **23,800** | None of the Directors has been granted, or exercised, any options or rights to subscribe for the Ordinary Shares of the Company. # **Company Performance** A graph showing the Company's NAV performance measured by total shareholder return compared with the Credit Suisse Merger Arb Liquid Index, the S&P Merger Arb Index, the 13 week US Treasury Bills, and the IQ Merger Arbitrage ETF (MNA), since launch, can be found on page 13. # **Relative Importance of Spend on Pay** The table below shows the Directors' remuneration (2022: $157,000 and 2021: $162,835) in comparison with Portfolio management fees paid, dividends paid to shareholders and the Company's annual revenues. | Directors' remuneration as a % of | 2023 | | | --- | --- | --- | | | $000 | % | | Directors' remuneration | 157 | | | Dividends to Shareholders | 822 | 19.1 | | Portfolio management fees | 654 | 24.0 | | Revenues | 1,012 | 15.5 | # **Statement by the Chairman of the Board** The Directors confirm that the Directors' Remuneration Report set out above provides a fair and reasonable summary for the financial year ended 30 June 2023 of: - a) the major decisions on Directors' remuneration; - b) any substantial changes relating to Directors' remuneration made during the period; and - c) the context in which those changes occurred and the decisions which have been taken. The Directors' Remuneration Report was approved by the Board on 20 September 2023 and is signed on its behalf by: John Birch Co-Chairman 19 October 2023 Marc Gabelli Co-Chairman 35 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Statement of Directors' Responsibilities in respect of the Financial Statements We share this Report to Shareholders, encompassing the year ended 30 June 2023, and note certain developments post calendar year end. This period included several important changes for the Gabelli Merger Plus+ Trust Plc (the "Company"), which include: - NAV increase of 10.54% against a volatile market backdrop. - Fifth Anniversary Tender Offer implemented in accordance with the Loyalty Programme. The Company purchased 3,387,414 shares, resulting in 6,850,792 shares in issue at 30 June 2023 versus 10,238,206 shares in issue in July 2022. - The Company has elected continued adherence to the AIC's SORP. Although no longer a trust, the Company has elected to continue to prepare the financial statements on a basis compliant with the recommendations of the SORP. The SORP is issued by the AIC and it sets out recommendations, intended to represent current best practice, on the form and contents of the financial statements of Investment Companies. Investment Companies include investment trust companies that have been, currently are, or are directing its affairs so as to enable it to obtain or retain approval under Section 1158 of the Corporation Tax Act 2010. Although the Company no longer meets the requirements of Section 1158 of the Corporation Tax Act 2010 to be an investment trust, it continues to conduct its affairs as an investment company. - Confirmation of the Investment Policy in accordance with the original offering prospectus. - The allowance to issue Special Voting Loyalty Shares at the AGM for qualifying shareholders under the terms of the Loyalty Programme. During the year, the Company authorised the issuance of Special Voting Loyalty Shares in accordance with the terms specified in the Loyalty Programme, with Associated Capital Group Inc. agreeing to subscribe for Special Voting Loyalty Shares, which will increase its voting interest when issued, with issuance pending. Gabelli Merger Plus+ Trust Plc ("GMP") seeks to achieve long-term total return from capital appreciation and income utilizing the Gabelli Private Market Value with a Catalyst™ methodology, primarily investing in the securities of businesses undergoing some form of strategic change where there are substantial disconnects between market price and business value, and, where catalysts exist that may narrow these discounts for the benefit of shareholders. GMP objectives, operating within this highly specialised value based catalyst event driven merger arbitrage discipline, are to compound and preserve shareholder wealth over time while remaining non-correlated to the broad equity and fixed income markets. The GMP investment process begins by focusing on a company's balance sheet and underlying fundamentals, looking for changes in market positions and analyzing the company's ability to generate free cash flow relative to competition. The process continues with the calculation of corporate replacement and intrinsic values while accounting for sector wide industrial synergies in the context of profitability and growth. The manager attempts to understand what an informed industrialist would pay for a business in its entirety through a negotiated acquisition process. This element serves as the foundation in determining what is deemed a business's Private Market Value ("PMV"). Lastly, the manager builds a diversified portfolio of companies in the public market that are selling at discounts to their PMVs, with a catalyst in place to generate returns. The investment programme is global, encompassing a broad spectrum of value based special situations and event driven opportunities, with an analytical emphasis on announced merger transactions. As market price dislocations continue, it is expected this programme will include minority and also majority controlling stakes in businesses. Controlling stakes may require the management of operating businesses on behalf of the company's shareholders in an effort to deliver the company's objectives in accordance with investment policy. Over the long term GMP strives to achieve superior risk-adjusted annual returns above inflation for shareholders. On behalf of the Board of Directors, we thank investors for entrusting a portion of their assets with the Gabelli Merger Plus+ Trust ("GMP"). We appreciate your confidence in the Gabelli long-term oriented investment method. The Portfolio Manager's Review on pages 8 to 11 provides details of the important events that have occurred during the period and their impact on the financial statements. ## Company Considerations Investors should note the difference between book and accounting value. Deferred tax assets ("DTA") can be used to offset certain taxes as applicable in the United Kingdom. And as such based on a continuing level of activity the DTA are expected to be utilised over the foreseeable future resulting in the company not paying UK tax for this year. As a result of Associated Capital Group Inc.'s ownership of 90.7% of shares in issue, the Company is a consolidated subsidiary for Associated Capital Group Inc.'s financial reporting purposes. As such, activities of the Company and of Associated Capital Group Inc. could be deemed related parties for purposes of this disclosure. Investors should note that as a close company with Associated Capital Group Inc. controlling greater than 90% of shares and 95% of voting shares that Associated Capital Group Inc. may be able to ensure the passage of shareholder resolutions. ## Principal Risks and Uncertainties The principal risks and uncertainties faced by the Company fall into the following broad categories: investment portfolio; global macro events; operational; market and share price; financial; corporate governance and regulatory compliance; taxation; emerging and geopolitical risks. The global macro event category includes specific market and operational risks associated with the ongoing war in Ukraine and the aftermath of the global COVID-19 pandemic, which continue to cause uncertainty and disruption across global economies and markets. Information on each of these identified risk areas, including mitigating actions taken by the Company, was provided on pages 14 to 15 in the Strategic Report in the Company's Annual Report and Accounts for the year ended 30 June 2023. The Directors together with the Manager will continue to monitor business continuity and resilience processes with the objective of mitigating any potential for ongoing impact of COVID-19 and the conflict in Ukraine. ## Related Party Disclosure and Transactions During the financial year, other than fees payable by the Company in the ordinary course of business, there have been no material transactions with related parties which have materially affected the financial position or the performance of the Company. 36 Strategic report Governance Financial statements As a result of Associated Capital Group Inc.'s ownership in excess of 90% of shares in issue, the Company is a consolidated subsidiary for Associated Capital Group Inc.'s financial reporting purposes. As such, activities of the Company and of Associated Capital Group Inc. could be deemed related parties for purposes of this disclosure. ### Significant Events In the year ended 30 June 2023 the Company conducted and completed the Fifth Anniversary Tender Offer, as set out in the circular published on 19 August 2022, and purchased 3,387,414 shares, resulting in 6,850,792 shares in issue at 30 June 2023 versus 10,238,206 shares in issue in July 2022. The Company determined that the post tender remaining Shareholder base has resulted in the Company being deemed a close company for the purposes of taxation, and the company no longer avails itself of investment trust status. The Company is committed to delivering its investment programme for the long term and Directors, together with management are in the process of examining alternatives to minimise taxes, costs and expenses for its Shareholders. ### Going Concern The Board have closely monitored the impact of the ongoing COVID-19 pandemic, Brexit uncertainty, and the war in Ukraine. Those impacts and related continuing uncertainty have short- and potentially medium-term implications for the Company's investment strategy. Additionally, the Board is monitoring the period ahead on the basis of the Company no longer having investment trust status and its implications on the Company's investment return profile over the longer term. In context, the Board continuously monitors the Company's investment portfolio, liquidity and gearing, along with levels of market activity, to appropriately minimise and mitigate consequential risks to capital and future income such as geopolitical risks, financial risks etc. Taking these factors into account, the Directors confirm that they have a reasonable expectation that the Company will continue to operate and meet its expenses as they fall due. For these reasons, the Directors consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts as at 30 June 2023. The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation. Company Law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the financial statements, the Directors are required to: - select suitable accounting policies and then apply them consistently; - state whether applicable UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006 have been followed, subject to any material departures disclosed and explained in the financial statements; - make judgements and accounting estimates that are reasonable and prudent; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006. The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. ### Directors' confirmations The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy. In the case of each Director in office at the date the Director's Report is approved: - so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and - they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information. The annual financial report was approved by the Board on 19 October 2023 and the above responsibility statement was signed on its behalf by the Chairman. By order of the Board John Birch Co-Chairman 19 October 2023 Marc Gabelli Co-Chairman 37 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Independent auditors' report to the members of Gabelli Merger Plus® Trust Plc ## Report on the audit of the financial statements ### Opinion In our opinion, Gabelli Merger Plus® Trust plc's financial statements: - give a true and fair view of the state of the company's affairs as at 30 June 2023 and of its result and cash flows for the year then ended; - have been properly prepared in accordance with UK-adopted international accounting standards; and - have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report and Accounts (the "Annual Report"), which comprise: the Statement of Financial Position as at 30 June 2023; the Statement of Comprehensive Income, the Statement of Changes in Equity, and the Statement of Cash Flows for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit Committee. ### Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ### Independence We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC's Ethical Standard were not provided. We have provided no non-audit services to the company in the period under audit. ### Our audit approach #### Overview ##### Audit scope - The company is a standalone investment trust company and engages Gabelli Funds, LLC (the "Manager") to manage its assets. - We conducted our audit of the Financial Statements using information from State Street Global Services (the "Administrator") to whom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions. - We tailored the scope of our audit taking into account the types of investments within the company, the involvement of the third parties referred to above, the accounting processes and controls, and the industry in which the company operates. - We obtained an understanding of the control environment in place at both the Manager and the Administrator, and adopted a fully substantive testing approach using reports obtained from the administrator. ##### Key audit matters - Valuation and existence of investments. - Income from investments. - Taxation. ##### Materiality - Overall materiality: $664,931 (2022: $958,410) based on 1% of net assets. - Performance materiality: $498,698 (2022: $718,808). ##### The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. 38 Strategic report Governance Financial statements Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Taxation is a new key audit matter this year. Assessment of the appropriateness of the going concern basis of preparation of the financial statements, which was a key audit matter last year, is no longer included because of the fact that the conditions that existing in the prior year in relation to the Tender Offers and upcoming Continuation Vote have now passed and are not recurring this year. Otherwise, the key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter Valuation and existence of investments Refer to Accounting Policies, note 2 (g) and Notes to the • We assessed the accounting policy for the valuation of investments financial statements, Note 3. The company’s investments for compliance with accounting standards and the AIC SORP and have decreased to US$55m.The investment portfolio performed testing to check that investments are accounted for in at year end consisted of listed equity investments and accordance with this stated accounting policy. derivatives (contracts for difference). We focused on • We tested the valuation of the listed equity investments by agreeing the valuation and existence of investments because the prices used in the valuation to independent third party sources. investments represent the principal element of the net asset value as disclosed in the Statement of Financial • We tested the existence of the investment portfolio by agreeing Position in the financial statements. We also focused on listed equity investment holdings to an independent custodian the accounting policy for the valuation of investments confirmation. as set out in the accounting standards as incorrect • For derivatives, we tested a sample of the valuation of these application could indicate a misstatement in the investments using valuation techniques as indicated by our valuation of investments. investment specialists. • We tested existence of derivatives by using broker statements obtained through the administrator. • No material issues were identified. Income from investments Income from investments refers to dividend income • We assessed the accounting policies implemented were in and net capital gains from investments. Refer to accordance with accounting standards and the AIC SORP, and Accounting Policies, Note 2(e) and 2(g). The company’s that income has been accounted for in accordance with the stated dividend income for the year is US$1m. Realised gains accounting policy. on investments for the year is US$4.7m and unrealised • We tested the accuracy of dividend receipts by agreeing the gains on investments is US$0.7m. We focused on the dividend rates from investments to independent market data. To test accuracy, occurrence and completeness of dividend for occurrence, we confirmed that a sample of dividends recorded income, and existence of net capital gains as incomplete had occurred in the market. To test for completeness, we tested that or inaccurate income could have a material impact on the appropriate dividends had been received in the year by reference the company’s net asset value and dividend cover. to independent data of dividends declared for all listed investments We also focused on the accounting policy for income during the year. recognition and its presentation in the Statement of Comprehensive Income as set out in the requirements of • We also tested the allocation and presentation of dividend income The Association of Investment Companies Statement of between the revenue and capital return columns of the Income Recommended Practice (the “AIC SORP”) as incorrect Statement in line with the requirements set out in the AIC SORP by application could indicate a misstatement in income confirming reasons behind dividend distributions. recognition. • The gains/losses on investments held at fair value comprise realised and unrealised gains/losses. For unrealised gains and losses, we tested the valuation of the portfolio at the year end (on a sample basis for derivatives), together with testing the reconciliation of opening and closing investments. For realised gains/losses, we tested a sample of disposals by agreeing the proceeds to bank statements and we re-performed the calculation of a sample of realised gains/ losses. • No material issues were identified. ## 39 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Independent auditors’ report to the members of ### + ## Gabelli Merger Plus Trust Plc continued Key audit matter How our audit addressed the key audit matter Taxation The Company under its previous status as an Investment We have performed testing over the taxation paid by the Company Trust Company was able to benefit from a tax exemption and the effect of the loss of s1158 exemption status on the deferred under s1158 of the Corporation Tax Act (2010). However, tax asset. Additionally, as part of our testing, we have assessed the due to the significant uptake by shareholders of the 5th appropriateness of the recognition of the deferred tax asset. We have Anniversary Tender offer and resulting loss of ITC status, found no issues in relation to this testing. the Company is no longer afforded this exemption. As a result, tax considerations which the Company was previously exempt from are now due to be borne in the current period. Refer Accounting Policies, note 2 (n) and Notes to the financial statements, Note 8. How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which it operates. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. The impact of climate risk on our audit In planning our audit, we made enquiries of the Directors and Manager to understand the extent of the potential impact of climate change risk on the Company’s financial statements. In conducting our audit, we made enquiries of the Directors and Manager to understand the extent of the potential impact of the climate change risk on the Company’s financial statements. Both concluded that the impact on the measurement and disclosures within the financial statements is not material because the Company’s investment portfolio is primarily made up of Level 1 quoted securities which are valued at fair value based on market prices. We found this to be consistent with our understanding of the Company’s investment activities. We also considered the consistency of the climate change disclosures included in the Strategic Report with the financial statements and our knowledge from our audit. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: | Overall company materiality | $664,931 (2022: $958,410). | | --- | --- | | How we determined it | 1% of net assets | | Rationale for benchmark applied | We believe that net assets is the primary measure used by shareholders in assessing | the performance of the company and is a generally accepted auditing benchmark for investment trust audits. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to $498,698 (2022: $718,808) for the company financial statements. In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $33,247 (2022: $47,921) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. ## 40 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements Conclusions relating to going concern Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included: • Evaluating the Directors’ assessment of potential operational impacts of the results of the recent Tender offer and the upcoming Continuation vote, considering their consistency with other available information and our understanding of the business and assessed the potential impact on the financial statements; • Reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight of key third-party service providers; • Assessing the implications of potential significant reductions in Net Asset Value as a result of market performance on the ongoing ability of the Company to operate; • Evaluating the legally binding confirmation from the majority shareholder regarding their intention and ability to continue to support the Company; and • Assessing the impact of the loss of Investment Trust Company status and the continued operations of the Company. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company’s ability to continue as a going concern. In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Director’s Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic report and Director’s Report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Director’s Report for the year ended 30 June 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Director’s Report. ## 41 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Independent auditors’ report to the members of ### + ## Gabelli Merger Plus Trust Plc continued Directors’ Remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Corporate governance statement The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: • The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The directors’ explanation as to their assessment of the company’s prospects, the period this assessment covers and why the period is appropriate; and • The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the directors’ statement regarding the longer-term viability of the company was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the company and its environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the company’s position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit Committee. We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. Responsibilities for the financial statements and the audit Responsibilities of the directors for the financial statements As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. ## 42 Job No: 50043 Proof Event: 16 Black Line Level: 8 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements ### Auditors' responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of the Corporation Tax Act 2010, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting of inappropriate journal entries to increase income or to overstate the value of investments and increase the net asset value of the company. Audit procedures performed by the engagement team included: - Discussions with the Directors, the Manager and the Administrator, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; - Evaluation of the controls implemented by the Manager and the Administrator designed to prevent and detect irregularities; - Assessment of the company's compliance with the Corporation Tax Act 2010, including recalculation of numerical aspects of the tax expense; and - Identifying and testing journal entries, in particular a sample of journals posted as part of the financial year end close process. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report. ### Use of this report This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. ### Other required reporting #### Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: - we have not obtained all the information and explanations we require for our audit; or - adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or - certain disclosures of directors' remuneration specified by law are not made; or - the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. 43 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Independent auditors’ report to the members of Gabelli Merger Plus® Trust Plc continued ## Appointment Following the recommendation of the Audit Committee, we were appointed by the members on 1 July 2017 to audit the financial statements for the year ended 30 June 2018 and subsequent financial periods. The period of total uninterrupted engagement is 6 years, covering the years ended 30 June 2018 to 30 June 2023. **Kevin Rollo (Senior Statutory Auditor)** for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 19 October 2023 44 Strategic report Governance Financial statements # Statement of Comprehensive Income for the year ended 30 June 2023 | Income | Notes | Year ended 30 June 2023 | | | Year ended 30 June 2022 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue $000 | Capital $000 | Total $000 | Revenue $000 | Capital $000 | Total $000 | | Investment income | 5 | 1,012 | - | 1,012 | 1,076 | - | 1,076 | | **Total investment income** | | **1,012** | **-** | **1,012** | **1,076** | **-** | **1,076** | | **Gains/(losses) on investments** | | | | | | | | | Net realised and unrealised gains/(losses) on investments | 3, 13 | - | 4,707 | 4,707 | - | (460) | (460) | | Net realised and unrealised currency gains on investments | | - | 114 | 114 | - | 490 | 490 | | Net gains on investments | | - | 4,821 | 4,821 | - | 30 | 30 | | **Total income and gains on investments** | | **1,012** | **4,821** | **5,833** | **1,076** | **30** | **1,106** | | **Expenses** | | | | | | | | | Portfolio management fee | 6 | (654) | - | (654) | (842) | - | (842) | | Performance fee | 6, 14 | - | - | - | - | - | - | | Other expenses | 6 | (807) | (501) | (1,308) | (1,127) | (124) | (1,251) | | **Total expenses** | | **(1,461)** | **(501)** | **(1,962)** | **(1,969)** | **(124)** | **(2,093)** | | **Net return on ordinary activities before finance costs and taxation** | | **(449)** | **4,320** | **3,871** | **(893)** | **(94)** | **(987)** | | Interest expense and similar charges | | (26) | - | (26) | (1) | - | (1) | | **Profit/(loss) before taxation** | | **(475)** | **4,320** | **3,845** | **(894)** | **(94)** | **(988)** | | Taxation on ordinary activities | 8 | 3,471 | - | 3,471 | (49) | - | (49) | | **Profit/(loss) for the year** | | **2,996** | **4,320** | **7,316** | **(943)** | **(94)** | **(1,037)** | | **Earnings/(loss) per share (basic and diluted)** | 9 | **$0.39** | **$0.55** | **$0.94** | **($0.09)** | **($0.01)** | **($0.10)** | The total column of this statement represents the Statement of Comprehensive Income prepared in accordance with UK International Accounting Standards (UK IAS). The supplementary revenue return and capital return columns are both prepared under guidance issued by the Association of Investment Companies. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year ended 30 June 2023. The Company does not have any income or expense that is not included in net profit for the year. Accordingly, the net profit for the period is also the total comprehensive income for the year, as defined in UK IAS. The notes on pages 49 to 66 form part of these financial statements. 45 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Statement of Changes in Equity ### for the year ended 30 June 2023 Year ended 30 June 2023 | | Called up | | | Special | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share | Distributable | | Capital | Revenue | | | | | Capital | | | Reserve* | Reserve | Reserve* | | Total | | Year ended 30 June 2023 Note | | $000 | | $000 | $000 | | $000 | $000 | Balance as at 1 July 2022 103 79,062 20,965 (4,356) 95,774 Ordinary shares bought back into treasury – (32,245) – – (32,245) Profit/(loss) for the period after tax on ordinary activities – – 4,320 2,996 7,316 Dividends paid 7 – (822) – – (822) Balance as at 30 June 2023 103 45,995 25,285 (1,360) 70,023 Year ended 30 June 2022 | | Called up | | | Special | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share | Distributable | | Capital | Revenue | | | | | Capital | | | Reserve* | Reserve | Reserve* | | Total | | Year ended 30 June 2022 Note | | $000 | | $000 | $000 | | $000 | $000 | Balance as at 1 July 2021 103 83,976 21,059 (3,413) 101,725 Loss for the period after tax on ordinary activities – – (94) (943) (1,037) Dividends paid 7 – (4,914) – – (4,914) Balance as at 30 June 2022 103 79,062 20,965 (4,356) 95,774 * The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2023, the net amount of reserves that are distributable are $44,635,000 (2022: $74,706,000). ## 46 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements # Statement of Financial Position as at 30 June 2023 | | Note | As at 30 June 2023 | | As at 30 June 2022 | | | --- | --- | --- | --- | --- | --- | | | | $000 | $000 | $000 | $000 | | **Non-current assets** | | | | | | | Investments held at fair value through profit or loss | 3 | | 56,514 | | 92,381 | | **Current assets** | | | | | | | Cash and cash equivalents | 10 | 9,555 | | 5,911 | | | Receivable for investment sold | | 1,800 | | 423 | | | Other receivables | 15 | 73 | | 66 | | | Deferred tax asset | 8 | 3,530 | | - | | | | | 14,958 | | 6,400 | | | **Current liabilities** | | | | | | | Portfolio management fee payable | | (46) | | (61) | | | Payable for investment purchased | | (571) | | (1,875) | | | Other payables | 15 | (349) | | (212) | | | Bank overdrafts | | | (106) | | (391) | | **Net current assets** | | | 13,886 | | 3,861 | | **Non-current liabilities** | | | | | | | Investments at fair value through profit or loss | 3 | | (325) | | (416) | | Offering fees payable | | | (52) | | (52) | | **Net assets** | | | 70,023 | | 95,774 | | **Share capital and reserves** | | | | | | | Called-up share capital | 11 | 103 | | 103 | | | Special distributable reserve* | | 44,635 | | 79,062 | | | Capital reserve | | 25,285 | | 20,965 | | | Revenue reserve* | | (1,360) | | (4,356) | | | **Total shareholders' funds** | | | 70,023 | | 95,774 | | **Net asset value per ordinary share** | | | **$10.22** | | **$9.35** | * The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2023, the net amount of reserves that are distributable are $44,635,000 (2022: $74,706,000). Signed by: 47 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Statement of Cash Flows for the year ended 30 June 2023 | | Year ended 30 June 2023 | | Year ended 30 June 2022 | | | --- | --- | --- | --- | --- | | | $000 | $000 | $000 | $000 | | **Cash flows from operating activities** | | | | | | Profit/(loss) before tax | | 3,845 | | (988) | | **Adjustments for:** | | | | | | Gains on investments | (4,821) | | (30) | | | **Cash flows from operating activities** | | | | | | Purchases of investments^{1} | (140,570) | | (202,678) | | | Sales of investments^{1} | 178,372 | | 204,122 | | | Increase in receivables^{2} | (7) | | 81 | | | Increase/(decrease) in payables | 148 | | (2,918) | | | Foreign withholding taxes on dividends | (59) | | (49) | | | **Net cash flows from operating activities** | | **36,908** | | **(2,460)** | | **Cash flows from financing activities** | | | | | | Shares bought back for cash | (32,245) | | - | | | Dividends paid | (822) | | (4,914) | | | Interest paid | (26) | | (1) | | | **Net cash flows from financing activities** | | **(33,093)** | | **(4,915)** | | **Net increase/(decrease) in cash and cash equivalents** | | **3,815** | | **(7,375)** | | Cash and cash equivalents at the start of the period | | 5,520 | | 12,405 | | Effect of foreign exchange rates | | 114 | | 490 | | **Cash and cash equivalents at the end of the period** | | **9,449^{3}** | | **5,520** | $^{1}$ Receipts from the sale of, and payments to acquire, investment securities, have been classified as components of cash flows from operating activities because they form part of the Company's dealing operations. $^{2}$ 2022 increase/(decrease) in receivables line has been adjusted to be consistent with the classifications applied in 2023. $^{3}$ As at 30 June 2023, $3,942,151 (2022: $5,843,979) was held as collateral at UBS Securities LLC for Contracts for Difference, and was restricted. Gabelli Merger Plus® Trust Plc is registered in England and Wales under Company number 10747219. The financial statements on pages 45 to 48 were approved by the Board of Directors on 19 October 2023 and signed on its behalf by John Birch Co-Chairman 19 October 2023 Marc Gabelli Co-Chairman 48 Strategic report Governance Financial statements # Notes to the Financial Statements ## 1 General Information Gabelli Merger Plus+ Trust Plc (the “Company”) is a closed-ended public limited company incorporated in the United Kingdom on 28 April 2017 with registered number 10747219. ## 2 Accounting policies (a) **Basis of preparation** – The financial statements of Gabelli Merger Plus+ Trust Plc have been prepared in accordance with the UK adopted International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss. The principal accounting policies adopted by the Company are set out below. Where presentational guidance set out in the Statement of Recommended Practice (“SORP”) for investment trusts issued by the Association of Investment Companies (“AIC”) in October 2019 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. For the accounting period ended 30 June 2022, the Company met the requirements to be an investment trust under sections 1158 and 1159 of the Corporation Tax Act of 2010. However, as a result of the Tranche One Tender Offer completed in the third quarter of 2022, the Company subsequently became a close company due to becoming controlled by a single participator, Associated Capital Group, Inc. Although no longer a trust, the Company has elected to continue to prepare the financial statements on a basis compliant with the recommendations of the SORP. The SORP is issued by the AIC and it sets out recommendations, intended to represent current best practice, on the form and contents of the financial statements of Investment Companies. Investment Companies include investment trust companies that have been, currently are, or are directing its affairs so as to enable it to obtain or retain approval under Section 1158 of the Corporation Tax Act 2010. Although the Company no longer meets the requirements of Section 1158 of the Corporation Tax Act 2010 to be an investment trust, it continues to conduct its affairs as an investment company. Further, management of the Company also believes that consistency in presentation will be beneficial to individuals reviewing the Company’s financial statements. (b) **Presentation of Statement of Comprehensive Income** – To better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. (c) **Going concern** – The Directors, have taken account of the continuing market regulatory changes affecting investee companies, investment valuations and the war in Ukraine. Those impacts and related continuing uncertainty have short- and potentially medium-term implications for the Company’s investment strategy. Additionally, the Board is monitoring the period ahead on the basis of the Company no longer having investment trust status and its implications on the Company’s investment return profile over the longer term. In context, the Board continuously monitors the Company’s investment portfolio, liquidity, and gearing, along with levels of market activity, to appropriately minimise and mitigate consequential risks to capital and future income such as geopolitical risks and financial risks. Taking these factors into account, the Directors confirm that they have a reasonable expectation that the Company will continue to operate and meet its expenses as they fall due. For these reasons, the Directors consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts as at 30 June 2023. In forming this position, the Directors consulted with shareholders utilizing the tender offer process, considered the Company’s investment objectives, risk management policies, capital management policies and procedures, the nature of the portfolio and expenditure projections in detail. These items are discussed in more detail in the Directors’ Report on pages 19 to 24 and the Chairman’s Statement on pages 3 and 4. (d) **Statement of estimation uncertainty** – In the application of the Company’s accounting policies, the Investment Manager is required to make judgements, estimates, and assumptions about carrying values of assets and liabilities that are not always readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may vary from these estimates. There have been no significant judgements, estimates, or assumptions for the period. 49 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Notes to the Financial Statements continued 2 Accounting policies (continued) (e) Income recognition – Revenue from investments (other than special dividends), including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend, or where no ex-dividend date is quoted, when the Company’s right to receive payment is established. Franked investment income is stated net of the relevant tax credit. Other income includes any taxes deducted at source. Special dividends are credited to capital or revenue, according to the circumstances. Scrip dividends are treated as unfranked investment income; any excess in value of the shares received over the amount of the cash dividend is recognised as a capital item in the Statement of Comprehensive Income. Interest income is accounted for on an accrual basis by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. (f) Expenses – The management fees are allocated to revenue in the Statement of Comprehensive Income. Interest receivable and payable and management expenses are treated on an accruals basis. Other expenses are charged to revenue except where they directly relate to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale proceeds. Starting with the year ended 30 June 2023, transaction and finance charges related to contracts for difference are charged to capital. The formation and initial expenses of the Company are allocated to capital. (g) Investments – Investments have been designated upon initial recognition at fair value through profit or loss. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned, and are initially measured at fair value. Subsequent to initial recognition, investments are valued at fair value. Movements in the fair value of investments and gains/losses on the sale of investments are taken to the Statement of Comprehensive Income as capital items. The Company’s investments are classified as held at fair value through profit or loss in accordance with applicable International Financial Standards. Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. The Company shall offset financial assets and financial liabilities if it has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis. Financial assets and liabilities are derecognised when the Company settles its obligations relating to the instrument. Contracts for Difference (CFDs) CFDs are recognised in the Statement of Financial Position at the accumulated unrealised gain or loss as an asset or liability, respectively. This represents the difference between the nominal book cost and market value of each position held. Movements in the unrealised gains/losses are taken to the Statement of Comprehensive Income as capital items. (h) Cash and cash equivalents – The Company may invest part of its net assets in cash and cash equivalents, money market instruments, bonds, commercial papers or other debt obligations with banks or other counterparties, having at least a single-A (or equivalent) credit rating from an internationally recognised rating agency or government and other public securities, if the Portfolio Manager believes that it would be in the best interests of the Company and its shareholders. This may be the case, for example, where the Portfolio Manager believes that adverse market conditions justify a temporary defensive position. Any cash or surplus assets may also be temporarily invested in such instruments pending investment in accordance with the Company’s investment policy. Cash balances are marked to market based on the prevailing exchange rate as of the valuation date. US Treasuries are valued at their amortised cost. (i) Transaction costs – Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the Statement of Comprehensive Income. (j) Foreign currency – Foreign currencies are translated at the rates of exchange ruling on the period end date. Revenue received/ receivable and expenses paid/payable in foreign currencies are translated at the rates of exchange ruling at the transaction date. (k) Fair value – All financial assets and liabilities are recognised in the financial statements at fair value. (l) Dividends payable – Interim and final dividends are recognised in the period in which they are declared. (m) Capital reserve – Capital distributions received, realised gains or losses on investments that are readily convertible to cash, and capital expenses are transferred to the capital reserve. Share buybacks are funded through the capital reserve, with details of buybacks disclosed in note 11. ## 50 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements (n) **Taxation** – The tax effect of different items of income/gains and expenditure/losses is allocated between revenue and capital on the same basis as the particular item to which it relates, under the marginal method, using the Company's effective rate of tax. Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the period end date where transactions of events that result in an obligation to pay more or a right to pay less tax in future have occurred at the period end date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. GMP has historically been authorized as an Investment Trust under Sections 1158 and 1159 Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 (S.I.2011/2999). Following a share buy-back offer from 19 August 2022 to 22 September 2022, GMP became a close company due to becoming controlled by a single participator, Associated Capital Group Inc. This constituted a "serious" breach of the Investment Trust rules. Accordingly, GMP notified HMRC of this development in December 2022 and requested confirmation that GMP's authorization as an Investment Trust should be withdrawn from the commencement of the current accounting period (being 1 July 2022). The primary benefit associated with the Investment Trust regime is that capital gains income realized by a qualifying Investment Trust company is exempt from UK Corporation Tax. Therefore, loss of Investment Trust status for a UK company can have potentially significant consequences for its tax profile moving forwards, as it would be subject to tax on any capital gains realized thereafter at the main rate of UK Corporation Tax (currently 19%, but rising to 25% with effect from 1 April 2023). At the year ended 30 June 2023, after offset against income taxable on receipt, there was a deferred tax asset ("DTA") of $3,530,045 (2022: Unrecognised Potential DTA $2,354,232) in relation to surplus tax reliefs. After the loss of its Investment Trust Status it is now possible for GMP to utilise this DTA in order to shelter capital gains from UK Corporation Tax. In order for the DTA to remain available, GMP must maintain its investment business moving forwards. GMP's activities are such that it will have an investment business for UK tax purposes. In particular, the Investment Trust rules require that "substantially all of the business of the Investment Trust company consists of investing its funds in shares, land or other assets with the aim of spreading investment risk and giving members of the company the benefit of the results of the management of its funds". This may be considered analogous to having an investment business. Therefore, given (i) GMP previously received approval from HMRC that this requirement was met, and (ii) the activity of the company is not intended to change, GMP will continue having an investment business and will meet the conditions to carry forward and use its excess management expenses in current and future periods. As such GMP has now included the DTA in the financial statements. (o) **Functional and presentation currency** – The functional and presentation currency of the Company is the U.S. dollar. 51 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Notes to the Financial Statements continued 3 Investments at fair value through profit or loss The financial assets measured at fair value through profit or loss in the financial statements are grouped into the fair value hierarchy as follows: As at 30 June 2023 Level 1 Level 2 Level 3 Total $000 $000 $000 $000 Financial assets at fair value through profit or loss Equities 55,219 903 – 56,122 Contingent value rights – 257 – 257 Derivatives – 135 – 135 Gross fair value 56,514 Derivatives – (326) – (326) Net fair value 55,219 969 – 56,188 As at 30 June 2022 Level 1 Level 2 Level 3 Total $000 $000 $000 $000 Financial assets at fair value through profit or loss Quoted equities 89,577 1,782 – 91,359 Contingent value rights – 132 5 137 Derivatives – 885 – 885 Gross fair value 92,381 Derivatives – (416) – (416) Net fair value 89,577 2,383 5 91,965 Analysis of changes in market value and book cost of portfolio investments in year | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Opening book cost 99,687 93,078 Opening investment holding losses (7,722) (1,461) Opening market value 91,965 91,617 Additions at cost 139,266 202,731 Disposals proceeds received (179,749) (201,923) Gains/(losses) on investments 4,707 (460) Market value of investments 56,189 91,965 Closing book cost 63,218 99,687 Closing investment holding losses (7,029) (7,722) Closing market value 56,189 91,965 The company received $179,749,000 (2022: $201,923,000) from investments sold in the year. The book cost of these investments when they were purchased was $175,735,000 (2022: $196,122,000). Further explanation of the disposal proceeds received in the year can be found in the Net realised and unrealised gains/(losses) on investments section on page 53. ## 52 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements Fair value hierarchy IFRS 13 requires the Company to classify its financial instruments held at fair value using a hierarchy that reflects the significance of the inputs used in the valuation methodologies. These are as follows: • Level 1 - quoted prices in active markets for identical investments; • Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments, credit risk, etc.); and • Level 3 - significant unobservable inputs. Valuation process and techniques for Level 3 valuations The investments in contingent value rights are reviewed regularly to ensure that the initial classification remains correct given each asset’s characteristics and the Company’s investment policies. The contingent value rights are initially recognised using the transaction price as the best evidence of fair value at acquisition, and are subsequently measured at fair value. At 30 June 2023, the quantitative inputs used to value the level 3 contingent value rights were the last sale price and the merger price for each. Level 2 financial assets at fair value through profit or loss The investments in contracts for difference are marked at the price of the underlying equity. Contingent value rights in Level 2 are marked using broker quotes. Level 3 financial assets at fair value through profit or loss | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Opening valuation 5 – Assets acquired during the year – – Assets disposed during the year (5) – Total profit or loss included in net profit on investments in the Statement of Comprehensive Income – 5 Closing valuation – 5 Net realised gains/(losses) and unrealised gains/(losses) on investments | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Realised gains on investments 4,014 5,801 Movement in unrealised on investments 693 (6,261) Net realised gains/(losses) and unrealised gains/(losses) on investments 4,707 (460) 4 Transactions costs During the year commissions and other expenses were incurred in acquiring within gains in the Statement of Comprehensive Income. The total costs were as follows: | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Purchases 54 68 Sales 34 33 Total 88 101 ## 53 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Notes to the Financial Statements continued 5 Income | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Income from investments Overseas equities 423 530 1 Income on short-term investments 387 3 Other income 202 543 Total income 1,012 1,076 1 Income on short-term investments represents the return on cash and cash equivalents, primarily U.S. Treasury Bills. Further information can be found in Note 10 on page 57. 6 Expenses | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Revenue expenses Portfolio Management Fee (654) (842) Directors’ Remuneration (157) (157) 1 Audit Fees – PwC (145) (70) 2 Legal Fees (122) (110) 2 Company Secretary Fees (100) (94) Administration Fees – State Street (55) (44) Custodian/Depositary Fees – State Street (52) (42) Former AIFM – Carne (51) (60) Other (34) (17) Printing (28) (4) Registrar – Computershare (18) (33) Regulatory Filing Fees – AIFMD (14) (13) Directors’ Expenses (11) (13) Ongoing LSE and UKLA Fees (10) (15) LSE RNS fees (10) (14) Contracts for Difference – (429) Dividend Expense on Securities Sold Short – (8) Marketing expenses – (4) Total revenue expenses (1,461) (1,969) Capital expenses 3 Contracts for Difference (317) – Transaction costs on derivatives (92) (73) Transaction Charges – State Street (92) (51) Total capital expenses (501) (124) 1 Audit fees for the year ended 30 June 2023 include $34,808 related to the prior fiscal year. 2 Legal Fees and Company Secretary Fees include approximately $39,000 and $4,000 of tender offer related fees that will not recur. 3 Beginning with the year ended 30 June 2023 expenses related to Contracts for Difference are treated as capital expenses. In prior years these expenses were treated as revenue expenses. ## 54 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements Portfolio Management Fee Under the terms of the Portfolio Management Agreement, the Portfolio Manager will be entitled to a management fee (“Management Fee”), together with reimbursement of reasonable expenses incurred by it in the performance of its duties under the Portfolio Management Agreement, other than the salaries of its employees and general overhead expenses attributable to the provision of the services under the Portfolio Management Agreement. The Management Fee shall be accrued daily and calculated on each Business Day at a rate equivalent to 0.85% of NAV per annum. AIFM fees The Company previously appointed Carne Global Fund Managers (Ireland) Limited (“Carne”) as its former Alternative Investment Fund Manager pursuant to the AIFMD. Carne is entitled to receive from the Company such annual fees, accrued and payable at such times, as may be agreed in writing between itself and the Company from time to time. The fees are payable monthly and subject to a minimum monthly fee of ¤2,500. The Company appointed Gabelli Funds, LLC to serve as AIFM effective 14 February 2023. Gabelli Funds, LLC does not earn a fee for its role as AIFM; it earned $653,934 in portfolio management fees during the year ended 30 June 2023 (2022: $841,642). 7 Equity dividends | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Dividends paid 822 4,914 During the year ended 30 June 2023 dividends paid per share totaled $0.12 (30 June 2022: $0.48 per share). More detailed information can also be found in the Dividend History table on page 13. 8 Taxation on ordinary activities Deferred Tax Assets At 30 June 2023 the Company has excess expenses of $7,284,611 carried forward. This sum, which is net of the amount set against current period provides, had arisen due to the cumulative deductible expenses having exceeded taxable income over the life of the Company when it was authorized as an Investment Trust for tax purposes. Now that it is no longer a trust and therefore subject to capital gains tax, the Company believes it is more likely than not that it will have sufficient taxable profits against which these expenses can be offset. Therefore, a deferred tax asset of $1,821,153 has now been recognized. Provided the Company continues to maintain its current investment profile, it is likely that this deferred tax asset will be utilised to offset future taxable income subject to the normal corporate tax loss restriction rules for carried forward losses which restrict their use for any particular period to £5 million plus 50% of profits in excess of that initial £5 million. The Company has also recognised a deferred tax asset of $1,709,699 on the unrealised losses on the value of its equity investments. At 30 June 2023 total deferred tax assets recognised was $3,530,045, or $0.52 per Ordinary Share. Year ended 30 June 2023 Revenue Capital Total Analysis of the charge in the year $000 $000 $000 Deferred tax asset 3,530 – 3,530 Current tax expense – – – Irrecoverable overseas tax (59) – (59) Total 3,471 – 3,471 Year ended 30 June 2022 Revenue Capital Total Analysis of the charge in the year $000 $000 $000 Irrecoverable overseas tax (49) – (49) Total (49) – (49) ## 55 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Notes to the Financial Statements continued ## 8 Taxation on ordinary activities (continued) | Factors affecting the tax charge for the year | Year ended 30 June 2023 | | | | --- | --- | --- | --- | | | Revenue $000 | Capital $000 | Total $000 | | (Loss)/profit before taxation | (475) | 4,320 | 3,845 | | UK Corporation tax at effective rate of 20.5% | 97 | (886) | (789) | | **Effects of:** | | | | | Non taxable overseas dividends | - | - | - | | Losses on investments held at fair value through profit or loss | - | - | - | | Deferred tax benefit | 3,530 | - | 3,530 | | Current tax expense | - | - | - | | Irrecoverable overseas tax | (59) | - | (59) | | Expenses not deductible for tax purposes | - | - | - | | Losses on foreign currencies | - | - | - | | Movement in excess management expenses | - | - | - | | **Total** | **3,471** | **-** | **3,471** | | **Total tax charge for the year** | **3,568** | **(886)** | **2,682** | | Factors affecting the tax charge for the year | Year ended 30 June 2022 | | | | --- | --- | --- | --- | | | Revenue $000 | Capital $000 | Total $000 | | Loss before taxation | (894) | (94) | (988) | | UK Corporation tax at effective rate of 19% | 170 | 18 | 188 | | **Effects of:** | | | | | Non taxable overseas dividends | 98 | - | 98 | | Gains on investments held at fair value through profit or loss | - | (87) | (87) | | Irrecoverable overseas tax | (49) | - | (49) | | Expenses not deductible for tax purposes | (1) | (10) | (11) | | Losses on foreign currencies | - | 93 | 93 | | Movement in excess management expenses | (352) | (18) | (370) | | Movement in deferred tax rate on excess management expenses | 85 | 4 | 89 | | **Total** | **(219)** | **(18)** | **(237)** | | **Total tax charge for the year** | **(49)** | **-** | **(49)** | At the year end after offset against income taxable on receipt, there is a deferred tax asset of $3,530,281 (2022: Unrecognised Potential DTA $2,354,232) in relation to surplus tax reliefs. Note: the difference between book and accounting value. Deferred tax assets ("DTA") can be used to offset certain taxes as applicable in the United Kingdom. As such based on a continuing level of activity the Company's DTA are expected to be utilised over the foreseeable future resulting in the company not paying UK tax for this year. 56 Strategic report Governance Financial statements 9 Earnings per share Earnings per ordinary share is calculated with reference to the following amounts: Year ended Year ended 30 June 2023 30 June 2022 Revenue return Revenue return attributable to ordinary shareholders ($000) 2,996 (943) Weighted average number of shares in issue during year 7,797,333 10,238,206 Total revenue return per ordinary share $0.39 ($0.09) Capital return Capital return attributable to ordinary shareholders ($000) 4,320 (94) Weighted average number of shares in issue during year 7,797,333 10,238,206 Total capital return per ordinary share $0.55 ($0.01) Total return per ordinary share $0.94 ($0.10) As at As at Net asset value per share 30 June 2023 30 June 2022 Net assets attributable to shareholders ($000) 70,023 95,774 Number of shares in issue at year end 6,850,792 10,238,206 Net asset value per share $10.22 $9.35 The Company continues to report according to SORP standards as provided by the AIC. As such, the net asset value per share is provided in accordance with IFRS standards inclusive of the Deferred Tax Asset of $0.52 per share, or $3.53 million, as a result of the Company having Close status and no longer availing itself of Section Investment Trust status under Section 1158 of the Corporation Tax Act 2010. Furthermore, net asset value cum-income, which includes the Revenue Reserves, is for illustrative purposes. 10 Cash and cash equivalents | | As at | | As at | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Cash 6,090 5,911 U.S. Treasuries 3,465 – Total 9,555 5,911 The Board and Investment Manager oversee investments held in cash and cash equivalents in accordance with the Investment Policy. ## 57 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Notes to the Financial Statements continued 11 Called up share capital | | As at | | As at | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Allotted, called up and fully paid: 6,850,792 (2022: 10,238,206) Ordinary shares of $ 0.01 each – equity 68 102 Treasury shares: 3,483,374 (2022: 95,960) Ordinary shares of $ 0.01 each – equity 35 1 Total shares 103 103 In September 2022, concurrent with the Fifth Anniversary Tender Offer, the Board of Directors of the Company were authorised to allot Ordinary Shares of the Company up to an aggregate nominal value of $511,910.30, with such authority to expire on the fifth anniversary of the date of the passing of the resolution. In addition, at the November 2022 AGM, the Board of Directors was authorised to allot relevant securities in the Company up to a maximum aggregate nominal amount of $71,822 (being ten percent of the total number of voting rights of the Company at the latest practicable date prior to the publication of the Notice of AGM), with such authority to apply until the conclusion of this year’s AGM. The resolutions for the 2023 AGM include authorisation to the Company to allot equity securities up to an aggregate nominal value of $45,672, that can be utilised for acquisitions by the company. These transactions may result in the acquisition of other operating businesses to further expand and develop shareholder value in accordance with the investment programme. 12 Financial risk management The Company’s financial instruments comprise securities and other investments, cash balances, receivables, and payables that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and receivables for accrued income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures, and options, for the purpose of managing currency and market risks arising from the Company’s activities. The main risks the Company faces from its financial instruments are (i) market price risk (comprising interest rate risk, currency risk, and other price risk), (ii) liquidity risk, and (iii) credit risk. The Board regularly reviews, and agrees upon, policies for managing each of these risks. The Portfolio Manager’s policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short term receivables and payables, other than for currency disclosures. (i) Market price risk The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – interest rate risk, currency risk, and other price risk. Interest rate risk Interest rate movements may affect the level of income receivable and payable on cash deposits. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions. ## 58 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements Interest risk profile The interest rate risk profile of the portfolio of financial assets and liabilities at the year-end date was as follows: As at 30 June 2023 | Interest | | Local | Foreign | | US Dollar | | | --- | --- | --- | --- | --- | --- | --- | | | rate | currency | exchange | | equivalent | | | | % | 000 | | rate | | $000 | Assets: US dollar 1.52 9,469 1.00 9,469 Australian dollar 0.42 (53) 1.50 (35) Canadian dollar 0.48 99 1.32 75 Danish krone 0.00 (1) 6.82 – Euro currency 0.60 (5) 0.92 (6) GBP Sterling 0.51 (44) 0.79 (56) Hong Kong dollar 0.00 1 7.84 * New Zealand dollar 0.15 3 1.63 2 Total 9,449 * Less than $500. As at 30 June 2022 | Interest | | Local | Foreign | | US Dollar | | | --- | --- | --- | --- | --- | --- | --- | | | rate | currency | exchange | | equivalent | | | | % | 000 | | rate | | $000 | Assets: US dollar 0.24 5,585 1.00 5,585 Australian dollar 0.12 (48) 1.45 (33) Canadian dollar 0.15 15 1.29 12 Euro currency (0.75) (8) 0.96 (8) GBP Sterling 0.12 (24) 0.82 (29) Hong Kong dollar 0.00 1 7.85 * New Zealand dollar 0.10 5 1.61 3 Norwegian krone 0.00 (5) 9.88 (1) South African rand 0.00 (13) 16.38 (1) Swedish krona (0.75) (80) 10.25 (8) Total 5,520 * Less than $500. Interest rate sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the year-end date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. If interest rates had been 10 (2022: 10) basis points higher or lower and all other variables were held constant, the Company’s profit or loss for the reporting year to 30 June 2023 would increase/decrease by $9,000 (2022: $6,000). This is mainly attributable to the Company’s exposure to interest rates on its floating rate cash balances. Currency risk The Company’s investment portfolio is invested predominantly in foreign securities and the year end can be significantly affected by movements in foreign exchange rates. It is not the Company’s policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investments with foreign currency borrowings. The revenue account is subject to currency fluctuation arising from overseas income. ## 59 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Notes to the Financial Statements continued 12 Financial risk management (continued) Currency risk exposure by currency of denomination: As at 30 June 2023 | | Net | Net monetary | | Total currency | | | | --- | --- | --- | --- | --- | --- | --- | | Investments | | | assets | | exposure | | | | $000 | | $000 | | | $000 | Australian dollar 226 465 691 Canadian dollar 1,645 (1,664) (19) Danish krone – (7) (7) Euro currency – (30) (30) GBP Sterling 371 1,208 1,579 Hong Kong dollar – (1) (1) Japanese yen – (1) (1) New Zealand dollar – 2 2 Norwegian krone – (10) (10) Polish zloty – 1 1 Swedish krona – (7) (7) Swiss franc – 6 6 Total non US Investments 2,242 (38) 2,204 US dollar 57,602 10,217 67,819 Total 59,844 10,179 70,023 As at 30 June 2022 | | Net | Net monetary | | Total currency | | | | --- | --- | --- | --- | --- | --- | --- | | Investments | | | assets | | exposure | | | | $000 | | $000 | | | $000 | Australian dollar – (55) (55) Canadian dollar 5,295 (5,222) 73 Euro currency 98 (55) 43 GBP Sterling 937 (805) 132 Hong Kong dollar – 2 2 New Zealand dollar – 3 3 South African rand – (7) (7) Swedish krona – 108 108 Swiss franc 2,442 – 2,442 Total non US Investments 8,772 (6,031) 2,741 US dollar 82,724 10,309 93,033 Total 91,496 4,278 95,774 ## 60 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements Currency sensitivity The following table details the Company’s sensitivity to a 10% increase and decrease in US dollars against the relevant foreign currencies and the resultant impact that any such increase or decrease would have on net return before tax and equity shareholders’ funds. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates. | | As at | | As at | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Australian dollar 69 (6) Canadian dollar (2) 8 Danish krone (1) – Euro currency (3) 5 GBP Sterling 158 13 Norwegian krone (1) – South African rand – (1) Swedish krona (1) 11 Swiss franc 1 244 The relevant US dollar exchange rates as at 30 June 2023 were: Australian dollar (1: 1.5023); Canadian dollar (1: 1.3233); Danish krone (1: 0.9166); Euro currency (1: 6.8249); GBP Sterling (1: 0.7866); Norwegian krone (1: 10.7136); Swedish krona (1: 10.8013); Swiss franc (1: 0.8947). Other price risk Other price risks, i.e., changes in market prices other than those arising from interest rate or currency risk, may affect the value of the quoted investments. The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on a recognised stock exchange. Other price risk sensitivity If market prices at the year-end date had been 15% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders for the year ended 30 June 2023 would have increased/decreased by $8,428,000. The calculations are based on the portfolio valuations as at the year-end date, and are not representative of the year as a whole. (ii) Liquidity risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. All creditors are payable within 3 months. Liquidity risk is not considered to be significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. (iii) Credit risk This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss. The table below shows the counterparty risk as at the Balance Sheet date: Derivative exposure: CFDs Collateral posted Net exposure $000 $000 $000 Counterparty UBS Securities, LLC 191 (4,053) (3,862) Total 191 (4,053) (3,862) Net exposure represents the mark-to-market value of derivative contracts less any cash collateral held. Negative exposure represents the Fund’s exposure to that counterparty. Positive amounts are not an exposure to the Fund. ## 61 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Notes to the Financial Statements continued 12 Financial risk management (continued) The risk is managed as follows: • Investment transactions are carried out mainly with brokers whose credit ratings are reviewed periodically by the Portfolio Manager. • Most transactions are made delivery versus payment on recognised exchanges. • Cash is held at State Street Bank and Trust which has a credit rating by Standard and Poor’s on short-term deposits of A-1+ and long-term deposits AA-. The maximum credit risk exposure as at 30 June 2023 was $14,958,000 (2022: $6,400,000). This was due to cash and receivables as per note (10) ‘Cash & cash equivalents’, note (15) ‘Total other receivables’ and Statement of Financial Position Receivable for investment sold. Capital management policies and procedures The Company’s capital management objectives are: • to ensure that the Company will be able to continue as a going concern; and • to maximise the revenue and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. The Board considers the Company’s capital requirements in the context of both the Special Distributable and Revenue reserves being treated as distributable, as permitted by current accounting standards for listed investment companies. The distributable reserves can be used to fund dividends and share repurchase programmes. This review includes the nature and planned level of gearing, which takes account of the Portfolio Manager’s views on the market and the extent to which revenue in excess of that which is required to be distributed under the investment trust rules should be retained. The analysis of shareholders’ funds is as follows: | | As at | | As at | | --- | --- | --- | --- | | 30 June 2023 | | 30 June 2022 | | | | $000 | | $000 | Called-up share capital 103 103 1 Special distributable reserve (45,995) 79,062 Capital reserve 25,602 20,965 Revenue reserve* (1,677) (4,356) Total shareholders' funds 70,023 95,774 1 The Revenue Reserve and Special Distributable Reserve are distributable. The amount of the Revenue Reserve and Special Distributable Reserve that is distributable is not necessarily the full amount of the reserves as disclosed within these financial statements. As at 30 June 2023, the net amount of reserves that are distributable are $45,995,000 (2022: $74,706,000). Alternative Investment Fund Managers’ (‘AIFM’) Directive In accordance with the Alternative Investment Fund Managers’ Directive (“AIFMD”), the Company has appointed Gabelli Funds, LLC as its Alternative Investment Fund Manager (the “AIFM”), effective 14 February 2023, to provide portfolio management and risk management services to the Company in accordance with the investment management agreement. Leverage Leverage is calculated using two methods: i) Gross method and ii) Commitment method. For further details please see the Glossary on page 69. The Company’s maximum leverage levels at 30 June 2023 are shown below: Gross Commitment Leverage Exposure method method Maximum permitted limit 500% 250% Actual 115% 131% The leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted in the Company’s Articles of Association. The AIFM is also required to comply with the gearing parameters set by the Board in relation to borrowings. ## 62 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements ### 13 Derivatives risk The Company's investment policy may involve the use of derivatives (including, without limitation, forward foreign exchange contracts, equity contracts for difference swap agreements ("CFDs"), securities sold short and/or structured financial instruments). The Company may use both exchange-traded and over-the-counter derivatives as part of its investment activity. The cost of investing utilising derivatives may be higher than investing in securities (whether directly or through nominees) as the Company will have to bear the additional costs of purchasing and holding such derivatives, which could have a material adverse effect on the Company's returns. The low initial margin deposits normally required to establish a position in such instruments permit a high degree of leverage. As a result, depending on the type of instrument, a relatively small movement in the price of a contract may result in a profit or a loss which is high in proportion to the amount of funds actually placed as initial margin and may result in unquantifiable further losses exceeding any margin deposited. In addition, daily limits on price fluctuations and speculative position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses. The use of derivatives may expose the Company to a higher degree of risk. These risks may include credit risk with regard to counterparties with whom the Company trades, the risk of settlement default, lack of liquidity of the derivative, imperfect tracking between the change in value of the derivative and the change in value of the underlying asset that the Company is seeking to track and greater transaction costs than investing in the underlying assets directly. Additional risks associated with investing in derivatives may include a counterparty breaching its obligations to provide collateral, or, due to operational issues (such as time gaps between the calculation of risk exposure to a counterparty's provision of additional collateral or substitutions of collateral or the sale of collateral in the event of a default by a counterparty), there may be instances where credit exposure to its counterparty under a derivative contract is not fully collateralised. The use of derivatives may also expose the Company to legal risk, which is the risk of loss due to the unexpected application of a law or regulation, or because a court declares a contract not legally enforceable. The use of CFDs is a highly specialised activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In a CFD, a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. Depending on the general state of short-term interest rates and the returns on the Company's portfolio securities at the time a CFD transaction reaches its scheduled termination date, there is a risk that the Company will not be able to obtain a replacement transaction or that terms of the replacement will not be as favourable as on the expiring transaction. At 30 June 2023 the Company held CFDs, as shown in the following table. | Security name | Trade currency | Shares (000) | Nominal ($000) | As at 30 June 2023 Unrealised gain/(loss) $000 | | --- | --- | --- | --- | --- | | ADVA Optical Networking SE | USD | 1 | 30 | 1 | | Allfunds Group plc | EUR | 4 | 30 | (4) | | Alliance Aviation Service | AUD | 60 | 111 | 7 | | Arlington Asset Investment Corp | USD | 34 | 151 | 7 | | Black Knight Inc | USD | 3 | 188 | 10 | | Broadcom Inc | USD | (1) | (1,054) | (20) | | Brookfield Infrastructure Partners | USD | (2) | (117) | 4 | | Chevron Corp | USD | (3) | (436) | 1 | | Chr. Hansen A/S | DKK | 6 | 406 | (28) | | Curtis Banks Group plc | GBP | 16 | 64 | ** | | Dechra Pharmaceuticals plc | GBP | 34 | 1,546 | 15 | | Disruptive Capital GP | GBP | 1 | 8 | (8) | | Egetis Therapeutics AB | SEK | 68 | 34 | (7) | | Ellington Financial Inc | USD | (13) | (172) | (3) | | Emis Group plc | GBP | 20 | 336 | 1 | | Entain plc | GBP | 25 | 387 | 18 | | Essential Metals Ltd | AUD | 248 | 74 | (4) | | Extra Space Storage Inc | USD | (2) | (286) | (6) | | Fox Corp | USD | (3) | (115) | (2) | 63 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Notes to the Financial Statements continued ## 13 Derivatives risk (continued) | Security name | Trade currency | Shares (000) | Nominal ($000) | As at 30 June 2023 Unrealised gain/(loss) $000 | | --- | --- | --- | --- | --- | | Genkyotex SA | EUR | 7 | ** | ** | | Globus Medical Inc | USD | (15) | (850) | (48) | | Grifols SA | USD | (12) | (149) | (11) | | Heico Corp | USD | (2) | (369) | (27) | | Intercontinental Exchange Inc | USD | * | (41) | (2) | | Iveco Group NV | EUR | 3 | 27 | 2 | | John Wood Group plc | GBP | 23 | 38 | 1 | | Lennar Corp | USD | (9) | (1,000) | (80) | | Link Admin | AUD | 20 | 27 | (3) | | Livent Corp | USD | (7) | (204) | ** | | Lookers plc | GBP | 274 | 409 | 3 | | Magellan Midstream Partners | USD | 6 | 338 | 17 | | Majorel Group Luxembourg SA | EUR | 26 | 808 | (4) | | Maxlinear Inc | USD | (1) | (34) | (1) | | Meltwater Holding NV | NOK | 113 | 201 | (10) | | Network International Holdings plc | GBP | 254 | 1,227 | 1 | | Newcrest Mining Ltd | USD | 37 | 666 | (9) | | Newmont Corp | USD | (13) | (551) | ** | | Novozymes A/S | DKK | (8) | (413) | 25 | | Numis Corporation plc | GBP | 35 | 147 | ** | | ONEOK Inc | USD | (4) | (229) | (5) | | Orange Belgium SA | EUR | 5 | 81 | (3) | | Ordina NV | EUR | 34 | 210 | 1 | | Origin Energy Ltd | AUD | 248 | 1,416 | (2) | | PDC Energy Inc | USD | 5 | 324 | (3) | | PEXA Group Ltd | AUD | 3 | 24 | 1 | | Praemium Ltd | AUD | 121 | 49 | 6 | | Ramsay Health Care Ltd | AUD | 1 | 24 | (1) | | Randall & Quilter Investment Holdings Ltd | GBP | 32 | 18 | 3 | | Regency Centers Corp | USD | (5) | (301) | (6) | | Rovio Entertainment Oyj | EUR | 108 | 1,065 | (4) | | Siltronic AG | EUR | 2 | 183 | (19) | | SimCorp A/S | DKK | 9 | 949 | (3) | | Softwareone Holding AG | CHF | 1 | 25 | ** | | SOHO China Ltd | HKD | 437 | 66 | (1) | | Spear Investment Group | EUR | 39 | 9 | ** | | Spire Healthcare plc | GBP | 29 | 78 | 1 | | STS Holding SA | PLN | 25 | 145 | 1 | | Telecom Italia | EUR | 285 | 76 | 4 | | Telenet Group Holding NV | EUR | 21 | 467 | 3 | 64 Strategic report Governance Financial statements As at 30 June 2023 Unrealised Trade Shares Nominal gain/(loss) Security name currency (000) ($000) $000 Toshiba Corp JPY 28 914 (1) Vivendi SE EUR 4 34 1 Total unrealised loss on derivatives (191) * Fewer than 500 shares. ** Less than $500. 14 Performance fee Subject to the satisfaction of the Performance Conditions, the Portfolio Manager shall be entitled under the Portfolio Management Agreement, in respect of each Performance Period, to receive 20% of the Total Return relating to such Performance Period, provided that such amount shall not exceed 3% of the Average NAV. Performance Conditions The Portfolio Manager’s entitlement to a Performance fee in respect of any Performance Period shall be conditional on the Closing NAV per Share in respect of the Performance Period (adjusted for any changes to the NAV per Share through dividend payments, Share repurchases (howsoever effected) and Share issuances since Admission) being in excess of the Performance Hurdle and High Water Mark. The Performance Hurdle is equal to the Starting NAV per Share increased by two times the rate of return on 13 week Treasury Bills published by the US Department of the Treasury over the Performance Period, less the Starting NAV per Share; multiplied by the weighted average of the number of Shares in issue (excluding any Shares held in treasury) at the end of each day during the Performance Period. For the year ended 30 June 2023, no Performance fee was paid. As at 30 June 2023, no amount was outstanding to the Portfolio Manager in respect of the performance fee, reflecting the performance period matching the Company’s financial year (2022: $nil). 15 Other Assets and Liabilities The categories of other receivables and other payables include: | As at 30 June | | As at 30 June | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | $000 | | $000 | Other receivables FX currency purchased 3 – FX currency sold – 12 All other receivables* 70 54 Total other receivables 73 66 Other payables FX currency sold 6 – Custodian fees 15 7 Accounting fees 26 17 Audit fees 86 70 All other payables 216 118 Total other payables 349 212 * As at 30 June 2023, all other receivables included prepaid expenses and dividend and swap income. ## 65 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Notes to the Financial Statements continued 16 Related party disclosure: Directors Each of the Directors is entitled to receive a fee from the Company at such rate as may be determined in accordance with the Articles of Incorporation. The Directors' remuneration is $30,000 per annum for each Director, other than: • the Chairman, who will receive an additional $1,000 per annum *; • the Chairman of the Audit & Risk Committee, who will receive an additional $5,000 per annum; and • the Members of the Audit & Risk Committee, who will receive an additional $1,000 per annum. Each of the Directors is also entitled to be paid all reasonable expenses properly incurred by them in connection with the performance of their duties. These expenses will include those associated with attending general meetings, Board or committee meetings and legal fees. The Board may determine that additional remuneration may be paid, from time to time, to any one or more Directors in the event such Director or Directors are requested by the Board to perform extra or special services on behalf of the Company. Carne Global Fund Managers (Ireland) Limited, was considered a related party to the Company as it was considered to have significant influence over the Company while in its role as AIFM. During the financial year ended 30 June 2023, Carne earned fees of US$39,926, of which US$12,708 was payable at year end. Carne Global Financial Services Limited, the parent Company of the AIFM, earned fees amounting to US$12,173 during the financial year ended 30 June 2023 in respect of other fund governance services to the Company, of which US$5,458 was payable at year end. The related party transactions with the Directors are set out on pages 36 and 37 and on page 22. Related parties disclosure: other The Portfolio management fee for the period ended 30 June 2023 paid by the Company to the Portfolio Manager is presented in the Statement of Comprehensive Income. Details of the Portfolio Management fee paid during the period is disclosed in Note 6. Details of Performance fee paid during the year are disclosed in Note 14. As at 30 June 2023, Associated Capital Group Inc., an affiliate of the AIFM and Portfolio Manager, held 6,210,619 Ordinary Shares in the Company. Associated Capital Group Inc. also agreed to subscribe for Special Voting Loyalty Shares, which will increase its voting interest when issued, with issuance pending. Investors should note that as a close company with Associated Capital Group Inc. controlling greater than 90% of shares and greater than 90% of voting shares Associated Capital Group Inc. may be able to ensure the passage of shareholder resolutions. Further details of related parties and transactions, including with the Company's AIFM Gabelli Funds, LLC, are disclosed in the Directors' Report on page 22. Connected party transactions All connected party transactions are carried out at arm's length. There were no such transactions during the year ended 30 June 2023. 17 Contingent Liabilities and Commitments As at 30 June 2023, the Company had no contingent liabilities or commitments (30 June 2022: nil). 18 Historical Share and NAV information | | 30 June 2023 | 30 June 2022 | 30 June 2021 | | --- | --- | --- | --- | | Total Shares^{1} | 6,850,792 | 10,238,206 | 10,238,206 | | Total NAV ($000) | 70,023 | 95,774 | 101,725 | | NAV per share | $10.22 | $9.35 | $9.94 | $^{1}$ Data excludes 3,484,374 shares held in treasury as of 30 June 2023. * Mr Gabelli has waived his fees since appointment as Chairman. 19 Significant events Events arising in Ukraine, as a result of military action being undertaken by Russia, may impact on securities directly or indirectly related to companies domiciled in Russia and/or listed on exchanges located in Russia ("Russian Securities"). As at 30 June 2023, the Company did not have direct exposure to Russian securities. The Directors are monitoring developments related to this military action, including economic sanctions and actions of foreign governments. The Company appointed Gabelli Funds, LLC to serve as AIFM effective 14 February 2023. 20 Post balance sheet events The Company paid the first interim dividend for the fiscal year ended 30 June 2023 on 8 September 2023. On 5 October 2023 the Company named John Birch as non-executive Co-Chairman. 66 Strategic report Governance Financial statements # Regulatory Disclosures ## Information to be disclosed in accordance with Listing Rule 9.8.4 The disclosures below are made in compliance with the requirements of Listing Rule 9.8.4. 9.8.4 (1) The Company has not capitalised any interest in the year under review. 9.8.4 (2) The Company has not published any unaudited financial information in a class 1 circular or prospectus or any profit forecast or profit estimate. 9.8.4 (4) The Company does not have any long term incentive schemes in operation. 9.8.4 (5) and (6) The Chairman Mr Gabelli has waived or agreed to waive any current or future emoluments from the Company. 9.8.4 (7) During the year to 30 June 2023, the Company has not issued shares. 9.8.4 (8) and 9.8.4 (9) are not applicable. 9.8.4 (10) As President of the Portfolio Manager's parent company, GGCP, and an employee of the Portfolio Manager, Mr Gabelli is/ was deemed to be interested in the Company's portfolio management agreement. There were no other contracts of significance subsisting during the year under review to which the Company is a party and in which a Director of the Company is or was materially interested; or between the Company and a controlling shareholder. 9.8.4 (11) This provision is not applicable to the Company. 9.8.4 (12) and (13) There were no arrangements under which a shareholder has waived or agreed to waive any dividends or future dividends. 9.8.4 (14) This provision is not applicable to the Company. 67 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Glossary ## Alternative Investment Fund Managers Directive (“AIFMD”) Agreed by the European Parliament and the Council of the European Union and adopted into UK legislation, the AIFMD classifies certain investment vehicles, including investment companies, as Alternative Investment Funds (“AIFS”) and requires them to appoint an Alternative Investment Fund Manager (“AIFM”) and Depositary to manage and oversee the operations of the investment vehicle. The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to shareholders. ## Alternative Performance Measures Net Asset Value total return, which is calculated based on the net asset value per share at 30 June 2023, compared to the Net Asset Value per share as at 30 June 2022, adjusted for dividends paid, and assumes that dividends are reinvested. Share price total return, which is calculated based on the share price as at 30 June 2023, compared to the share price as at 30 June 2022, adjusted for dividends paid, and assumes that all dividends are reinvested. Discount to net asset value, which is calculated by dividing the difference between the share price and net asset value per share, by the net asset value per share. ## Association of Investment Companies (“AIC”) The Company is a member of the AIC which is the trade body for investment companies and represents the industry in relation to various matters which impact the regulation of such entities. ## Capital Return per Share The capital return per share is the capital profit for the year (see Statement of Comprehensive Income) divided by the weighted average number of ordinary shares in issue during the year. ## Close Company Subject to certain exceptions, a close company is broadly a company which is under the control of five or fewer participators or any number of participators if those participators are directors, or more than half the assets of which would be distributed to five or fewer participators, or to participators who are directors, in the event of the winding up of the company. ## Connected Party A connected party to the Company includes the Administrator, the Depositary, the AIFM, the Portfolio Managers of the relevant sub-funds of the Company, the Board and the respective holding companies (if any), subsidiaries and affiliates of each (each a “Connected Party”). ## Contract for Difference (“CFD”) A financial instrument in which a set of future cash flows is exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate combined with the performance of a notional value of shares of a stock. The other will be based on the performance of the shares of a stock. CFDs are open-ended with no fixed termination date, in contrast to swaps, which utilise fixed termination dates. ## Cum-income NAV Cum-income net asset value includes all income, less the value of any dividends paid together with the value of any dividends which have been declared and marked ex-dividend but not yet paid. When the cum-income NAV is lower than the ex-income NAV, this reflects the revenue deficit. ## Custodian The Custodian is responsible for ensuring the safe custody of the Company’s assets and that all transactions in the underlying holdings are transacted in an accurate and timely manner. ## Depositary From July 2014 all AIFs were required to appoint a Depositary who has responsibility for overseeing the operations of the Company including safekeeping, cash monitoring and verification of ownership and valuation of the underlying holdings and is responsible for the appointment of a custodian. The Depositary is strictly liable for the loss of any investments or other assets in its custody unless it has notified that it has discharged its liability in certain markets. The Depositary has confirmed that it has not discharged liability in relation to any of the Company’s assets. ## Dividend Dates When declared or recommended, each dividend will have three key dates applied to it. The payment date is the date on which shareholders will receive their dividend, either by BACS transfer or by receipt of a dividend cheque. The record date applied to the dividend is used as a cut-off for the Company’s registrars to know which shareholders should be paid a dividend. Only shareholders on the register of members at the close of business on the record date will receive the dividend. The ex-dividend date is the business day before the record date and is the date upon which the Company’s net asset value will be disclosed ex-dividend. 68 Strategic report Governance Financial statements Dividend Yield The annual dividend expressed as a percentage of the share price. Ex-Income NAV Ex-income net asset value is the cum-income NAV excluding income (net income being all current year income, less the value of any dividends paid together with the value of any dividends which have been declared and marked ex-dividend but not yet paid). Fifth Anniversary Tender Offer The tender offer to purchase certain of the Company’s Ordinary Shares from Shareholders whose names were entered into the Loyalty Register on Admission and who continuously remained on the Loyalty Register from Admission to the launch of the Fifth Anniversary Tender Offer. Additional Fifth Anniversary Tender Offer The tender offer to purchase certain of the Company’s Ordinary Shares from Shareholders whose names were entered into the Loyalty Register at the time of the November 2017 Tap Admission and who continuously remained on the Loyalty Register from the November 2017 Tap Admission to the launch of the Additional Fifth Anniversary Tender Offer. Gearing (including Actual and Nominal Gearing) The net gearing percentage reflects the amount of borrowings (i.e. bank loans or overdrafts) the Company has used to invest in the market less cash and investments in cash funds, divided by net assets. Nominal gearing is the total notional amount of assets plus total notional amount of liabilities, divided by equity. Actual gearing is calculated under two methodologies: the gross method, which includes the market value of positions and the gross exposure of derivatives, and excludes cash and cash equivalents; and the commitment method, which includes the value of cash and cash equivalents. Nominal CFD gearing is the gross nominal value of CFD positions, as a percentage of shareholders’ equity. High Water Mark The closing Net Asset Value (NAV) per share in respect of the last performance period in respect of which a performance fee was payable to the Portfolio Manager (adjusted for any changes to the NAV per share through dividend payments, share repurchases, and share issuances from admission to the end of such performance period). Leverage Leverage is the ratio between a fund’s Total Exposure and its Net Asset Value, expressed as a percentage. For the purposes of the AIFM Directive, leverage can be calculated using two methods: (i) the gross method; and (ii) the commitment method. Under the gross method, Total Exposure is the algebraic sum of all investment positions (long and short), excluding cash and cash equivalents and converting derivative instruments into the equivalent position in the underlying asset. Under the commitment method, Total Exposure is the algebraic sum of all investment positions (long and short), plus cash and cash equivalents, minus hedging arrangements and offsetting instruments between eligible assets. Liquidity In the context of the liquidity of shares in the stock market, this refers to the availability of buyers in the market for the share in question. Where the market in a particular share is described as liquid, that share will be in demand and holders wishing to sell their shares should find ready buyers. Conversely, where the market in a share is illiquid the difficulty of finding a buyer will tend to depress the price that might be negotiated for a sale. Loyalty Programme The Company has implemented a loyalty programme to incentivise long-term share ownership. The loyalty programme is open to all shareholders, who are entered in the Loyalty Register, a separate register maintained by the registrar to allow a shareholder to increase its voting power after holding shares for a continuous period of at least five years. Each shareholder so registered will be entitled to subscribe for one special voting loyalty share in respect of each ordinary share held. These shares can also be used as a form of consideration when entering into one or more agreements to acquire operating businesses in accordance with the Investment Policy, and subject to approval by shareholders at the AGM, the articles will be updated to reflect this dynamic. Loyalty Register The register of Qualifying Registered Shareholders maintained by the Registrars in accordance with the Company’s loyalty programme. Net Asset Value (“NAV”) per ordinary share The value of the Company’s assets (i.e. investments, cash held and debtors) less any liabilities (i.e. bank borrowings, debt securities and creditors) for which the Company is responsible, divided by the number of shares in issue. The aggregate NAV is also referred to as total shareholders’ funds on the Statement of Financial Position. The NAV is published daily. ## 69 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Glossary continued **Net Asset Value per ordinary share, total return** represents the theoretical return on the cum-income NAV per ordinary share, assuming that dividends paid to shareholders were reinvested at the cum-income NAV per ordinary share at the close of business on the day shares were quoted ex-dividend. | | 2023 | 2022 | | --- | --- | --- | | NAV at start of year | 9.35 | 9.93 | | NAV at end of year | 10.22 | 9.35 | | Effect of dividends^{1} | 0.12 | 0.46 | | NAV at end of year including effect of dividends | 10.35 | 9.81 | | NAV total return | 10.54% | (1.37)% | $^{1}$ Assumed reinvested at the time of shares going ex-dividend. **Ongoing Charges** are operating expenses incurred in the running of the Company, whether charged to revenue or capital, but excluding financing costs. These are expressed as a percentage of the average net asset value during the year and this is calculated in accordance with guidance issued by the Association of Investment Companies. | | | 2023 $000 | 2022 $000 | | --- | --- | --- | --- | | Regular recurring expenses | a | 1,645 | 1,592 | | Average Shareholders' funds | b | 75,684 | 99,579 | | Ongoing Charge Calculation | a/b | 2.17% | 1.60% | ## Performance Fee A detailed explanation of the calculation methodology for the Performance Fee payable to the Investment Manager can be found in Note 14. ## Performance Hurdle In relation to each performance period, the hurdle is represented by "A" multiplied by "B", where: "A" is equal to the starting NAV per share increased by two times the rate of return on 13 week Treasury Bills published by the US Department of the Treasury over the performance period, less the starting NAV per share; and "B" is the weighted average of the number of shares in issue (excluding any shares held in treasury) at the end of each day during the performance period. The Remuneration Committee has determined that this is the most appropriate means of benchmarking the Manager's performance. ## Premium/(Discount) The amount by which the market price per share of an investment trust is either higher premium or lower (discount) than the NAV per share, expressed as a percentage of the NAV per share. ## Prospectus The prospectus published by the Company on 15 June 2017 in connection with the placing of up to 20,000,000 Ordinary Shares at $10 per Ordinary Share. ## Related Party Related party disclosures are required under International Financial Reporting Standards (IAS 24). A common definition of a related party is if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions and defined as: - (i) Two or more parties are related parties when at any time during the financial period; - (ii) one party has direct or indirect control of the other party; or the parties are subject to common control from the same source; or - (iii) one party has influence over the financial and operating policies of the other party to an extent that that other party might be inhibited from pursuing at all times its own separate interests; or - (iv) the parties, in entering a transaction, are subject to influence from the same source to such an extent that one of the parties to the transaction has subordinated its own separate interests. ## Revenue Return per ordinary share The revenue return per ordinary share is the revenue return profit for the year divided by the weighted average number of ordinary shares in issue during the year. 70 Strategic report Governance Financial statements **Share Price Total Return** represents the theoretical return to a shareholder, on a closing market price basis, assuming that all dividends received were reinvested, without transaction costs, into the ordinary shares of the Company at the close of business on the day the shares were quoted ex-dividend. | | 2023 | 2022 | | --- | --- | --- | | Share price at start of year | 9.00 | 7.40 | | Share price at end of year | 9.00 | 9.00 | | Effect of dividends* | 0.12 | 0.55 | | Share price at end of year including effect of dividends | 9.12 | 9.55 | | Share price total return | 1.33% | 29.06% | * Assumed reinvested at the time of the shares going ex-dividend. #### Shareholder Owner of the Company's Ordinary Shares. #### Special Voting Loyalty Shares Redeemable non-participating voting shares of a nominal value of $0.01 each in the capital of the Company (if any) having the rights and privileges and being subject to the restrictions contained in the Articles. Each Registered Holder of an ordinary share who remains registered in the Loyalty Register in respect such Ordinary Share for a continuous uninterrupted period of at least five years (the "Qualifying Period") and is not an ineligible shareholder and or is not disqualified shall be entitled to subscribe for one Special Voting Loyalty Share in respect of such ordinary share. (1) As to voting: The holders of Special Voting Loyalty Shares shall have the right to receive notice of, to attend, and to vote at all general meetings of the Company. (2) As to dividends and distributions: The Special Voting Loyalty Shares are not entitled to participate in any dividend or distribution made or declared by the Company, except for a fixed annual dividend equal to 0.00001 per cent. of their nominal value. (3) On a winding up or other return of capital: On a winding up of the Company, the holder of a Special Voting Loyalty Share shall be entitled to be repaid the capital paid up thereon pari passu with the repayment of the nominal amount of the ordinary shares. #### Total Return Performance This is the return on the share price or NAV taking into account both the rise and fall of share prices and the dividends paid to shareholders. Any dividends received by a shareholder are assumed to have been reinvested in either additional shares (for share price total return) or the Company's assets (for NAV total return). 71 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Company Information Registered Name Registrar and Receiving Agent Gabelli Merger Plus+ Trust Plc Computershare Investment Services PLC The Pavilions | Registered Office | Bridgwater Road | | --- | --- | | 3 St. James’s Place, | Bristol BS99 6ZZ | | London SW1A 1NP | United Kingdom | United Kingdom Legal & Financial Advisers to the Company | Board of Directors | Dickson Minto W.S. | | --- | --- | | Marc Gabelli | 16 Charlotte Square | | Marco Bianconi | Edinburgh | | John Birch | EH2 4DF | John Newlands Yuji Sugimoto Skadden, Arps, Slate, Meagher & Flom (UK) LLP James Wedderburn 22 Bishopsgate London Portfolio Manager EC2N 4BQ Gabelli Funds, LLC | One Corporate Center | The Company is a member of The Association of Investment Companies | | --- | --- | | Rye, NY 10580-1422 | (“AIC”), which publishes a number of useful fact sheets and email updates | | United States | for investors interested in investment companies. | | Company Secretary | The AIC | | Kin Company Secretarial | 9th Floor | | Hyde Park House | 24 Chiswell Street | | 5 Manfred Road | London | | London SW15 2RS | EC1Y 4YY | | United Kingdom | 0207 282 5555 | www.theaic.co.uk Independent Auditors PricewaterhouseCoopers LLP Information to Shareholders 7 More London Riverside Contact Information and Website London SE1 2RT United Kingdom Please visit us on the Internet. Our homepage at www.gabelli.co.uk includes useful information about the Company, such as daily prices, Administrator and Custodian factsheets, announcements, and current and historic half year and annual State Street Bank and Trust Company reports. 20 Churchill Place Canary Wharf We welcome your comments and questions at +44 (0) 20 3206 2100 or London E14 5HJ via e-mail at info@gabelli.co.uk. United Kingdom General Information | Depositary | SEDOL/ISIN: BD8P074/GB00BD8P0741 | | --- | --- | | State Street Trustees Ltd | London Stock Exchange (TIDM) Code: GMP | | 20 Churchill Place | Legal Entity Identifier (LEI): 5493006X09N8HK0V1U37 | Canary Wharf London E14 5HJ The Company’s registrar is Computershare Investor Services PLC. United Kingdom Computershare’s website address is investorcentre.co.uk and certain details relating to your holding can be checked through this website. Alternative Investment Fund Manager Alternatively, Computershare can be contacted on 0370 707 1390. Gabelli Funds, LLC (from 14 February 2023) One Corporate Center Change of name or address must be notified through the website or sent Rye, NY 10580 USA to The Pavilions, Bridgwater Road, Bristol BS99 6ZZ. Carne Global Fund Managers (Ireland) Limited The Company is a member of The Association of Investment Companies (through 13 February 2023) (“AIC”), which publishes a number of useful fact sheets and email updates 2nd Floor, Block E for investors interested in investment companies www.theaic.co.uk. Iveagh Court, Harcourt Road Dublin 2 Ireland ## 72 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements # Annual General Meeting ## Notice of Annual General Meeting Notice is hereby given that the sixth Annual General Meeting (the "AGM") of the Company will be held at GAMCO (UK), 3 St. James's Place London SW1A 1NP United Kingdom on Thursday 30 November 2023 at 16:00 (GMT) to consider and, if thought fit, pass the following resolutions, of which resolutions numbered 1 to 14 (inclusive) will be proposed as Ordinary Resolutions, and resolutions numbered 15 to 20 (inclusive) will be proposed as Special Resolutions. The Directors currently anticipate that this year's Annual General Meeting will be open to shareholders, but reserve the right to change arrangements for the meeting at short notice. Therefore shareholders are strongly encouraged to vote by proxy and to appoint the Chairman as their proxy. ### Ordinary Business 1. To receive the Company's audited financial statements, the Strategic Report and the reports of the Directors of the Company (the "Directors") for the year ended 30 June 2023 (the "Annual Report") together with the report of the auditors. 2. To approve the Directors' Remuneration Report for the year ended 30 June 2023. 3. To approve the directors' remuneration policy, as set out in the Directors' Remuneration Report, which takes effect immediately after the end of the annual general meeting. 4. To approve the Company's dividend policy to continue to pay interim dividends. The dividends declared in respect of the financial year ended 30 June 2023 totaled $0.12 per share. 5. To re-elect Marc Gabelli as a Director. 6. To re-elect Marco Bianconi as a Director. 7. To re-elect John Birch as a Director. 8. To re-elect John Newlands as a Director. 9. To re-elect Yuji Sugimoto as a Director. 10. To re-elect James Wedderburn as a Director. 11. To re-appoint PricewaterhouseCoopers LLP as auditors of the Company to hold office until the conclusion of the next AGM of the Company. 12. To authorise the Audit & Risk Committee to determine the remuneration of the auditors. ### Special Business #### Ordinary Resolution 13. THAT in addition to all existing authorities: a. the Directors of the Company be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the "Act") to exercise all the powers of the Company to allot ordinary shares in the capital of the Company (the "Ordinary Shares") up to an aggregate nominal value of $45,672, such authority to expire at the conclusion of next year's AGM (unless the authority is previously revoked, varied or extended by the Company in general meeting) but so that this authority shall allow the Company to make, before the expiry of this authority, offers or agreements which would or might require equity securities to be allotted after such expiry and the Directors of the Company may allot equity securities pursuant to any such offer or agreement as if the authority had not expired; and b. the Directors of the Company be and are hereby generally and unconditionally authorised in accordance with section 551 of the Act to exercise all the powers of the Company to allot Ordinary Shares up to an aggregate nominal value of $511,910.30, such authority to expire on the fifth anniversary of the date of the passing of this resolution (unless the authority is previously revoked, varied or extended by the Company in general meeting) but so that this authority shall allow the Company to make, before the expiry of this authority, offers or agreements which would or might require equity securities to be allotted after such expiry and the Directors of the Company may allot equity securities pursuant to any such offer or agreement as if the authority had not expired. c. the Directors of the Company be and are hereby generally and unconditionally authorised in accordance with section 551 of the Act to exercise all the powers of the Company to allot Special Voting Loyalty Shares up to an aggregate nominal value of $511,910.30, such authority to expire on the fifth anniversary of the date of the passing of this resolution (unless the authority is previously revoked, varied or extended by the Company in general meeting). 14. THAT the Directors of the Company be and are hereby authorised to exercise all powers of the Company, as granted by all existing authorities (including by resolution 13 above), to allot new Ordinary Shares and Special Voting Loyalty shares for purposes of making acquisitions. ### Special Resolutions 15. THAT, in addition to all existing authorities, the Directors of the Company be and are hereby empowered in accordance with section 570 of the Act, to allot equity securities (as defined in section 560 of the Act) for cash under the authority given by resolution 13(a) and, in accordance with section 573 of the Act, to sell any Ordinary Shares held by the Company as treasury shares ("treasury shares") for cash, in each case, as if section 561 of the Act did not apply to any such allotment or sale, such power in respect of the authority given by resolution 13(a) to be limited: a. to the allotment of equity securities and sale of treasury shares in connection with an offer of, or invitation to apply for, equity securities: i. to holders of Ordinary Shares in the capital of the Company in proportion (as nearly as may be practicable) to their existing holdings; and ii. to holders of other equity securities in the capital of the Company, as required by the rights of those securities or, subject to such rights, as the Directors otherwise considers necessary, and so that the Directors may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal with treasury shares, fractional 73 Gabelli Merger Plus® Trust Plc Annual Report and Accounts 2023 # Annual General Meeting ## Notice of Annual General Meeting continued entitlements, record dates, legal, regulatory or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and b. otherwise than pursuant to resolution 15(a) above, to the allotment of equity securities and sale of treasury shares up to an aggregate nominal amount of $13,701 (being 20% of the total number of voting rights of the Company at the latest practicable date prior to the publication of this Notice); c. such that no allotment of securities shall be made which would result in Ordinary Shares being issued or sold from treasury at a price which is less than the higher of the Company's cum or ex income net asset value per Ordinary Share at the latest practicable date before such allotment of equity securities as determined by the Directors in their reasonable discretion; and d. such power, unless renewed, to apply until the expiry of the powers in resolution 13(a) but, in each case, during this period the Company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the power ends and the Directors may allot equity securities (and sell treasury shares) under any such offer or agreement as if the power had not ended. 16. THAT, in addition to all existing authorities, the Directors of the Company be and are hereby empowered, pursuant to sections 570 and 573 of the Act, to allot or make offers or agreements to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the authority referred to in resolution 13(b) above as if section 561 of the Act did not apply to any allotment which is the subject of, and provided that this power shall expire upon the expiry of, the authority conferred by resolution 13(b) above (unless the authority is previously revoked, varied or extended by the Company in general meeting), but so that this authority shall allow the Company to make, before the expiry of this authority, offers or agreements which would or might require equity securities to be allotted after such expiry and the Directors of the Company may allot equity securities pursuant to any such offer or agreement as if the authority had not expired. 17. THAT, with effect from the conclusion of the meeting, the changes to the Company's Investment Policy be approved. These changes are deemed to be immaterial and are proposed to enable the management team to implement the Company's Investment Policy as a closed company. A copy of the existing investment policy and the proposed immaterial amendments to the policy marked to show all changes are available for inspection on the Company's website from the date of this notice of meeting. The proposed Investment Policy as amended will also be available for inspection at the AGM at least 15 minutes prior to the start of the meeting and up until the close of the meeting. 18. THAT, with effect from the conclusion of the meeting, the draft articles of association produced to the meeting be adopted as the Articles of Association of the Company in substitution for, and to the exclusion of, the Company's existing articles of association. A copy of the Company's existing articles of association and the proposed new articles of association marked to show all the changes is available for inspection on the Company's website from the date of this notice of meeting. The proposed new articles of association will also be available for inspection at the AGM at least 15 minutes prior to the start of the meeting and up until the close of the meeting. 19. THAT, in addition to all existing authorities, the Company be authorised for the purposes of section 701 of the Act to make one or more market purchases (as defined in section 693(4) of the Act) of its Ordinary Shares, provided that: a. the maximum number of Ordinary Shares hereby authorised to be purchased is 685,079 (being 10% of the total number of voting rights of the Company at the latest practicable date prior to the publication of this Notice); b. the minimum price (exclusive of expenses) which may be paid for an Ordinary Share is the nominal amount of that share; and c. the maximum price (exclusive of expenses) which may be paid for an Ordinary Share is the higher of: i. an amount equal to 5% above the average of the middle market quotations for an Ordinary Share as derived from the Daily Official List of the London Stock Exchange plc for the five business days immediately preceding the day on which that Ordinary Share is contracted to be purchased; and ii. an amount equal to the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out at the relevant time, such authority, unless renewed or extended, to apply until the conclusion of next year's AGM but during this period the Company may enter into a contract to purchase Ordinary Shares, which would, or might, be completed or executed wholly or partly after the authority ends and the Company may purchase Ordinary Shares pursuant to any such contract as if the authority had not ended. 20. THAT a general meeting of the Company other than an Annual General Meeting may be called on not less than 14 clear days' notice. By order of the Board John Birch Co-Chairman 19 October 2023 Marc Gabelli Co-Chairman Registered Office: 3 St. James's Place London England SW1A 1NP 74 Strategic report Governance Financial statements # Notes to the Notice of the AGM The Annual General Meeting is currently anticipated to be open to members this year. All members are entitled to vote at the meeting by providing a form of proxy. Members are strongly advised to appoint the Chairman of the meeting as their proxy. Proxy appointment 1 A member is entitled to appoint another person as his proxy to exercise all or any of his rights to attend and to speak and vote at the AGM, or any adjournment thereof. A proxy need not be a shareholder of the Company. A shareholder may appoint more than one proxy in relation to the AGM provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. 2 A form of proxy is enclosed. The appointment of a proxy will not prevent a member from subsequently attending and voting at the meeting in person. 3 To appoint a proxy, the form of proxy and any power of attorney or other authority (if any) under which it is executed (or a duly certified copy of any such power or authority), must be either (a) sent to the Company's Registrar, Computershare Investor Services PLC, at The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, or (b) the proxy appointment must be lodged using the CREST Proxy Voting Service in accordance with Note 8 below, in either case so as to be received no later than 4.00pm (GMT) on 28 November 2023 (or, if the meeting is adjourned, no later than 48 hours (excluding any part of a day that is not a working day) before the time of any adjourned meeting). Joint shareholders 4 In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names appear in the register of members in respect of the share. Nominated persons 5 The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have been nominated to receive communications from the Company in accordance with section 146 of the Act ("Nominated Persons"). Nominated Persons may have a right under an agreement with the member who holds the shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if Nominated Persons do not have such a right or do not wish to exercise it, they may have a right under such an agreement to give instructions to the person holding the shares as to the exercise of voting rights. Information about shares and voting 6 Holders of Ordinary Shares are entitled to attend and vote at general meetings of the Company. The total number of issued Ordinary Shares in the Company on 5 October 2023, which is the latest practicable date before the publication of this Notice is 6,850,792 Shares (excluding shares held in treasury). Right to attend and vote 7 Entitlement to attend and vote at the meeting, and the number of votes which may be cast at the meeting, will be determined by reference to the Company's register of members as at the close of business on 27 November 2023, or, if the meeting is adjourned, no later than 48 hours (excluding any part of a day that is not a working day) before the time fixed for the adjourned meeting (as the case may be). In each case, changes to the register of members after such time will be disregarded. CREST members 8 CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting (and any adjournment of the meeting) by following the procedures described in the CREST Manual available on the website of Euroclear UK and Ireland Limited ("Euroclear") at www.euroclear.com. CREST Personal Members or other CREST sponsored members (and those CREST members who have appointed a voting service provider) should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message (regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy) must, in order to be valid, be transmitted so as to be received by Computershare Investor Services PLC Participant ID 3RA50 by the latest time(s) for receipt of proxy appointments specified in Note 3 above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to a proxy appointed through CREST should be communicated to him by other means. CREST members (and, where applicable, their CREST sponsors or voting service providers) should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members (and, where applicable, their CREST sponsors or voting service providers) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a) of the Uncertificated Securities Regulations 2001. Corporate representatives 9 Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares. 75 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 ## Notes to the Notice of the AGM continued Audit concerns Company not later than four weeks before the AGM, and (in the 10 Shareholders should note that, under section 527 of the Act, case of a matter to be included in the business only) must be members meeting the threshold requirements set out in that accompanied by a statement setting out the grounds for the section have the right to require the Company to publish on request. a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the auditors Website information report and the conduct of the audit) that are to be laid before 13 A copy of this notice and other information required by the AGM for the financial year ended 30 June 2023; or (ii) section 311A of the Act can be found at www.gabelli.co.uk/ any circumstance connected with auditors of the Company investment-products/gabelli-merger-plus/. appointed for the financial year ended 30 June 2023 ceasing to hold office since the previous meeting at which Use of electronic address annual accounts and reports were laid. The Company may 14 Members may not use any electronic address provided not require the shareholders requesting any such website in either this notice of meeting or any related documents publication to pay its expenses in complying with sections (including the enclosed form of proxy) to communicate with 527 or 528 (requirements as to website availability) of the the Company for any purposes other than those expressly Act. Where the Company is required to place a statement on stated. a website under section 527 of the Act, it must forward the statement to the Company’s auditors not later than the time Documents available for inspection when it makes the statement available on the website. The 15 Copies of the letters of appointment of the non-executive business which may be dealt with at the AGM for the relevant Directors may be inspected during normal business hours financial year includes any statement that the Company has on any weekday (Saturdays, Sundays and public holidays been required under section 527 of the Act to publish on a excepted) at the registered office of the Company at 3 St. website. James’s Place, London SW1A 1NP, United Kingdom, up to and including the date of the AGM, and, if possible, on the date Questions itself at the AGM venue 15 minutes before the meeting until it 11 Any member attending the AGM has the right to ask ends. questions. The Company must cause to be answered any such question relating to the business being dealt with at Communication the meeting but no such answer need be given if (a) to do so 16 Except as provided above, shareholders who have general would interfere unduly with the preparation for the meeting queries about the AGM should use the following means of or involve the disclosure of confidential information, (b) the communication (no other methods of communication will be answer has already been given on a website in the form of an accepted): answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the • by calling the Registrar’s helpline on: +44 (0)370 707 question be answered. 1390, or Members’ right to request a resolution to be proposed at the • by writing to the Registrar, Computershare Investor Meeting Services PLC, The Pavilions, Bridgwater Road, Bristol 12 Under sections 338 and 338A of the Companies Act 2006, BS99 6ZZ, or members meeting the threshold requirements in those sections have the right to require the Company: • by email to the Registrar web.queries@computershare.co.uk i. to give, to members of the Company entitled to receive Gabelli Merger Plus+ Loyalty Programme notice of the meeting, notice of a resolution which may The Company has a Loyalty Programme in place for its long | | properly be moved and is intended to be moved at the | term shareholders. Please see pages 20 and 21 for benefits and | | --- | --- | --- | | | meeting; and/or | eligibility requirements. | | ii. to include in the business to be dealt with at the meeting | | Contact the Company | | | any matter (other than a proposed resolution) which may | www.gabelli.com/mergerplus | | | be properly included in the business. | gmpassist@gabelli.com | +44 20 3206 2100 A resolution may properly be moved or a matter may +1 914 921 5135 properly be included in the business unless: +39 02 3057 8299 a. (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company’s constitution or otherwise); b. it is defamatory of any person; or c. it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, and must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it, must be received by the ## 76 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Strategic report Governance Financial statements # Appendix ## AIFMD Remuneration Disclosures ### Carne Global Fund Managers (Ireland) Limited The European Union Directive 2011/61/EU as implemented in Ireland by S.I. No. 257/2013 European Union (Alternative Investment Fund Managers) Regulations 2013, requires alternative investment fund managers ("AIFMs") to establish and apply remuneration policies and practices that promote sound and effective risk management, and do not encourage risk taking which is inconsistent with the risk profile of the Fund. To that effect, Carne Global Fund Managers (Ireland) Limited ("the Manager"), has implemented a remuneration policy that applies to all alternative investment funds ("AIFs") for which the Manager acts as AIFM (the "Remuneration Policy") and covers all staff whose professional activities have a material impact on the risk profile of the Manager or the AIFs it manages ("Identified Staff of the Manager"). The Remuneration Policy also applies to all UCITS funds for which the Manager acts as manager. In accordance with the Remuneration Policy, all remuneration paid to Identified Staff of the Manager can be divided into: - Fixed remuneration (payments or benefits without consideration of any performance criteria); and - Variable remuneration (additional payments or benefits depending on performance or, in certain cases, other contractual criteria) which is not based on the performance of the Fund. The Manager has designated the following persons as Identified Staff of the Manager: 1. The Designated Persons; 2. Each of the Manager's directors; 3. Head of Compliance; 4. Risk Officer; 5. Head of Anti-Money Laundering and Counter Terrorist Financing Compliance; 6. Money Laundering Reporting Officer; 7. Chief Executive Officer; 8. Chief Operating Officer; and 9. All members of the investment committee. The Manager has a business model, policies, and procedures which by their nature do not promote excessive risk taking and take account of the nature, scale and complexity of the Manager and the Fund. The Remuneration Policy is designed to discourage risk taking that is inconsistent with the risk profile of the Fund and the Manager is not incentivised or rewarded for taking excessive risk. The Manager has determined not to constitute a separate remuneration committee and for remuneration matters to be determined through the Manager's Compliance and AML Committee, a Committee of the Manager's Board. The Compliance and AML Committee is responsible for the ongoing implementation of the Manager's remuneration matters and will assess, oversee, and review the remuneration arrangements of the Manager as well as that of the delegates as relevant, in line with the provisions of the applicable remuneration requirements. The Manager has a number of directly employed staff. The Manager's parent company is Carne Global Financial Services Limited ("Carne"). In addition, Carne also operates through a shared services organisational model which provides that Carne employs the majority of staff and enters into inter-group agreements with other Carne Group entities within the group to ensure such entities are resourced appropriately. As at 31 December 2022, 10 of the Identified Staff are employed directly by the Manager. The remainder of the Identified Staff are employees of Carne, or employees of another entity within the Carne Group, and are remunerated directly based on their contribution to Carne Group as a whole. In return for the services of each of the Carne Identified Staff, the Manager pays an annual staff recharge to Carne (the "Staff Recharge"). The independent non-executive directors are paid a fixed remuneration. The Other Identified Staff member's remuneration is linked to their overall individual contribution to the Manager or the Carne Group, with reference to both financial and non-financial criteria and not directly linked to the performance of specific business units or targets reached or the performance of the Fund. The aggregate of the total Staff Recharge, remuneration of the directly employed identified staff of the Manager and the remuneration of the independent non-executive directors is €2,502,802 paid to 16 Identified Staff* for the year ended 31 December 2022. The Manager has also determined that, on the basis of number of sub-funds / net asset value of the Fund relative to the number of sub-funds / assets under management, the portion of this figure attributable to the Fund is €2,204. The Fund does not pay any fixed or variable remuneration to identified staff of the Investment Manager. ### Gabelli Funds, LLC In accordance with the AIFMD and FCA Rules, Gabelli Funds, LLC's remuneration policy and remuneration disclosures in respect of the year ended 30 June 2023 are available from Gabelli Funds, LLC on request. * This number represents the number of Identified Staff as at 31 December 2022. 77 + Gabelli Merger Plus Trust Plc Annual Report and Accounts 2023 The offer is made by the prospectus only. ## Ordinary Shares ## 10,011,100 ## This announcement is neither an offer to sell nor a solicitation of an offer to buy these securities. 78 + ## $100,111,000 ## Price $10 per Share Gabelli Merger Plus Trust Plc 19 July 2017 Job No: 50043 Proof Event: 17 Black Line Level: 9 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Printed by Park Communications on FSC® certified paper. Park works to the EMAS standard and its Environmental Management System is certified to ISO 14001. This publication has been manufactured using 100% offshore wind electricity sourced from UK wind. 100% of the inks used are HP Indigo ElectroInk which complies with RoHS legislation and meets the chemical requirements of the Nordic Ecolabel (Nordic Swan) for printing companies, 95% of press chemicals are recycled for further use and, on average 99% of any waste associated with this production will be recycled and the remaining 1% used to generate energy. This document is printed on Galerie Satin paper made of material from well-managed, FSC®-certified forests and other controlled sources. Job No: 50043 Proof Event: 15 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600 Gabelli Merger Plus+ Trust Plc Annual Report and Accounts 2023 ### Gabelli Merger Plus+ Trust Plc ### www.gabelli.com/mergerplus ### gmpassist@gabelli.com Job No: 50043 Proof Event: 15 Park Communications Ltd Alpine Way London E6 6LA Customer: Gabelli Project Title: Gabelli Merger Plus Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600