Menhaden
Resource
Efficiency
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Menhaden Resource Efficiency PLC – Annual Report
Company Summary
Menhaden Resource Efficiency PLC (formerly Menhaden PLC) (the “Company”) is an investment trust. Its shares are
listed on the premium segment of the Official List and traded on the main market of the London Stock Exchange. The
Company is a member of the Association of Investment Companies (“AIC”).
Investment Objective
The Company aims to generate long-term shareholder returns, predominantly in the form of capital growth, by investing
in businesses and opportunities that are demonstrably delivering or benefiting significantly from the efficient use of
energy and resources irrespective of their size, location or stage of development.
Management
The Company employs Frostrow Capital LLP (“Frostrow”) as its Alternative Investment Fund Manager (“AIFM”) to provide
company management, company secretarial, administrative and marketing services. Frostrow and the Company have
jointly appointed Menhaden Capital Management LLP as the Portfolio Manager. Further details of these appointments
are provided on pages 23 and 24.
Capital Structure
The Company’s capital is composed solely of ordinary shares. Details are given on page 36 and in note 13 to the
financial statements on page 74.
ISA Status
The Company’s shares are eligible for Stocks and Shares ISAs.
Retail Investors advised by IFAs
The Company currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers
(“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”) rules in relation
to non-mainstream investment products and intends to continue to do so. The shares are excluded from the FCA’s
restrictions which apply to non-mainstream pooled investment products because they are shares in an investment
trust.
Menhaden
Menhaden are forage fish that occur in great abundance in the West Atlantic Ocean. The name, Menhaden, is derived
from the Native American expression “he fertilises” referring to the widespread use of the fish as a fertiliser. Menhaden
filter vast quantities of water and play a key role in the food chain. It has been argued that the environmental movement
and fisheries ecology rose from the first collapse in the population of Menhaden in the 1860s as this was used as a
prominent example of mankind’s impact on the oceans and the importance of using resources sustainably.
Menhaden Capital PLC
Annual Report for the period from incorporation on
30 September 2014 to 31 December 2015
01
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
1 2
Strategic Report
2 Company Performance
4 Portfolio Profile
5 Chairman’s Statement
8 Investment Objective and Policy
10 Investment Committee
11 Investment Process
12 Portfolio
14 Portfolio Manager’s Review
18 Environmental Impact Statement
22 Business Review
Governance
34 Board of Directors
36 Directors’ Report
40 Statement of Directors’
Responsibilities
41 Corporate Governance Statement
47 Audit Committee Report
51 Directors’ Remuneration Report
53 Directors’ Remuneration Policy
54 Independent Auditor’s Report
3 4
Financial Statements
62 Income Statement
63 Statement of Changes in Equity
64 Statement of Financial Position
65 Statement of Cash Flows
66 Notes to the Financial Statements
Further Information
81 Shareholder Information
82 Glossary
84 How to Invest
86 Notice of Annual General Meeting
91 Explanatory Notes to the
Resolutions
93 Company Information
Strategic Report
1
Company Performance
02
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
155.7p
NAV per share
2020: 132.7p
112.0p
Share price
2020: 99.0p
28.1%
Share price discount
to NAV per share*
2020: 25.4%
17.3%
NAV per share
(total return)*
2020: 13.2%
13.1%
Share price
(total return)*
2020: 3.0%
1.8%
Total ongoing charges*
2020: 2.0%
This report contains terminology that may be unfamiliar to some readers. The Glossary on pages 82 and 83 gives
definitions for frequently used terms.
*Alternative performance measures (“APMs”)
As at
31 December 2021
For the year ended
31 December 2021
03
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Total Return Performance – One Year
Total Return Performance – Three Years
80.0
90.0
100.0
110.0
120.0
130.0
%
Dec 20 Mar 21 June 21 Sep 21 Dec 21
RPI+3% Company Share Price Total Return Company NAV Total Return
80.0
100.0
120.0
140.0
160.0
180.0
200.0
%
Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21
RPI+3% Company Share Price Total Return Company NAV Total Return
Source: Frostrow Capital LLP, Office for National Statistics
Rebased to 100 as at 31 December 2020
Source: Frostrow Capital LLP, Office for National Statistics
Rebased to 100 as at 31 December 2018
Total Return Performance – Five Years
80.0
100.0
120.0
140.0
160.0
180.0
200.0
%
Dec 18Dec 16 Jun 17 Jun 18Dec 17 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21
RPI+3% Company Share Price Total Return Company NAV Total Return
Source: Frostrow Capital LLP, Office for National Statistics
Rebased to 100 as at 31 December 2016
0.7%
12.5%
86.8%
Public Equities
Liquidity
Private Investments
21.3%
3.2%
2.9%
Europe
North America
Asia & Emerging Markets
72.6%
UK
6.5%
0.9%
42.1%
8.1%
Sustainable Infrastructure
and Transportation
Clean Energy
Digitisation
Industrial Emissions Reduction
42.4%
Water and Waste Management
05
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
I am pleased to present our seventh annual report since the
launch of the Company in July 2015. This report covers the
year ended 31 December 2021.
Performance
The Company’s net asset value (“NAV”) per share total
return* for the year was 17.3% (2020: 13.2%), which
compares favourably with the 10.5% (2020: 4.2%) increase
of our RPI+3% primary performance comparator and
reflects good portfolio performance over the period. Indeed,
this brings the compound NAV performance over the last
five years to approximately 13% per annum.
However, it is disappointing that this did not translate into
stronger market demand for the shar
es and, consequently,
the price at which they trade. The price lagged the NAV,
resulting in a less impressive, though still respectable, share
price total return* of 13.1% (2020: 3.0%).
Albeit with some bouts of volatility along the way, equity
markets made positive pr
ogress through 2021 and this was
reflected in the Company’s performance. The leading
contributors to performance in the year were the holdings in
the digitisation space, notably Alphabet and Microsoft
because of the holding sizes, but all of the holdings within
that theme benefited from the accelerated digital
transformation being driven along by the evolution of
working practices and consumer behaviour during
thepandemic.
The Board is reassured by the positive performance of the
portfolio and the disciplined approach of our Portfolio
Manager in pursuit of their investment strategy: selecting
competitively advantaged businesses that are demonstrably
delivering or benefiting significantly from the efficient use
ofresources.
Our Portfolio Manager has provided a full description of the
development and performance of the portfolio over the year
in the Portfolio Manager’s Review on pages
14 to 17.
Environmental Impact
As in past years, we have integrated the Company’s
Environmental Impact Report within the annual report. It can
be found on pages 18 to 21. This year saw the total tonnes
of greenhouse gas (“GHG”) emissions avoided by our
investments (as a proportion based on the portfolio’s
ownership levels in each company) almost double to over
58,000 tonnes. The amount of clean electricity generated by
the portfolio almost tripled to over 94,000 megawatt hours.
During 2021 the commitments of the portfolio’s listed equity
holdings were assessed against the Paris Agreement. While
most are working towar
ds the target 2°C limit by 2050, we
have reservations about two investee companies. Our
Portfolio Manager will increase engagement with them in
2022 in pursuit of a lowering of their future climate impact.
We are pleased that a third of the portfolio’s equity holdings
have now set targets that have been independently validated
by the Science Based Targets initiative. This means they
have a clearly defined pathway to reduce their GHG
emissions in line with the goals of the Paris Agreement.
We are aware that the sectors represented in the portfolio,
including transport, infrastructure and waste management,
intersect closely with natural environments, so we are keen
to see the companies we invest in actively reporting on the
impacts of their activities upon local flora and fauna, soil
quality and natural environments. Therefore, a focus for 2022
is to encourage more investee companies to take action on
protecting nature and biodiversity.
The report is also made available as a separate document,
which includes the methodological detail, on our website
www.menhaden.com
.
Investment Policy
When the Company was launched in 2015 the investment
policy, as set out in the IPO prospectus, reflected the
intention that the portfolio would be comprised of three main
allocations: listed equity; yield assets; and special situations
(the last being private equity investments). Since then, the
Company has consistently disclosed the portfolio
composition according to those three categories. However,
in the current economic environment it has proven to be very
difficult to find investments suitable for the portfolio with
attributes that would cause them to be identified as yield
assets. Additionally, those that were identified have tended
to also fall into the special situations (private equity) category.
Accordingly, we have concluded that the yield assets
description is superfluous and, therefore, have made a minor
change to the Company’s investment policy to remove the
reference to a yield assets allocation. The investment policy,
which is set out on page 8, now says: “The Company
Chairman’s Statement
Sir Ian Cheshire
*Alternative Performance Measure (see Glossary beginning on page 82)
webinar to enable the Portfolio Manager to give a
presentation online. Shareholders should send any
questions they may have to the Company Secretary by
email to info@frostrow.com ahead of the meeting. Details on
registering for the webinar will be made available nearer the
time if this alternative becomes necessary.
Dividend
The Company’s dividend policy is that the Company will only
pay dividends sufficient for it to maintain investment trust
status. The revenue return for the year to 31 December
2021 means that a dividend must be paid to meet this
requirement. Consequently, the Board is recommending to
shareholders that a final dividend of 0.2p (amounting to
£160,000 in total) be declared in respect of the year ended
31 December 2021 and a corresponding resolution has
been included in the Notice of Meeting for the AGM. If this
resolution is passed the dividend will be payable on 29 June
2022 to shareholders on the register on 6 June 2022. The
shares will be marked ex-dividend on 1 June 2022.
Outlook
It is apparent from our primary performance comparator that
inflation increased significantly in the year to December
2021. This is principally a consequence of the increased
money supply from Government and central bank policy
responses to Covid-19. It has manifested particularly in
energy prices and where supply chain shortages have
arisen, but it can be expected to continue more broadly. It is
unlikely that this is a short-term transitory effect. On the plus
side, equities kept ahead of inflation in the year and
historically have been proven to be a good place to be
invested during inflationary times.
Our portfolio is well placed, with pricing power being a key
attribute that our Portfolio Manager looks for in investment
propositions.
Following COP26 in November 2021 progress on the
transition to net zero appears to be an increasing investor
priority as well as being a political focus, which corresponds
well with the Company’s resource efficiency investment
thesis.
Whilst the Board shares global concern about the Russian
aggression in Ukraine, to the best of our current knowledge
the situation should have no direct impact on the Company
and while one portfolio company is affected by the Russian
sanctions, Safran, its share price has recovered to
December levels after initial volatility. As far as we are aware
there are no Russian shareholders and services provided to
the Company are not affected by any sanctions.
The Board remains confident about the resilience and
long-term prospects of the portfolio as well as the prospects
of the environmental and resource-efficiency sectors.
Sir Ian Cheshire
Chairman
20 April 2022
07
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
09
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Borrowing and Leverage Limits
The Company may incur indebtedness for working capital
and investment purposes, up to a maximum of 20% of the
net asset value at the time of incurrence. The decision on
whether to incur indebtedness may be taken by the
Portfolio Manager within such parameters as are approved
by the AIFM and the Board from time to time. There will be
no limitations on indebtedness being incurred at the level
of the Company’s underlying investments (and measures of
indebtedness for these purposes accordingly exclude debt
in place at the underlying investment level).
At the date of this report, the Company had no borrowings.
In addition, the Alternative Investment Fund Managers
Regulations(“UK AIFMD”) r
equire the Company, which is
an Alternative Investment Fund (“AIF”) under the regulations,
to set maximum leverage limits corresponding to the
UK AIFMD leverage definition. The UK AIFMD defines
leverage as any method by which the total exposure of an
AIF is increased and provides two calculation methods
(gross and commitment), as further explained in the
Glossary on page 82 and in the separate UK AIFMD
periodic disclosures document on the Company’s website.
Other Investment Restrictions
The Company will at all times invest and manage its assets
with the objective of spreading risk and in accordance with
its published investment policy.
The Listing Rules restrict the Company from investing more
than 10% of its total assets in other listed closed-ended
investment funds, save that this restriction does not apply
to investments in closed-ended investment funds which
themselves have published investment policies to invest no
more than 15% of their total assets in other listed closed-
ended investment funds. The Company will comply with
this investment restriction (or any variant thereof) for so long
as such restriction remains applicable.
At the date of this report, the Company was not invested
in any listed closed-ended investment funds.
In the event of any material breach of the investment
restrictions applicable to the Company, shareholders will
be informed of the actions to be taken by the Alter
native
Investment Fund Manager (“AIFM”) through a Regulatory
Information Service announcement.
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Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Investment Process
Investment Process
The portfolio management team, which has day to day
responsibility for managing the portfolio, is led by Luciano
Suana, and comprises himself, Ben Goldsmith and Edward
Pybus.
The portfolio management team presents investment
opportunities to the Investment Committee, which is
chaired by Graham Thomas.
Thematically, the team seeks to invest in opportunities,
publicly traded or private, which either demonstrably
deliver or benefit significantly from the more efficient use
of energy and resources. All investment opportunities are
assessed through a value lens, with the aim of acquiring
investments with low downside risk, backed by identifiable
assets and cash flows, at attractive valuations. The team
seeks to invest with a long-term perspective, and with high
conviction. Consequently, the portfolio comprises around
20 positions and the team aims for portfolio turnover to
be low.
When identifying suitable investment opportunities, the
portfolio management team is cognisant of the UK
Stewardship Code and the UN Principles of Responsible
Investment.
Investment Committee
The Investment Committee meets weekly in order to
consider the investment opportunities presented by the
portfolio management team. All investment decisions must
be made with the unanimous consent of all members of
the Investment Committee unless one of the members has
a potential conflict of interest, in which case that member
will excuse himself from that particular decision.
Investment Network
The portfolio management team has access to a
proprietary investment network, which includes a group of
investment managers of external funds and, from time to
time, external experts and advisers. The portfolio
management team believe that this is of benefit to the
investment process and helps to source opportunities that
they believe would not otherwise be available to the
Company.
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Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Business Description Theme
Digitisation
Develops and operates solar energy assets Clean energy
Provides waste management and environmental services in North America Water & waste management
Delivers a range of internet based products and services for users and advertisers,
which are powered by renewable energy with the group being the largest corporate
buyer of renewable power worldwide
Owns and operates telecommunications infrastructure across the USA, which will
underpin the Internet of Things
Sustainable infrastructure and
transportation
Provides cloud infrastructure and software services which deliver energy efficiency
savings for customers versus legacy solutions
Digitisation
Owns and operates (fuel-efficient) freight railways in Canada and the USA Sustainable infrastructure and
transportation
Designs, manufactures and services next generation aircraft engines which offer
significant fuel efficiency savings
Industrial emissions reduction
Builds and operates energy efficient critical infrastructure assets Sustainable infrastructure and
transportation
Operates rail freight services across North America, which represent the most
environmentally friendly way to transport freight over land
Sustainable infrastructure and
transportation
Portfolio of mostly renewable, rail and social infrastructure assets Sustainable infrastructure and
transportation
Operates ports and provides (lower climate impact) maritime services in Brazil Sustainable infrastructure and
transportation
Invests in energy-efficient real estate projects Sustainable infrastructure and
transportation
Develops, manufactures & services advanced lithography systems used to produce
more energy efficient semiconductor chips
Digitisation
Develops, manufactures & services inspection and metrology equipment used to
increase the efficiency of semiconductor manufacturing
Digitisation
Develops, manufactures & services etching & deposition equipment used to produce
more energy efficient semiconductor chips
Digitisation
continues to set new sustainability targets. Building on its
pledge to operate on carbon-free energy everywhere, at all
times, by 2030, we were also pleased to see, in September
2021, that the company aims to replenish 120% of the water
it consumes across its datacentres and offices.
Microsoft was also a very strong contributor, validating our
decision to materially increase our position in late April and
early May. Following these additional purchases, the shares
rose more than 30% over the remainder of the calendar year.
The holding represented 12.4% of NAV at 31 December
2021. We expect the group to continue benefiting from the
secular digitisation theme for many years. CEO Satya Nadella
expects IT spending to increase from 5% to 10% of GDP by
the end of the decade. The company is the key technology
partner for all enterprises and its software products are
ubiquitous. Following Alphabet’s lead, Microsoft now also
aims to operate on carbon-free energy everywhere, at all
times, by 2030. Furthermore, the company wants to be
carbon negative in the same timeframe and to have removed
all carbon it has emitted since its founding by 2050. During
the calendar year, Microsoft announced a 15% blended
average price increase for Office 365, the largest since its
launch a decade ago. We do not expect the move to have
any material impact on customer retention and believe it
clearly demonstrates the group’s pricing power. In our mind
this is emblematic of the type of company we want to hold
in the portfolio.
Following a period of moving sideways in the prior year,
Waste Management shares delivered robust performance
in 2021. The company benefited from both the recovery in
economic activity and its successful integration of Advanced
Disposal Services, which included upgraded synergy
targets. With the share price multiple at an all-time high, we
opted to realise some profits in December and sold a portion
of our holding. We continue to expect the shares to deliver
steady performance over time, with the company offering
an appealing combination of predictable free cash flow
generation, solid competitive position and a shareholder
friendly management team. We are also pleased with the
company’s progress on its environmental goals. Whilst
Waste Management’s services currently avoid three times
more emissions than are generated by its operations,
management is aiming to increase this figure to four times
by 2038. The company is increasingly harnessing the
methane gas emitted from its landfill facilities by transforming
it into renewable natural gas and is currently using it to power
approximately one quarter of its vehicle fleet.
Consolidation surged back onto the North American
railroad industry agenda, with both Canadian National
and Canadian Pacific making bids to buy Kansas City
Southern. The well reported tussle between the two
companies ended with Canadian Pacific as the only
viable acquirer, after regulatory uncertainty effectively
stymied Canadian National’s bid. Canadian Pacific
announced the completion of its acquisition in December
2021, but it remains subject to the merger being approved
by the United States Surface Transportation Boar
d.
Canadian Pacific expects to be able to start integrating
Kansas City Southern in late 2022. However, if the Surface
Transportation Board does not approve the transaction,
Canadian Pacific will have to sell the business, possibly
at a loss. We think this is unlikely due to the transaction’s
procompetitive characteristics and the regulator’s positive
reception so far, in contrast to its opposition to Canadian
National’s bid.
Our thesis for both companies is unchanged, with rail as the
most environmentally friendly way of transporting freight over
land. Current locomotives are four times more fuel efficient
than trucking on a per unit basis. Both businesses possess
very strong competitive positions, which we believe provides
them with real pricing power. We are also optimistic on the
Canadian Pacific-Kansas City Souther
n combination,
which will create a unique network spanning three North
American countries. There will be a significant opportunity
to grow volumes by converting road freight to new rail
services between Mexico, Texas and the Upper Midwest.
Separately, we opted to exit our position in the Canadian
railroads’ peer, Union Pacific, in March and reallocate the
proceeds within the portfolio to opportunities offering a
better balance between risk and r
eward.
The global semiconductor shortage seems to be persisting
due to rapid demand growth driven by cloud computing,
artificial intelligence, 5G, the Internet of Things and the
digitisation of the automotive industry. Significant capital
investments by the industry to expand capacity have proven
a boon for our semiconductor capital equipment
companies, ASML, Lam Research and KLA. Since our
initial purchases in October 2020, each company’s share
price had more than doubled at the year end. They each
dominate their respective niche and play a critical role in
helping the wider industry both maximise semiconductor
production from finite resources and develop and produce
more advanced and energy efficient chips. Whilst
15
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
energy company ENI to jointly develop a further
140megawatts of capacity. The value of our holding was
marked up according to the co-investment manager’s latest
valuation in May and we subsequently received a £2 million
cash distribution from the company, in relation to proceeds
from the sale of assets. This reduced the value of our holding
and left X-ELIO representing 8.2% of our NAV at the
periodend.
Our original investment in TCI Real Estate Partners
Fund III in 2018 incorporated a commitment to invest
additional follow-on amounts to support further fund
investments. Whilst we had hoped they would draw down
additional capital from our commitment over the year under
review, the opposite occurred with our receipt of a
US$2.2million distribution in June. This reflected the return
of capital and income proceeds realised after David Lloyd
Leisure repaid the fund following a successful refinancing.
Following the completion of the sale of Calisen we received
cash proceeds of £6.1 million. We were pleased with this
result, with the transaction representing a return on
investment of approximately 1.8 times over four years,
equivalent to a net IRR of approximately 15%.
We were also pleased to complete a new co-investment
with KKR in John Laing in December 2021. Our initial
£4 million investment equated to 3.2% of our NAV at
31December 2021 and was funded from cash on hand and
partial sales of existing quoted equity positions. The
company is an originator, developer and owner of core
mid-market infrastructur
e assets primarily across Europe,
North America and Australia. The company works to
mitigate the environmental impact of its operations on an
asset by asset basis and has committed itself to the net zero
transition for its business, with an aim to complete this for
direct operations ahead of the collective 2050 target. We
expect the development pipeline of infrastructure assets to
provide us with opportunities to commit additional capital
over time.
FX Hedges
Our currency hedges are in place to lower the volatility of our
sterling reporting currency returns by reducing non-sterling
exposure related to investments that are denominated in
other currencies. We have been using currency forward
contracts to hedge between half and two thirds of our EUR
and USD denominated exposures. The depreciation of
sterling during the period meant that we incurred a small loss
on these currency forward contracts on a standalone basis,
equivalent to 1.1% of the NAV.
Outlook
Forecasting the future is fraught with difficulty and so we
focus on investments which require us to make as few
predictions as possible. We believe our criteria of resource
efficiency, quality and value should leave our portfolio well
placed to generate superior returns over time relative to the
risk taken, in most market conditions. Whilst the prospect
of tightening monetary policy has had a significant impact
on valuations in certain pockets of the market, our quoted
equities have been less affected. If current rates of inflation
remain high, and real interest rates negative, we believe our
focus on companies with pricing power will keep us in good
stead. The presence of better opportunities within public
markets has limited our private investment activity after a
series of successful realisations. We continue to search
diligently for suitable private investments that offer an
attractive balance between risk and reward, but intend to
make sure we only make investments that improve the
quality of the portfolio. We are pleased to report that the
Company’s net asset value has now successfully
compounded at circa 13% annually, after fees, for over five
years.
Net Asset NAV
Value per share
£’000 pence
31 December 2016 68,283 85.4
31 December 2021 124,531 155.7
Annualised Net Return 12.9%
Menhaden Capital Management LLP
Portfolio Manager
20 April 2022
17
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
19
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Our approach and developments in 2021
Menhaden Capital Management LLP (“MCM”) continued to
apply its fundamental, research-oriented approach
throughout 2021 aiming to find the innovation, products and
services that show corporate best practice when it comes
to energy and resource efficiency.
There was relatively little turnover in the portfolio during the
year, but we made some changes to our investment
themes, which included broadening technology to
digitisation, opening up themes on ‘environmental reporting’
and ‘industrial emissions reduction’ and expanding our
transport theme to encompass sustainable transport and
infrastructure. The latter saw the Company complete a new
co-investment with KKR in John Laing Group. The group
is committed to responsible investment and decreased
direct emissions by 48% and Scope 3 emissions by 89% in
their last year reported. We also invested in VINCI who are
transforming their business around achieving a 40%
reduction in emissions by 2030 (compared to 2018).
Total tonnes of greenhouse gas (“GHG”) emissions avoided
by the Company’s investments (as a proportion based on
the portfolio’s ownership levels in each company) almost
doubled this year to over 58,000 tonnes. The amount of
clean electricity generated by the portfolio almost tripled to
over 94,000 MWh, with X-ELIO being the main generator.
We accept that high-emitting sectors like aviation and
construction contribute greatly to climate change but rather
than avoid the sector entirely we want to reward those
players leading the way in efficient and environmentally-
friendly practices. For example, VINCI’s construction arm
launched its Exegy low carbon concrete range in September
2020, which reduces C02 emissions by up to 70%
compared with traditional concretes.
We take a similar future-focused approach to the transport
sector, which is responsible for 24% of direct CO2
emissions. The transport industry has been slow to
decarbonise, so we look to support companies such as
Safran which launched a new project in partnership with
GE Aviation in June 2021 called the CFM Rise (Revolutionary
Innovation for Sustainable Engines), a low-carbon aircraft
technology that targets a 20% reduction in fuel consumption
and CO2 emissions in comparison to current jet engines. In
2021 we divested from Airbus, which despite offering a
more energy efficient option than peers, was one of the most
carbon-intensive stocks in the portfolio. We took an
opportunity to sell following the significant recovery of its
share price after the Covid-19 pandemic.
Railways represent the most energy efficient method of
moving freight over land. Investee companies Canadian
Pacific and Canadian National have both implemented
robust climate actions plans to minimise emissions released
from rail freight. Canadian Pacific has committed to reduce
Scope 1, 2 and 3 GHG emissions intensity of its locomotives
in excess of 38% by 2030. The company also installed solar
capacity at its Calgary headquarters, and announced its
Hydrogen Locomotive Programme to create north America’s
first line-haul hydrogen locomotive prototype.
Finally, perhaps one of our most impressive environmental
performers in 2021 was Waste Management, a US waste
and environmental services company. Services the company
provides, such as turning gas from its landfills into energy,
help it avoid three times the GHG emissions it generates
from its operations, and it is aiming to increase this to
fourtimes by 2038.
Active ownership: Leveraging our voice
onclimate
As responsible stewards of shareholders’ capital, we are
committed to using our voice to foster best practice, both
by engaging directly with companies in the portfolio and
working in collaboration with other investors and initiatives.
In 2021 we began an organised programme of engagement
to move the portfolio’s holdings forward on environmental
reporting and target setting. We believe that the setting of
emissions reduction plans in line with what climate science
says is required for a net zero economy and regular
disclosure on performance against these targets is a vital
first step to driving energy and resource efficiency.
Thus, it was encouraging to see Safran improve their CDP
environmental reporting platform score from a ‘C’ to a ‘B’
last year, and for Canadian Pacific to improve from a ‘B’ to
an ‘A-‘ following our engagements on this issue. We are
pleased to note that a third of the portfolio’s equity holdings
have established clearly-defined pathways to reduce their
GHG emissions in line with the goals of the Paris Agreement,
with targets that have been independently validated by the
Science Based Targets initiative.
We will continue to engage with portfolio companies this
year in our quest to raise standards of environmental
disclosure and action.
As long-term investors, we also believe that mitigating
environmental risks involves an active approach to the
preservation of biodiversity and are proud to be signatories
Strategic Report
1
20
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
of the Financial Sector Commitment Letter on Eliminating
Commodity Driven Deforestation. We are cognisant that the
sectors represented in the portfolio, including transport,
infrastructure and waste management, intersect closely with
natural environments, and keenly interested to see the
companies we invest in actively reporting on the impacts of
their activities upon local flora and fauna, soil quality and
natural environments. Therefore, a focus for 2022 is to
encourage more investee companies to take action on
protecting nature and biodiversity.
Environmental Impact Statement
continued
INVESTING IN BIG TECH SOLUTIONS FOR NATURE
There is growing awareness about the interlinked crises of climate change and biodiversity and this is creating opportunity
for several firms, including portfolio constituents Microsoft and Alphabet, to explore how they can help restore and
preserve the natural environment.
Microsoft recently committed to building a Planetary Computer to help protect the earth’s ecosystems. The platform
will provide scientists, sustainability practitioners and conservation stakeholders with global environmental data to help
them identify the impacts climate change is having on biodiversity, and enable them to work with the data to support
environmental monitoring, forecasting, planning, and attribution.
At Alphabet, a new initiative using Google Earth technology has been designed to promote ecosystem restoration
across the world. Restor, a science-based open data platform developed by Google Creative Lab, launched in November
2021 and shows data on local biodiversity, current and potential soil carbon and other variables like annual rainfall, soil
PH and land cover.
Last year, Google also announced it would make AI-powered improvements to its Maps application to direct drivers along
more environmentally friendly routes, focusing on reducing emissions by avoiding traffic and limiting fuel consumption.
Portfolio Company Alignment with Paris Agreement Goals
The figure below shows our assessment of the commitments of the portfolio’s listed equity holdings against the Paris
Agreement. It indicates that most are working towards the target 2°C limit by 2050, but we have concerns about LAM
Research and ASML. We will increase our engagement with these in 2022 with a view to encouraging improvements in
their future climate impact.
21
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Alignment with SDGs
MCM and the Company’s Board support the UN Sustainable Development Goals (“SDGs”) and many of the portfolio’s
holdings contribute to the challenge of achieving them. We mapped our investment themes against the SDGs and
concluded that our contributions focus on six of the goals:
2021 saw record levels of extreme weather events and the IPCC warned temperature increases
will likely impact the global water cycle. The state of Califor
nia, home to Alphabet, headquarters,
recorded a severe drought and the company has committed to replenish 20% more water than
it uses by 2030 to help return regions with high or extremely high-water scarcity to a normal level.
Our portfolio companies have a significant role to play in both supply and creating demand for
renewable energy. X-ELIO is a global leader in the development of photovoltaics while Microsoft
has set a goal to be carbon negative by 2030 and to remove from the environment all the carbon
the company emitted since its founding by 2050. Encouragingly semi-conductor company ASML
has already reached its goal to use 100% renewable electricity across all of its operations.
We invest in companies helping build the infrastructure needed to transition to a low-carbon future.
Electric Vehicles (EVs) will help reduce transport emissions by 31% compared to petrol cars and
to support their roll out VINCI Autoroutes is aiming for all its service areas to have electric charging
stations by 2023. Charter Communications is also investing in innovative technologies to
support the transition, including 10G connectivity for the Internet of Things and smart cities.
Building a more circular economy is an important opportunity for sustainable investors and in the
US more than 75 billion pounds of food is wasted each year. Waste Management has invested
in technology to recycle food waste from residential, commercial and industrial sources and turn
it into energy or compost. Semiconductor supplier ASML also has a range of waste management
initiatives such as the Return4Reuse programme. From 2019 to 2020, the company’s total waste
generated per €1 million reduced from 417 kg to 360 kg.
This is a key theme acr
oss our portfolio. In the transport sector, for example, Safran is focusing
its research on breakthrough aircraft, to reach low carbon aviation by 2030-35 and move towards
carbon neutrality around 2050. Canadian National has set a target in line with achieving netzero
carbon emissions by 2050. By doing so, it is the first North American railroad to formally commit
to join the Business Ambition for 1.5°C and the United Nations’ Race to Zero campaign.
Since 2002, Oceans Wilson maritime services company, Wilson Sons, has been donating
deactivated tugboats to the award-winning Pernambuco Artificial Reefs Project, which works to
help the recovery of damaged marine ecosystems and serves as a living laboratory for studies on
marine biology.
23
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
“Depositary”). Details of their key responsibilities and their
contractual arrangements with the Company follow.
AIFM
The Board has appointed Frostrow as the designated AIFM
of the Company on the terms and subject to the conditions
of the alternative investment fund management agreement
between the Company and Frostrow (the “AIFM
Agreement”). The AIFM Agreement assigns to Frostrow
overall responsibility to manage the Company, subject to
the supervision, review and control of the Board, and
ensures that the relationship between the Company and
Frostrow is compliant with the requirements of UK AIFMD.
Frostrow, under the terms of the AIFM Agreement
provides, inter alia, the following services:
• risk management services;
• marketing and shareholder services;
• administrative and secretarial services;
• advice and guidance in respect of corporate
governance requirements;
• maintenance of the Company’s accounting records;
• preparation and dispatch of the annual and half yearly
reports and monthly factsheets; and
• ensuring compliance with applicable tax, legal and
regulatory requirements.
AIFM Fee
Under the terms of the AIFM Agreement, Frostrow receives
a periodic fee equal to 0.225% per annum of the
Company’s net assets up to £100 million, 0.20% per
annum of the net assets in excess of £100 million and up
to £500 million, and 0.175% per annum of the net assets
in excess of £500 million.
The AIFM Agreement is terminable on six months’ notice
given by either party.
Portfolio Manager
MCM is responsible for the management of the Company’s
portfolio of investments under a delegation agreement
between MCM, the Company and Frostrow (the “Portfolio
Management Agreement”). Under the terms of the Portfolio
Management Agreement, MCM provides, inter alia, the
following services:
• seeking out and evaluating investment opportunities;
• recommending the manner by which cash should be
invested, divested, retained or realised;
• advising on how rights conferred by the investments
should be exercised;
• analysing the performance of investments made; and
• advising the Company in relation to trends, market
movements and other matters which may affect the
investment objective and policy of the Company.
Portfolio Management Fee
MCM receives a periodic fee equal to 1.25% per annum
of the Company’s net assets up to £100 million and 1.00%
of the Company’s net assets in excess of £100 million.
The Portfolio Management Agreement is terminable on
sixmonths’ notice given by any of the three parties.
Performance Fee
MCM is also entitled to a performance fee which is
dependent on the level of the long-term performance of
the Company.
The performance fee is calculated for discrete three year
performance periods. In respect of a given performance
period, a performance fee may be payable equal to 10%
of the amount, if any, by which the Company’s adjusted
NAV at the end of that performance period exceeds the
higher of (a) a compounding hurdle (an annualised
compound return)* on the gross proceeds of the IPO
(adjusted for any subsequent share issues and
repurchases) of 5% per annum; and (b) a high watermark
(the highest net asset value that the Company has
reached on which a performance fee has been paid)*. The
performance fee is subject to a cap in each performance
period of an amount equal to the aggregate of 1.5% of the
weighted average NAV in each year (or part year, as
applicable) of that performance period.
*see Glossary for further details
25
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Key Performance Indicators (“KPIs”)
The Board of Directors reviews performance against the
following KPIs. They comprise both specific financial and
shareholder-related measures. The results for the year are
summarised in the Chairman’s Statement on page 5.
The KPIs for the Company ar
e:
•
Net asset value (“NAV”) per share total return;
•
Share price total return;
•
Discount/premium of the share price to the
NAVpershare; and
•
Ongoing charges rati
o.
Please refer to the Glossary beginning on page 82 for
definitions of these terms and an explanation of how they
are calculated.
N
AV per share total return
The Directors regard the Company’s NAV per share total
return as being the overall measure of value delivered to
shareholders over the long term. This reflects both the net
asset value growth of the Company and any dividends paid
to shareholders. The Board monitors the Company’s
NAVtotal return against its benchmark and peers in the
AICGlobal Sector and the AIC Environmental Sector. The
Company’s NAV per share total return over the year to
31December 2021 was 17.3% (2020: 13.2%). To reflect
the Company’s non-benchmarked total r
eturn investment
strategy, the Board uses RPI+3% as its primary long-term
financial performance comparator. RPI+3% over the year
was 10.5% (2020: 4.2%).
A full description of the portfolio and performance during
the year under review is contained in the Portfolio
Manager’s Review commencing on page 14 of this report.
Share price total return
The Directors regard the Company’s share price total return
to be a key indicator of performance and monitor this
closely. This measure reflects the return to the investor on
last traded market prices, assuming any dividends paid ar
e
reinvested. The Company’s share price total return over the
year to 31 December 2021 was 13.1% (2020: 3.0%).
Share price discount/premium to NAV per share
The share price discount/premium to the NAV per share
is considered a key indicator of performance as it impacts
the share price total return and can provide an indication
of how investors view the Company’s performance and its
investment objective. At 31 December 2021 the discount
stood at 28.1% (2020: 25.4%). The Chairman’s
Statement, on page 6, addresses the discount and the
approach of the Board. The discount remained stubbornly
wide throughout the year, notwithstanding the Company’s
positive performance.
Ongoing charges ratio
Ongoing charges represent the costs that shareholders
can reasonably expect to pay from one year to the next,
under normal circumstances. The Board continues to be
conscious of expenses and works har
d to maintain a
sensible balance between good quality service and costs.
The Board therefore considers the ongoing charges ratio
to be a KPI and r
eviews the figure both in absolute terms
and in comparison to the Company’s peers. The ongoing
charges ratio for the year to 31 December 2021 was 1.8%
(2020: 2.0%).
R
isk Management
In fulfilling its oversight and risk management responsibilities,
the Board maintains a framework of key risks which affect
the Company and the related internal controls designed to
enable the Directors to manage/mitigate these risks as
appropriate. The Directors have carried out a robust
assessment of the emerging and principal risks facing the
Company, including those that would threaten its business
model, future performance, solvency or liquidity.
The principal risks can be categorised under the following
broad headings:
•
Corporate Risks
•
Investment Risks
•
Operational Risks
•
Financial Risks
•
Legal and Regulatory Risks
27
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
The departure of a key member of the portfolio
management team may affect the Company’s
performance.
Principal Risks and Uncertainties
and the ability of the Company to liquidate its portfolio if the need
arose. Further details are included in the Going Concern and Viability
Statements on pages 36 and28 respectively.
The Portfolio Manager reports to the Board on developments at
MCM at each Board meeting. All investment decisions are made by
an Investment Committee, reducing reliance on a single individual.
Management and Mitigation
Operational Risks
As an externally managed investment trust, the
Company is reliant on the systems of its service
providers for dealing, trade processing,
administrative services, financial and other
functions. If such systems were to fail or be
disrupted (including as a result of cyber crime or
a pandemic) this could lead to a failure to comply
with applicable laws, regulations and
governance requirements and/or to a
financialloss.
The Board continuously monitors the performance of all the principal
service providers with a formal evaluation process being undertaken
each year. The Audit Committee reviews internal controls reports and
key policies (including measures taken to mitigate cyber risks and
disaster recovery procedures) put in place by its principal service
providers. Both Frostrow and MCM provide a quarterly compliance
report to the Audit Committee, which details their compliance with
applicable laws and regulations. The Audit Committee maintains the
Company’s risk matrix which details the risks to which the Company
is exposed, the approach to managing those risks, the key controls
relied upon and the frequency of the controls operation. Further
details are set out in the Audit Committee Report on page 48.
Financial Risks
The Company is exposed to liquidity risk and
credit risk arising from the use of counterparties.
If a counterparty were to fail it could adversely
affect the Company through either delay in
settlement or loss of assets. The most significant
counterparty to which the Company is exposed
is the Depositary, which is responsible for the
safekeeping of the Company’s custodial assets.
The Company’s assets include liquid securities which can be sold
to meet funding requirements, if necessary. Further information on
financial instruments and risk can be found in note 17 to the financial
statements beginning on page 75.
The Board reviews the services provided by the Depositary and the
internal controls report of the Custodian to ensure that the security
of the Company’s custodial assets is maintained. The Portfolio
Manager is responsible for undertaking r
eviews of the credit
worthiness of the counterparties that it uses. The Board reviews the
Portfolio Manager’s approved list of counterparties and the
Company’s use of those counterparties. Appropriate due diligence
is undertaken to verify the existence and ownership of unquoted
(non-custodial) assets.
Legal and Regulatory Risks
The regulatory or political environment in which
the Company operates could change to the
extent that it affects the Company’s viability.
The Board monitors regulatory developments but relies on the
services of its external advisers to ensure compliance with applicable
law and regulations. The Board has appointed a specialist
investment trust company secretary who provides industry and
regulatory updates at each Board meeting.
Impact of Covid-19
The Board continues to monitor developments with respect
to Covid-19. Restrictions imposed because of the pandemic
have challenged operations, but the Portfolio Manager
successfully continued dialogue with investee companies
and the Board has stayed in close contact with the Portfolio
Manager and has continuously monitored portfolio and
share price developments. All of the Company’s service
29
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Who?
STAKEHOLDER
GROUP
Why?
THE BENEFITS OF ENGAGEMENT WITH
THE COMPANY’S STAKEHOLDERS
Who?
HOW THE BOARD, THE AIFM AND THE
PORTFOLIO MANAGER HAVE ENGAGED
WITH THE COMPANY’S
STAKEHOLDERS
Investors Frostrow as AIFM, the Portfolio Manager and
the Company’s broker, on behalf of the
Board, complete a programme of investor
relations throughout the year (see also the
following section on Company Promotion).
An analysis of the Company’s shareholder
register is provided to the Directors at each
Board meeting along with marketing r
eports
from Frostrow. The Board reviews and
considers the marketing plans on a regular
basis. Reports from the Company’s broker
are submitted to the Board on investor
sentiment and industry issues.
Key mechanisms of engagement include:
l The Annual General Meeting;
l The Company’s website which hosts
reports, video interviews with the Portfolio
Manager and monthly factsheets;
l One-on-one investor meetings;
l As reported in the half year report, there
was a significant vote against the re-
election of the Chairman at the last
annual general meeting. Following
engagement it was determined this was
because his external appointments
exceeded the internal corporate
governance guidelines of a particular
large shareholder. This shareholder did
not engage before voting. The regular
Board evaluation exercise already
includes a review of Directors’ other time
commitments (see page 43), but this was
given greater emphasis at the latest
review because of this vote;
l The Board will explain in its announcement
of the results of the AGM the actions it
intends to take to consult Shareholders in
order to understand the reasons behind
any significant votes against;
Clear communication of the Company’s
strategy and the performance against the
Company’s objective can help the share
price trade at a narrower discount or a wider
premium to its net asset value, which
benefits shareholders.
The Board seeks to comply with these and the following describes how the Directors have had regard to the views of
the Company’s stakeholders in their decision-making.
Key topics of engagement with the external
Portfolio Manager on an ongoing basis are
portfolio composition, performance, outlook and
business updates.
l The Board received regular updates from the Portfolio
Manager throughout the Covid-19 pandemic,
including its impact on investment decision making.
Working practices adopted by the Portfolio Manager
to cope with restrictions imposed because of the
pandemic were also reviewed. No further action was
considered necessary in this regard.
l The impact of Covid-19 upon their business and how
components in the portfolio have been able to benefit
during the pandemic, in particular through increased
digitalisation.
31
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Portfolio companies The Board encourages the Company’s
Portfolio Manager to engage with companies
and in doing so expects ESG issues to be a
key consideration.
The Board receives an update on MCM’s
engagement activities quarterly.
Gaining a deeper understanding of the
portfolio companies and their strategies as
well as incorporating consideration of ESG
factors into the investment process assists
in understanding and mitigating risks of an
investment as well as identifying future
potential opportunities.
Who?
STAKEHOLDER
GROUP
Why?
THE BENEFITS OF ENGAGEMENT WITH
THE COMPANY’S STAKEHOLDERS
Who?
HOW THE BOARD, THE AIFM AND THE
PORTFOLIO MANAGER HAVE ENGAGED
WITH THE COMPANY’S
STAKEHOLDERS
What?
WHAT WERE THE KEY TOPICS OF ENGAGEMENT?
Outcomes and actions
WHAT ACTIONS WERE TAKEN, INCLUDING
PRINCIPAL DECISIONS?
Key topics of engagement with investors
l The Portfolio Manager, Frostrow and the broker meet
regularly with shareholders and potential investors to
discuss the Company’s strategy, performance and
portfolio.
In December 2020, The Board held a dedicated
strategy session which reviewed the future strategy of
the Company including an enhanced communication
strategy with the Portfolio Manager, Frostrow and the
broker in attendance. Strategy discussions continued
as a constituent of the scheduled Board meetings
during the last year.
To further aid the Board and investors in the
monitoring of the NAV and the share price discount,
the Board agreed that the Company’s NAV per share
be announced daily rather than monthly from the start
of 2021.
l Ongoing dialogue with shareholders concerning the
strategy of the Company, performance and the
portfolio.
Strategic Report
1
32
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Company Promotion
The Company has appointed Frostrow to promote the
Company’s shares to professional investors in the UK and
Ireland. As investment company specialists, the Frostrow
team provides a continuous, proactive marketing,
distribution and investor relations service that aims to grow
the Company by encouraging demand for the shares.
Frostrow actively engages with professional investors,
typically discretionary wealth managers, some institutions
and a range of execution-only platforms. Regular
engagement helps to attract new investors and retain existing
shareholders, and over time results in a stable share register
made up of diverse, long-term holders. Frostrow, in turn,
provides the Board with up-to-date and accurate information
on the latest shareholder and market developments.
Frostrow arranges and manages a continuous programme
of one-to-one meetings with professional investors around
the UK. These include regular meetings with ‘gate keepers’,
the senior points of contact responsible for their respective
organisations’ research output and recommended lists.
The programme of regular meetings also includes
autonomous decision makers within large multi-office
groups, as well as small independent organisations. Some
of these meetings involve MCM, but most of the meetings
do not, which means the Company is being actively
promoted while MCM focuses on managing the portfolio.
The Chairman is also available to engage with shareholders.
The Company also benefits from involvement in the regular
professional investor seminars run by Frostrow in major
centres, notably London and Edinburgh, which are
focused on buyers of investment companies.
The creation and dissemination of information on the
Company is also overseen by Frostrow. Frostrow produces
all key corporate documents, monthly factsheets, annual
reports and manages the Company’s website
www.menhaden.com. All Company information and
invitations to investor events, including updates from MCM
on the portfolio and market developments, are regularly
emailed to a growing database, overseen by Frostrow,
consisting of professional investors across the UK and Ireland.
Frostrow maintains close contact with all the relevant
investment trust broker analysts, particularly those from
Numis Securities Limited, the Company’s corporate broker,
but also others who publish and distribute research on the
Company to their respective professional investor clients.
Social, Human Rights and
EnvironmentalMatters
The Company is an externally managed investment trust
within the AIC Environmental Sector and invests in
companies and markets that are demonstrably delivering
or benefiting significantly from the efficient use of energy or
resources. The Board is responsible for oversight of the
Portfolio Manager and consequently for the risks and
What?
WHAT WERE THE KEY TOPICS OF ENGAGEMENT?
Outcomes and actions
WHAT ACTIONS WERE TAKEN, INCLUDING
PRINCIPAL DECISIONS?
Business Review
continued
l
The Portfolio Manager reports regularly any ESG issues
in the portfolio companies to the Board and the Board
encourages the Portfolio Manager to engage with
investee companies on climate change mitigation and
reporting, which is expanded upon in the Impact
Statement starting on page 18.
Other Service Providers
l No specific action was required as the reviews of the
Company’s service providers have been positive and
the Directors believe their continued appointment is in
the best interests of the Company.
l
The integration of ESG into the Portfolio Manager’s
investment processes and their engagement with
investee companies on ESG.
l The Directors have frequent engagement with the
Company’s other service providers through the
annual cycle of reporting and due diligence meetings
or site visits by Frostrow. This engagement is
completed with the aim of maintaining an effective
working relationship and oversight of the services
provided.
33
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
opportunities that derive from their management of the
Company’s portfolio, including any considered to be
climate related. The Company’s resource efficiency
mandate is consistent with the drive towards net zero so
the Company is well placed to benefit as investor focus
evolves. The Company does not have any employees or
premises, nor does it undertake any manufacturing or
other operations. All its functions are outsourced to third
party service providers and therefore the Company itself
does not have any employee or direct human rights issues,
nor does it have any direct, material environmental impact.
The Company therefore has no environmental, human
rights, social or community policies.
The Company recognises risks fr
om climate change
regulation, such as potential impacts on investee
companies, portfolio construction, marketing and
reputation. It also recognises the opportunity provided by
the alignment of its investment objective and policy with
the net zero agenda.
The Board believes that the integration of financially material
environmental, social and governance (“ESG”) factors into
investment decision-making can r
educe risk and enhance
returns. The Portfolio Manager uses CDP ratings data as a
basis for engagement with investee companies on
ESGissues, including any considered to be climate related.
More detail is included in the Company’s Environmental
Impact Statement set out on pages18to21.
The ongoing engagement and dialogue with investee
companies, including through proxy voting, are key parts
of an asset stewardship role.
The Directors encourage the Portfolio Manager to ensure
the Company’s investments adhere to best practice in the
management of ESG issues and encourage them to have
due regard to the UN Global Compact and UN Principles
of Responsible Investment. The Portfolio Manager was a
signatory to the Financial Reporting Council 2012 UK
Stewardship Code and is reviewing its position against the
requirements of the 2020 Code.
As an investment company, the Company does not
provide goods or services in the normal course of business
and does not have customers. Accordingly, the Company
falls outside the scope of the Modern Slavery Act 2015.
The Company’s suppliers are typically professional advisers
and the Company’s supply chains are considered to be low
risk in this r
egard.
Anti-Bribery and Corruption Policy
The Board has adopted a zero-tolerance approach to
instances of bribery and corruption. Accordingly it
expressly prohibits anyone performing services or acting
on behalf of the Company from accepting, soliciting,
paying, offering or promising to pay or authorise any
payment, public or private, in the United Kingdom or
abroad, to secure any improper benefit for themselves or
for the Company.
A copy of the Company’s Anti Bribery and Corruption
Policy can be found on its website at
www.menhaden.com
. The policy is reviewed regularly by
the Audit Committee.
Prevention of the Facilitation of Tax Evasion
In response to the implementation of the Criminal Finances
Act 2017, the Board has adopted a zero-tolerance
approach to the criminal facilitation of tax evasion. A copy
of the Company’s policy on preventing the facilitation of
tax evasion can be found on the Company’s website
www.menhaden.com. The policy is reviewed annually by
the Audit Committee.
This Strategic Report on pages 2 to 33 has been approved
by the Board.
Sir Ian Cheshire
Chairman
20 April 2022
35
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Barbara Donoghue
Barbara Donoghue (also known as Barbara Donoghue
Vavalidis) is a non-executive director of Byredo AB, a
Stockholm based luxury fragrance company, having been
its chair for the six years to 2020.
Until 2020 she was also a partner in London based
Manzanita Capital, a private equity partnership specialising
in the beauty and personal care industry. Other past
appointments include chair of Susanne Kaufmann Ltd, an
Austrian based beauty company, director and audit
committee chair of Eniro AB, a Stockholm listed media
company, member of the Competition Commission and
Competition and Markets Authority and member of the
board of the Independent Television Commission. She had
a previous career in finance in Toronto, New York and
London advising companies on raising debt and equity
financing and on executing mergers and acquisitions,
during which she worked at Bank of Nova Scotia, Bankers
Trust and NatWest Markets.
Howard Pearce
Howard Pearce is the founder of HowESG Ltd, a specialist
environmental, asset stewardship, and corporate
governance consultancy business. He is also chairman of
the Bank of Montreal Global Asset Management (EMEA)
Responsible Investment Advisory Council.
Previously he has been a non executive director of
Response Global Media Limited, chair of the Pension Board
of Avon and Wiltshire Pension Funds, board member and
chair of the Audit Committee of Cowes Harbour
Commission, and a trustee and chair of the Investment and
Audit Committees of the NHS ‘Above and Beyond’ charity.
Between 2003 and 2013 Howard was the head of the
Environment Agency pension fund and a member of its
Pensions and Investment Committee. Under his leadership,
the fund won over 30awards in the UK, Europe and globally
for its financially and environmentally responsible investment,
best practice fund governance, public reporting and e-
communications.
Meeting Attendance
The number of scheduled meetings of the Board and its committees held during the year and each Director’s
attendance, is shown below:
Management
Engagement
Type and number of meetings Board Audit Committee Committee
held in 2021 (4) (3) (1)
Sir Ian Cheshire 4 3
1
1
Duncan Budge 4 3 1
Emma Howard Boyd 4 3 1
Howard Pearce 4 3 1
Barbara Donoghue
2
– – –
1
Sir Ian Cheshire is not a member of the Audit Committee but attended by invitation.
2
Barbara Donoghue was appointed as a Director after the end of the financial year, on 1 February 2022.
37
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
The voting rights of the ordinary shares on a poll are one
vote for each share held.
No shares were issued or repurchased during the year or
to the date of this report.
There are no:
• restrictions on transfers of the Company’s ordinary
shares, or in respect of their voting and dividend rights;
• agreements, known to the Company, between holders
regarding the transfer of ordinary shares; or
• special rights with regard to control of the Company
attaching to the ordinary shares.
At the end of the year under review and to the date of this
report, the Directors had shareholder authority to issue a
further 800,000 ordinary shares and to repurchase no
more than 14.99% of the Company’s issued share capital.
These authorities will expire at the forthcoming Annual
General Meeting. Proposals to renew the Board’s powers
to issue and buy back shares are set out in the Notice of
Annual General Meeting beginning on page 86.
Beneficial Owners of Shares – Information
Rights
Beneficial owners of shares who have been nominated by
the registered holder of those shares to receive information
rights under section 146 of the Companies Act 2006 are
required to direct all communications to the registered
holder of their shares rather than to the Company’s
registrar or to the Company directly.
Nominee Share Code
Where the Company’s shares are held via a nominee
company name, the Company undertakes:
• to provide the nominee company with multiple copies
of shareholder communications, so long as an
indication of quantities has been provided in advance;
and
• to allow investors holding shares through a nominee
company to attend general meetings, provided the
correct authority from the nominee company is
available.
Nominee companies are encouraged to provide the
necessary authority to underlying shareholders to attend
the Company’s general meetings.
Substantial Interests in Share Capital
The Company was aware of the following substantial interests of 3% or more in the voting rights of the Company as at
31 December 2021 and 31 March 2022.
31 March 2022 31 December 2021
Number % of Number % of
of issued of issued
Ordinary share Ordinary share
Shareholder shares capital shares capital
Cavenham Private Equity 15,635,000 19.5 15,635,000 19.5
Generali Deutschland Versicherung 10,000,000 12.5 10,000,000 12.5
Ravenscroft 5,339,950 6.7 5,339,950 6.7
Charles Stanley 3,417,793 4.3 3,341,855 4.2
Armstrong Investments 2,600,000 3.2 2,600,000 3.2
Rath Dhu 2,400,000 3.0 2,400,000 3.0
39
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Political Donations
The Company has not made, and does not intend to
make, any political donations.
Disclosure of Information to the Auditor
The Directors are listed on pages 34 and 35. Each Director
confirms that:
• to the best of each Director’s knowledge and belief,
there is no information relevant to the preparation of the
audit report of which the Company’s Auditor is
unaware; and
• each Director has taken all the steps a director might
reasonably be expected to have taken to be aware of
relevant audit information and to establish that the
Company’s Auditor is aware of that information.
This information is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
Annual General Meeting
The Company’s Annual General Meeting (“AGM”) will be
held at 25 Southampton Buildings, London WC2A 1AL on
22 June 2022 at 12 noon.
The business of the meeting is summarised in some detail
in the Explanatory Notes to the Resolutions on pages 91
to 92 of this Annual Report.
The AGM resolutions include the following items of special
business:
Resolution 10 Authority to allot shares
Resolution 11 Authority to disapply pre-emption rights
Resolution 12 Authority to repurchase shares
Resolution 13 Authority to hold General Meetings (other
than the AGM) on at least 14 clear days’ notice.
The full text of the resolutions can be found in the Notice
of AGM beginning on page 86.
The Board considers that the proposed resolutions are in
the best interests of the shareholders as a whole.
Accordingly, the Board unanimously recommends to
shareholders that they vote in favour of the resolutions to
be proposed at the forthcoming AGM, as the Directors
intend to do in respect of their own beneficial holdings.
By order of the Board
Frostrow Capital LLP
Company Secretary
20 April 2022
41
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Corporate Governance Statement
The Board and Committees
Responsibility for effective governance lies with the Board whose role is to promote the long-term success of the
Company. The governance framework of the Company reflects the fact that as an externally managed investment
company, it has no employees and outsources portfolio management services to Menhaden Capital Management LLP
and risk management, company management, company secretarial, administrative and marketing services to Frostrow
Capital LLP. The Board generates value for shareholders through its oversight of the service providers and management
of costs associated with running the Company.
The Board
Chairman – Sir Ian Cheshire
Four additional non-executive Directors, all considered independent.
Key roles and responsibilities:
– to provide leadership and set strategy within a framework of effective controls which enable risk to be assessed
and managed;
– to ensure that a robust corporate governance framework is implemented; and
– to challenge constructively and scrutinise performance of all outsourced activities.
Management Engagement
Committee
Chairman – Sir Ian Cheshire
All Directors
Key roles and responsibilities:
– to review the contracts, the performance and the
remuneration of the Company’s principal service
providers; and
– to make recommendations to the Board regarding
the continuing appointment of the AIFM and the
Portfolio Manager.
Audit Committee
Chairman – Howard Pearce
Duncan Budge, Barbara Donoghue,
EmmaHoward Boyd
Key roles and responsibilities:
– to review the Company’s financial reports;
– to oversee the risk and control environment; and
– to review the performance of the Company’s
external Auditor.
Copies of the full terms of reference, which clearly define the responsibilities of each committee, can be obtained from
the Company Secretary, will be available for inspection at the Annual General Meeting, and can be found on the Company’s
website www.menhaden.com.
The Directors have decided that, given the size of the Board and the fact that all Directors are considered to be
independent, it is unnecessary to form separate remuneration and nomination committees; the duties that would fall to
those committees are carried out by the Board as a whole. However, the Chairman takes no part in discussions
regarding his own remuneration and will not chair any discussions relating to the appointment of his successor.
43
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Conflicts of Interest
In line with the Companies Act 2006, the Board has the
power to authorise any potential conflicts of interest that
may arise and impose such limits or conditions as it thinks
fit. A register of interests and potential conflicts is
maintained and is reviewed at every Board meeting. It was
resolved at each Board meeting during the year that there
were no direct or indirect interests of a Director that
conflicted with the interests of the Company. Appropriate
authorisation will be sought prior to the appointment of
any new director or if any new conflicts or potential
conflicts arise.
Directors’ Other Commitments
As part of the annual Board evaluation process, each of
the Directors assessed the overall time commitment of
their external appointments and it was concluded that
they all have sufficient time to discharge their duties.
Board Meetings
The primary focus at regular Board meetings is the review
of investment performance and associated matters,
including asset allocation, marketing/investor relations,
gearing, peer group information and industry issues. The
Board reviews key investment and financial data, revenue
and expenses projections, analyses of asset allocation,
transactions, performance comparisons, share price and
net asset value performance. The Board’s approach to
addressing share price performance during the year is
described in the Chairman’s Statement on page6.
The Board is responsible for setting the Company’s
corporate strategy and reviews the continued
appropriateness of the Company’s investment objective,
investment strategy and investment restrictions at each
meeting.
The number of meetings and the individual attendance by
directors is set out on page 35.
Matters Reserved for Decision by the Board
The Board has adopted a schedule of matters reserved
for its decision. This includes, inter alia, the following:
• requirements under the Companies Act 2006, including
approval of the half yearly and annual financial
statements, recommendation of the final dividend (if
any), declaration of any interim dividends, the
appointment or removal of the Company Secretary, and
determining the policy on share issuance and buybacks;
• matters relating to certain Stock Exchange
requirements and announcements, the Company’s
internal controls, and the Company’s corporate
governance structure, policy and procedures;
• decisions relating to the strategic objectives and overall
management of the Company, including the
appointment or removal of the AIFM and other service
providers, and review of the Investment Policy; and
• matters relating to the Board and Board committees,
including the terms of reference and membership of the
committees, the appointment of directors (including the
Chairman) and the determination of Directors’
remuneration.
Day-to-day operational and portfolio management is
delegated to Frostrow and MCM respectively.
The Board takes responsibility for the content of
communications regarding major corporate issues, even
if Frostrow or MCM act as spokesmen. The Board is kept
informed of relevant promotional material that is issued by
Frostrow.
Stewardship and the Exercise of Voting Powers
The Board has delegated authority to MCM (as Portfolio
Manager) to engage with companies held in the portfolio
and to vote the shares owned by the Company. The Board
has instructed that MCM submit votes for such shares
wherever possible. MCM may refer to the Board on any
matters of a contentious nature.
The Portfolio Manager’s approach to stewardship,
including their consideration of environmental, social
andgovernance issues, is set out in their UK Stewardship
Code (2012) Compliance Statement which can be found
on the Company’s website www.menhaden.com
.
Independent Professional Advice
The Board has formalised arrangements under which the
Directors, in the furtherance of their duties, may seek
independent professional advice at the Company’s
expense. No such advice was sought during the year.
45
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
All of the Directors who served during the financial year
were appointed when the Company was established and
consequently their tenures coincide. The Board is
committed to ensuring that there is an orderly succession
with appropriate overlap of new Directors and, with that
in mind, scouted for prospective candidates during
theyear.
Appointments to the Board
The rules governing the appointment and replacement of
directors are set out in the Company’s articles of
association and the aforementioned succession planning
policy. Where the Board appoints a new director during
the year, that director will stand for election by
shareholders at the next AGM. Subject to there being no
conflict of interest, all Directors are entitled to vote on
candidates for the appointment of new directors and on
the recommendation for shareholders’ approval for the
Directors seeking re-election at the Annual General
Meeting. When considering new appointments, the Board
endeavours to ensure that it has the capabilities required
to be effective and oversee the Company’s strategic
priorities. This will include an appropriate range, balance
and diversity of skills, experience and knowledge. The
Company is committed to ensuring that any vacancies
arising are filled by the most qualified candidates.
Following a scouting exercise during the course of the year
the Board appointed Barbara Donoghue as a new
non-executive Director with effect from 1 February 2022.
The Board did not utilise the services of an external
agency or advertise the position as it was considered that
the Board’s contacts were sufficient to identify candidates
of high quality with relevant skills and experience.
MsDonoghue will offer herself for election by shareholders
at the forthcoming AGM.
Audit, Risk and Internal Control
The Statement of Directors’ Responsibilities on page 40
describes the Directors’ responsibility for preparing
thisreport.
The Audit Committee Report, beginning on page 47,
explains the work undertaken to allow the Directors to
make this statement and to apply the going concern basis
of accounting. It also sets out the main roles and
responsibilities and the work of the Audit Committee and
describes the Directors’ review of the Company’s risk
management and internal control systems.
A description of the principal risks facing the Company
and an explanation of how they are being managed is
provided in the Strategic Report on pages 25 to 27.
The Board’s assessment of the Company’s longer-term
viability is set out in the Strategic Report on page 28.
Remuneration
The Directors’ Remuneration Report beginning on
page 51 and the Directors’ Remuneration Policy on
page 53 set out the levels of remuneration for each
Director and explain how Directors’ remuneration
isdetermined.
Service Providers
Relationship with the AIFM and the Portfolio Manager
Representatives from Frostrow and MCM are in
attendance at each Board meeting to address questions
on specific matters and seek approval for specific
transactions that they are required to refer to the Board.
There is a respectful and constructive partnership between
the Board, the AIFM and the Portfolio Manager, and the
three parties worked closely together throughout the year.
The Management Engagement Committee evaluates
Frostrow and MCM’s performance and reviews the terms
of the AIFM and Portfolio Management Agreements at
least annually. The outcome of this year’s review is
described on page 24.
Relationship with Other Service Providers
The Management Engagement Committee monitors and
evaluates all of the Company’s other service providers,
including the Depositary, Registrar and Broker. At the most
recent review in November 2021, the Committee
concluded that all the service providers were performing
well and should be retained on their existing terms and
conditions.
Whistleblowing
The Board has gained assurance on whistleblowing
procedures at the Company’s principal service providers
to ensure employees at those companies are supported
in speaking up and raising concerns. No concerns relating
to the Company were raised during the year.
47
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Statement from the Audit Committee
Chairman
I am pleased to present the Audit Committee report for
the year ended 31 December 2021. The Committee met
three times during the year under review.
The role of the Committee is to ensure that shareholder
interests are properly protected in relation to the
application of financial reporting and internal control
principles and to assess the effectiveness of the audit. The
Committee’s roles and responsibilities are set out in full in
its terms of reference which are available on request from
the Company Secretary and can be seen on the
Company’s website (www.menhaden.com
). A summary
of the Committee’s main responsibilities and how it has
fulfilled them is set out below.
Composition
The Audit Committee comprises Howard Pearce
(Chairman of the Committee), Duncan Budge, Barbara
Donoghue and Emma Howard Boyd whose biographies
are set out on pages34 and 35. The Committee as a
whole has experience relevant to the investment trust
industry with Committee members having a range of
financial and investment experience. Mr Pearce has
extensive experience in audit, having chaired the audit
committees of numerous organisations as outlined on
page 35. MrBudge serves on the audit committees of the
three other investment trusts of which he is a
non-executive director.
Responsibilities
In summary, the Committee’s principal functions are:
• to monitor the integrity of the Company’s annual and
half-year financial statements and any announcements
relating to the Company’s financial performance;
• to review the internal controls and risk management
systems of the Company and its third-party service
providers;
• to make recommendations to the Board regarding the
appointment, re-appointment or removal of the external
Auditor, and to be responsible for leading an audit
tender process at least once every ten years;
• to have primary responsibility for the Company’s
relationship with the external Auditor, including
reviewing the external Auditor’s independence and
objectivity as well as the effectiveness of the external
audit process;
• to agree the scope of the external Auditor’s work and
to approve their remuneration; and
• to develop and implement policy on the engagement of
the external Auditor to supply non-audit services and
to review and approve any non-audit work to be carried
out by the external Auditor.
Meetings and Business
The following matters were dealt with at the Committee’s
meetings:
March 2021
• Review of the Company’s annual results, including
review of the Auditor’s report to the Committee;
• Approval of the Annual Report, including the
Environmental Impact Statement and the unquoted
investment valuations;
• Review of risk management, internal controls and
compliance; and
• Review of the need for an internal audit function.
September 2021
• Review of the Company’s terms of reference, non-audit
services policy and audit tender guidelines;
• Review of the outcome and effectiveness of the 2020
year end audit and any matters arising;
• Review of the Company’s half year results;
• Approval of the Half Year Report and financial
statements, and the unquoted investment valuations;
• Review of risk management, internal controls and
compliance; and
• Review of the Company’s anti bribery and corruption
policy and the policy on the prevention of the facilitation
of tax evasion, and the measures put in place by the
Company’s service providers.
November 2021
• Review of the Auditor’s plan and terms of engagement
for the 2021 year end audit;
• Review of new or revised reporting requirements and
audit standards;
• Review of the valuation methodology for the unquoted
investments; and
• Review of risks, internal controls and compliance.
Audit Committee Report
49
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Significant Reporting Matters
The Committee considered the significant issues in respect of the Annual Report, including the financial statements.
The table below sets out the key areas of audit risk identified and also explains how these were addressed.
Significant risk How the risk was addressed
The valuation of investments is undertaken in accordance with the accounting
policies in note 1 to the financial statements beginning on page 66. Controls are in
place to ensure that valuations are appropriate and existence is verified through
reconciliations with the Depositary. The Committee discussed with Frostrow and
MCM the process by which the unquoted investments are valued, and ownership
documented, including the reconciliation process with the Depositary. They also
reviewed the valuation of the unquoted investments as at 31 December 2021,
including the level of any discounts to net asset value applied to the unquoted
valuations, to ensure that they were carried out in accordance with the accounting
policy set out in note 1(b) on page 68. Having reviewed the valuations, the Committee
confirmed that they were satisfied that the investments had been valued correctly.
The Committee took steps to gain an understanding of the processes in place to
record investment income and transactions.
Valuation, existence and
ownership of investments, in
particular unquoted investments
Risk of revenue being misstated
due to the improper recognition
of revenue.
Financial Statements
The Board has asked the Committee to confirm that in its
opinion the Board can make the required statement that
the Annual Report taken as a whole is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position,
performance, business model and strategy. The
Committee has given this confirmation on the basis of:
• the procedures followed in the production of the Annual
Report, including the processes in place to assure the
accuracy of factual content;
• the extensive levels of review that were undertaken in
the production process, by Frostrow and also by the
Committee; and
• the internal control environment operated by Frostrow
Capital LLP (the AIFM), Menhaden Capital Management
LLP (the Portfolio Manager), JP Morgan (the Depositary)
and other service providers.
The Committee is satisfied that it is appropriate for the
Board to prepare the financial statements on the going
concern basis. Further detail can be found on page 36.
The financial statements can be found on pages 62 to 80.
The Committee also considered the longer-term viability
of the Company in connection with the Board’s statement
in the Strategic Report on page 28. The Committee
reviewed the Company’s financial position (including its
cash flows and liquidity position), the principal risks and
uncertainties and the results of stress tests and scenarios
which considered the impact of severe stock market
volatility on shareholders’ funds. This included modelling
further substantial market falls, and significantly reduced
market liquidity, to that experienced recently in connection
with the coronavirus pandemic. The scenarios assumed
that there would be significant falls in asset prices, that the
Company’s existing capital commitments would be drawn
down rapidly and in large instalments, that there would be
no sales of or distributions from private investments, and
that listed portfolio companies would cut their dividends.
The results illustrated the potential impact on the
Company’s NAV, expenses, cash flows and ability to meet
its liabilities and capital commitments. In even the most
stressed scenario, the Company was shown to have
sufficient cash, or to be able to liquidate a sufficient portion
of its listed holdings, in order to be able to meet its
liabilities as they fall due. Based on the information
available to the Directors at the time, the Committee
therefore concluded it was reasonable for the Board to
expect that the Company will be able to continue in
operation and meet its liabilities as they fall due over the
next five financial years.
51
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Single total figure of remuneration (audited)
Date of 2021 2020 Percentage
appointment Taxable Taxable change in
Director to the Board Fees expenses Total Fees expenses Total fees (%)
Sir Ian Cheshire 3 October 2014 50,000 – 50,000 50,000 – 50,000 0
Duncan Budge 3 October 2014 40,000 – 40,000 40,000 – 40,000 0
Emma Howard Boyd 3 October 2014 40,000 – 40,000 40,000 – 40,000 0
Howard Pearce 3 October 2014 40,000 2,464 42,464 40,000 580 40,580 0
Barbara Donoghue
^
1 February 2022 n/a n/a n/a n/a n/a n/a n/a
TOTAL 170,000 2,464 172,464 170,000 580 170,580
^ Barbara Donoghue was appointed as a Director after the end of the financial year.
No payments have been made to any former directors. It is the Company’s policy not to pay compensation upon leaving
office for whatever reason. None of the fees referred to in the above table were paid to any third party in respect of the
services provided by any of the Directors.
Statement from the Chairman
I am pleased to present the Directors’ Remuneration
Report to shareholders. An ordinary resolution for the
approval of this report will be put to shareholders at the
Company’s forthcoming Annual General Meeting. The law
requires the Company’s Auditor to audit certain disclosures
provided in this report. Where disclosures have been
audited, they are indicated as such and the Auditor’s
opinion is included in their report to shareholders on
pages54 to 61.
The Board considers the framework for the remuneration
of the Directors on an annual basis. It reviews the ongoing
appropriateness of the Company’s remuneration policy
and the individual remuneration of the Directors by
reference to the activities and particular complexities of
the Company and in comparison with other companies of
a similar structure and size. This is in line with the
AICCode.
Directors’ fees during the year were unchanged from the
previous year: £50,000 per annum for the Chairman and
£25,000 per annum for Directors, with Directors who
serve on the Audit Committee receiving an additional
£15,000 per annum. Directors’ fees have remained
unchanged since the Company’s launch in 2015. The
Board as a whole reviewed the fee levels at a meeting held
on 16 November 2021 and it was decided that they would
remain unchanged for the year ending 31 December
2022. The projected fees for 2022 are set out on page 53.
No remuneration consultants were appointed during the
year (2020: none).
Levels of remuneration reflect both the time commitment
and responsibility of the role. The Directors are
remunerated exclusively by fixed fees in cash and do not
receive bonus payments or pension contributions from the
Company, hold options to acquire shares in the Company,
or other benefits. All Directors are entitled to the
reimbursement of reasonable out of pocket expenses
incurred by them in order to perform their duties as
directors of the Company.
The simple fee structure reflects the non-executive nature
of the Board, which itself reflects the Company’s business
model as an externally managed investment trust (please
refer to the Business Review beginning on page22 for
more information). Accordingly, statutory disclosure
requirements relating to executive directors’ and
employees’ pay do not apply.
Directors’ Remuneration Report
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
%
Jul 15 Jan 16 Jul 16 Jan 17 Jul 17 Jan18 Jul 18 Jan 19 Jul 19 Jan 20 Jul 20 Jul 21Jan 21
RPI+3%
Company Share Price Total Return
53
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
The Company’s remuneration policy is that the
remuneration of each Director should be commensurate
with the duties, responsibilities and time commitment of
each respective role and consistent with the requirement
to attract and retain directors of appropriate quality and
experience. The remuneration should also be comparable
to that of investment trusts of similar size and structure.
Directors are remunerated in the form of fixed fees payable
monthly in arrears. There are no long or short-term
incentive schemes, share option schemes or pension
arrangements and the fees are not specifically related to
the Directors’ performance, either individually or
collectively.
The Directors’ remuneration is determined within the limits
set out in the Company’s Articles of Association. The
present limit is £500,000 in aggregate per annum.
It is the Board’s intention that the remuneration policy will
be considered by shareholders at the annual general
meeting at least once every three years. If, however, the
remuneration policy is varied, shareholder approval will be
sought at the AGM following such variation. The Board will
formally review the remuneration policy at least once a
year to ensure that it remains appropriate.
This policy was last approved by shareholders at the
Annual General Meeting held in 2019. Accordingly, an
ordinary resolution for the approval of this policy will be
put to shareholders at the Annual General Meeting to be
held on 22 June 2022. It is intended that this policy will
remain in place for the following financial year and
subsequent financial periods.
No communications have been received from
shareholders regarding Directors’ remuneration. The
Board will consider any comments received from
shareholders on the remuneration policy.
The Directors’ fees for 2021 and 2022 are shown in the
table below. The Company does not have any employees.
Directors’ Fees Current and Projected
Fees (£) Fees (£)
2022 2021
Sir Ian Cheshire 50,000 50,000
Duncan Budge 40,000 40,000
Howard Pearce 40,000 40,000
Emma Howard Boyd
1
19,111 40,000
Barbara Donoghue
2
36,667 n/a
185,778 170,000
1
Emma Howard Boyd will step down from the Board on 22 June 2022.
2
Barbara Donoghue was appointed as a Director with effect from
1February 2022.
Any new director appointed to the Board will, at the
current remuneration levels, receive a fee of £25,000 per
annum. Directors who serve on the Audit Committee
receive an additional fee of £15,000 per annum. The
Chairman receives an additional fee of £25,000
perannum.
All Directors are non-executive, appointed under the terms
of letters of appointment and none has a service contract.
The Directors’ letters of appointment may be inspected at
the Company’s registered office. The terms of their
appointment provide that Directors shall retire and be
subject to election at the first annual general meeting after
their appointment and to re-election every three years
thereafter. However, the Directors submit themselves for
annual re-election by shareholders, in line with the AIC
Code of Corporate Governance. The terms also provide
that a Director may be removed without notice and that
compensation will not be due on leaving office.
Directors’ Remuneration Policy
Governance
2
54
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Opinion
We have audited the financial statements of Menhaden Resource Efficiency PLC (the “Company”) for the year ended
31 December 2021 which comprise the Income Statement, the Statement of Changes in Equity, the Statement of
Financial Position, the Statement of Cash Flows and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and
United Kingdom Accounting Standards, including FRS 102, “The Financial Reporting Standard applicable in the UK
and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December 2021 and of its return for the year
then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the financial
statements” section of our report. We are independent of the Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, as applied to public
interest entities and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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.
Our audit procedures to evaluate the directors’ assessment of the Company’s ability to continue to adopt the going
concern basis of accounting included but were not limited to:
• Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern;
• Reviewing the directors’ going concern assessment including Covid-19 implications based on a ‘most likely’ (base
case) scenario and a ‘worst case scenario’ as approved by the board of directors on 20 April 2022;
• Making enquiries of directors to understand the period of assessment considered by the Directors, the completeness
of the adjustments taken into account and implication of those when assessing the ‘most likely’ scenario and the
‘worst case scenario’. This included examining the minimum cash inflow and committed outgoings under the ‘base
case’ cash flow forecasts and evaluated whether the directors’ conclusion that liquidity headroom remained in all
events was reasonable;
• Assessing and challenging the appropriateness of the directors’ key assumptions in their cashflow forecasts, by
reviewing supporting and contradictory evidence in relation to these key assumptions and assessing the directors’
consideration of severe but plausible scenarios;
• Testing the accuracy and functionality of the model used to prepare the directors’ forecasts; and
• Evaluating the appropriateness of the directors’ disclosures in the financial statements on going concern.
Independent Auditor’s Report to the
Members of Menhaden Resource Efficiency PLC
55
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
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.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
In relation to the Company’s reporting on how it has 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
director’s considered it appropriate to adopt the going concern basis of accounting.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our 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) we identified, 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 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.
We summarise below the key audit matters in forming our opinion above, together with an overview of the principal
audit procedures performed to address each matter and key observations arising from those procedures.
This matter, together with our findings, were communicated to those charged with governance through our Audit
Completion Report.
Key Audit Matter How our scope addressed this matter
Valuation, existence and ownership of the
investment portfolio
The Company has a significant portfolio of quoted and
unquoted investments, these are measured in
accordance with the requirements under FRS102 and
the Statement of Recommended Practice issued by
the Association of Investment Companies.
Investments make up 101% of total net assets by
value and are considered to be the key driver for the
Company. The investments are made up of unquoted
investments and quoted investments.
There is a significant level of judgements made in
ascertaining the fair value of these unquoted
investments. There is a risk that judgements made
when valuing the unquoted investments may lead to
a misstatement in the value recorded in the Statement
of Financial Position.
Unquoted investments
• understanding management’s process to value unquoted
investments through discussions with management and
examination of control reports on the third party service
organisations;
• obtaining and agreeing confirmation of investments held in
order to obtain comfort over existence and ownership;
• we engaged our valuation experts in considering whether
the methodology and assumptions applied for valuing
unquoted investments were in accordance with published
guidance, principally the International Private Equity and
Venture Capital Valuation Guidelines. This included reviewing
the investment valuation policies of the private equity funds,
reviewing the fund’s latest available audited financial
statements, reviewing the fund’s latest valuation statements,
reviewing any recent transactions and discussion with the
fund’s management where applicable;
57
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Our application of materiality and an overview of the scope of our audit
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 on the financial statements as a whole. Based on our
professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality £1,245,000
How we determined it This has been calculated with reference to the Company’s net assets, of which
it represents approximately 1%.
Rationale for benchmark applied Net assets have been identified as the principal benchmark within the financial
statements as it is considered to be the focus of the shareholders.
Approximately 1% of net assets have been chosen to reflect the level of
understanding of the stakeholders of the Company in relation to the inherent
uncertainties around accounting estimates and judgements.
Performance materiality Performance materiality is set to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
in the financial statements exceeds materiality for the financial statements as a
whole.
On the basis of our risk assessments, together with our assessment of the
overall control environment, our judgement was that performance materiality
was £933,000 which is approximately 75% of overall materiality.
Reporting threshold At planning stage, we agreed with the directors that we would report to them
misstatements identified during our audit above £36,000 as well as
misstatements below that amount that, in our view, warranted reporting for
qualitative reasons. This threshold has increased to £37,000 following our
revised materiality using net assets as at 31 December 2021.
As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether due
to fraud or error, and then designed and performed audit procedures responsive to those risks. In particular, we looked
at where the directors made subjective judgements, such as assumptions on significant accounting estimates.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the
financial statements as a whole. We used the outputs of our risk assessment, our understanding of the Company, its
environment, controls, and critical business processes, to consider qualitative factors to ensure that we obtained
sufficient coverage across all financial statement line items.
Other information
The other information comprises the information included in the annual report other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
59
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Corporate governance statement
The Listing Rules require us to review the directors’ statement 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.
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 or our knowledge obtained
during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 36;
• Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why the
period is appropriate set out on page 28;
• Directors’ statement on fair, balanced and understandable set out on page 40;
• Board’s confirmation that it has carried out a robust assessment of the e-merging and principal risks set out on
pages25to 27;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 48 and;
• The section describing the work of the audit committee set out on pages 47 to 50.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on page 40, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors 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.
Auditor’s 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 auditor’s 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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
61
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
The risks of material misstatement that had the greatest effect on our audit are discussed in the “Key audit matters”
section of this report.
A further description of our responsibilities is available on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the Audit Committee on 25November
2021 to audit the financial statements for the year ending 31 December 2021 and subsequent financial periods. The
period of total uninterrupted engagement is three years, covering the years ending 31 December 2019 to 31 December
2021.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain
independent of the Company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of the audit report
This report is made solely to the Company’s members as a body in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members
as a body for our audit work, for this report, or for the opinions we have formed.
Stephen Eames (Senior Statutory Auditor) for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
The Pinnacle
160 Midsummer Boulevard
Milton Keynes
MK9 1FF
20 April 2022
63
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
For the year ended 31 December 2021
Ordinary
share Special Capital Revenue
capital reserve reserve reserve Total
Notes £’000 £’000 £’000 £’000 £’000
At 31 December 2020 800 77,371 27,900 61 106,132
Net return after taxation – – 18,096 303 18,399
At 31 December 2021 800 77,371 45,996 364 124,531
For the year ended 31 December 2020
Ordinary
share Special Capital Revenue
capital reserve reserve reserve Total
Notes £’000 £’000 £’000 £’000 £’000
At 31 December 2019 800 77,371 15,280 548 93,999
Net return/(loss) after taxation – – 12,620 (167) 12,453
Dividends paid – revenue 7 – – – (320) (320)
At 31 December 2020 800 77,371 27,900 61 106,132
The accompanying notes on pages 66 to 80 are an integral part of these financial statements.
Statement of Changes in Equity
65
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
For the
For the
year ended year ended
31 December 31 December
2021 2020
Notes £’000 £’000
Net cash outflow from operating activities 15 (1,108) (1,225)
Cash flows from investing activities
Purchases of investments (20,492) (26,096)
Sales of investments 20,163 13,071
Settlement of derivatives 902 104
Net cash inflow/(outflow) from investing activities 573 (12,921)
Cash flows from financing activities
Equity dividends paid – (320)
Net cash outflow from financing activities – (320)
Decrease in cash and cash equivalents (535) (14,466)
Cash and cash equivalents at start of the year 1,413 15,879
Cash and cash equivalents at the end of the year 878 1,413
The accompanying notes on pages 66 to 80 are an integral part of these financial statements.
Statement of Cash Flows
67
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
1. ACCOUNTING POLICIES continued
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
Critical accounting judgements and key sources of estimation uncertainty used in preparing the financial
information are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable. The resulting estimates will, by definition, seldom
equal the related actual results.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities relate to the valuation of the Company’s unquoted (Level 3) investments.
£15,776,000 or 12.6% (2020: £13,380,000 or 13.0%) of the Company’s portfolio is comprised of unquoted
investments. These are all valued in line with accounting policy 1(b) below. Under the accounting policy the
reported net asset value or price of recent transactions methodologies have been adopted in valuing those
investments, as set out on page 68.
As the Company has judged that it is appropriate to use reported NAVs in valuing unquoted investments as set
out in note 17 (vi), the Company does not have any key assumptions concerning the future, or other key sources
of estimation uncertainty in the reporting period, which may have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year.
Whilst the Board considers the methodologies and assumptions adopted in the valuation of unquoted
investments to be supportable, reasonable and robust, because of the inherent uncertainty of valuation, the
values used may differ significantly from the values that would have been used had a ready market for the
investment existed. These values may need to be revised as circumstances change and material adjustments
may still arise as a result of a reappraisal of the unquoted investments’ fair value within the next year.
In using a figure of 25% in the disclosures, set out on page 79, in relation to unquoted investments the Directors
had regard to the nature of the investments, the wide range of possible outcomes, and public information on
secondary market transactions in private equity funds.
Segmental Analysis
The Board is of the opinion that the Company is engaged in a single segment of business, namely investing in
accordance with the Company’s Investment Objective, and consequently no segmental analysis is provided.
(b) Investments Held at Fair Value Through Profit or Loss
All investments are measured on initial recognition and at subsequent reporting dates at fair value in accordance
with FRS 102 Section 11: Basic Financial Instruments and Section 12: Other Financial Instruments Issues.
Purchases and sales of quoted investments are recognised on the trade date where a contract exists whose
terms require delivery within a time frame determined by the relevant market. Purchases and sales of unlisted
investments are recognised when the contract for acquisition or sale becomes unconditional.
Changes in the fair value of investments and gains and losses on disposal are recognised in the Income
Statement as ‘gains or losses on investments’. The fair value of the different types of investment held by the
Company is determined as follows:
• Quoted Investments
Fair value is deemed to be bid or last trade price depending on the convention of the exchange on which it
is quoted.
69
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
1. ACCOUNTING POLICIES continued
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the
Income Statement except as follows:
• expenses which are incidental to the acquisition or disposal of an investment are charged to the capital
column of the Income Statement; and
• expenses are charged to the capital column of the Income Statement where a connection with the
maintenance or enhancement of the value of the investments can be demonstrated. In this respect the
portfolio management and AIFM fees have been charged to the Income Statement in line with the Board’s
expected long-term split of returns, in the form of capital gains and income, from the Company’s portfolio.
As a result 20% of the portfolio management and AIFM fees are charged to the revenue column of the Income
Statement and 80% are charged to the capital column of the Income Statement.
Any performance fee accrued or paid is charged in full to the capital column of the Income Statement.
(f) Taxation
The tax effect of different items of expenditure is allocated between capital and revenue using the marginal basis.
Deferred taxation is provided on all timing differences that have originated but not been reversed by the Statement
of Financial Position date other than those differences regarded as permanent. This is subject to deferred tax
assets only being recognised if it is considered more likely than not that there will be suitable profits from which
the reversal of timing differences can be deducted. Any liability to deferred tax is provided for at the rate of tax
enacted or substantively enacted.
(g) Foreign Currency
Transactions recorded in overseas currencies during the year are translated into sterling at the exchange rate
ruling on the date of the transaction. Assets and liabilities denominated in overseas currencies are translated into
sterling at the exchange rates ruling at the date of the Statement of Financial Position.
Any gains or losses on the translation of foreign currency balances, whether realised or unrealised, are taken to
the capital or the revenue column of the Income Statement, depending on whether the gain or loss is of a capital
or revenue nature.
(h) Cash and Cash Equivalents
Cash and cash equivalents are defined as cash and demand deposits readily convertible to known amounts of
cash and subject to insignificant risk of changes in value.
(i) Share Capital
Ordinary shares issued by the Company are recognised at the proceeds or fair value received with the excess
of the amount received over nominal value being credited to the share premium account. Direct issue costs net
of tax are deducted from equity.
(j) Capital Reserves
The following are transferred to this reserve: gains and losses on the realisation of investments; changes in the
fair values of investments; and expenses, together with the related taxation effect, charged to capital in
accordance with the Company's accounting policy on expenses in 1(e).
Any gains in the fair value of investments that are not readily convertible to cash are treated as unrealised gains
in the capital reserve. The amounts within capital reserve less unrealised gains are available for distribution.
71
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
5. TAXATION ON NET RETURN
(a) Analysis of charge in period
2021
2020
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
UK corporation tax
Overseas taxation 65 – 65 14 – 14
(b) Factors affecting current tax charge for the year
Approved investment trusts are exempt from tax on capital gains made within the Company.
The tax charged for the period is lower than the standard rate of corporation tax in the UK of 19.0%
(2020:19.0%). The difference is explained below.
2021
2020
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return/(loss) before taxation 368 18,096 18,464 (153) 12,620 12,467
Corporation tax at 19.0% (2020: 19.0%) 70 3,438 3,508 (29) 2,398 2,369
Non-taxable gains on investments held
at fair value through profit or loss – (4,013) (4,013) – (2,623) (2,623)
Overseas withholding taxation 65 – 65 14 – 14
Non-taxable overseas dividends (220) – (220) (110) – (110)
Excess management expenses* 150 575 725 139 225 364
Current tax charge for the year 65 – 65 14 – 14
*Excess management expenses are expenses that are not relieved in full against income generated by the Company.
(c) Provision for deferred tax
No provision for deferred taxation has been made in the current period. The Company has not provided for
deferred tax on capital profits and losses arising on the revaluation or disposal of investments, as it is exempt
from tax on these items because of its status as an investment trust company.
The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the
United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be
taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the
higher 25% rate will apply but with a marginal relief applying as profits increase. The Company has not recognised
a deferred tax asset of £2,950,000 (25% tax rate) (2020: £1,527,000, 19% tax rate) as a result of excess
management expenses. It is not anticipated that these excess expenses will be utilised in the foreseeable future.
6. RETURN/(LOSS) PER SHARE
The capital, revenue and total return per ordinary share are based on the net return/(loss) shown in the
IncomeStatement on page 62 and the weighted average number of ordinary shares in issue 80,000,001
(2020:80,000,001).
There are no dilutive instruments issued by the Company.
73
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
8. INVESTMENTS continued
Gains on investments
2021 2020
£’000 £’000
Net movement in investment holding gains in the year 23,153 13,267
Net movement in derivative holding (losses)/gains in the year (2,029) 536
Gains on investments 21,124 13,803
Total unrealised gains, including transfers, during the year were £15,144,000 (2020: £7,937,000).
Purchase transaction costs were £28,000 (2020: £17,000). These comprise mainly commission and stamp duty.
Sales transaction costs were £5,000 (2020: £2,000). These comprise mainly commission.
9. DERIVATIVES
2021 2020
£’000 £’000
Fair value of FX forwards (99) 1,930
FX forwards are currently used to hedge the Company’s exposure to the euro and US dollar. See note 17(ii) for
further details. The Company received £902,000 (2020: received £104,000) on FX forwards closed during the
year. The FX forwards are revalued over time and any gains/losses (both realised and unrealised) are included in
gains/(losses) on investments in the capital column of the Income Statement.
10. DEBTORS
2021 2020
£’000 £’000
VAT recoverable 2 8
Withholding tax recoverable 49 70
Prepayments and accrued income 167 27
218 105
11. CREDITORS
2021 2020
£’000 £’000
Performance fees – 79
Other creditors and accruals 404 272
404 351
The performance fee mechanism is explained on page 23.
75
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
15. RECONCILIATION OF NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2021
2020
£’000 £’000
Gains before finance costs and taxation 18,464 12,467
Gains made on investments (21,124) (13,803)
(2,660) (1,336)
Increase in other debtors (134) (5)
Increase in creditors, accruals and performance fee provisions 1,730 123
Net taxation suffered on investment income (44) (7)
Net cash outflow from operating activities (1,108) (1,225)
16. RELATED PARTIES
The following are considered to be related parties:
• Frostrow Capital LLP
• The Directors of the Company
Details of the relationship between the Company and the Company’s AIFM are disclosed in the Strategic Report
on page 23. Details of fees paid to Frostrow by the Company can be found in note 3 on page 70. All material
related party transactions have been disclosed in note 3 on page 70. Details of the remuneration of the Directors
can be found in note 4 and in the Directors’ Remuneration Report starting on page 51. Details of the Directors’
interests in the capital of the Company can be found on page 51.
The balance outstanding to Frostrow at the year end was £23,000 (2020: £20,000). No balances were due to
the Directors (2020: nil).
17. FINANCIAL INSTRUMENTS
Risk management policies and procedures
The Company’s financial instruments comprise securities and other investments, cash balances and certain
debtors and creditors that arise directly from its operations.
As an investment trust, the Company invests in equities and other investments for the long term so as to achieve
its Investment Objective as stated on page 8. In pursuing its Investment Objective, the Company is exposed to
a variety of risks that could result in a reduction in the Company’s net assets.
The main risks that the Company faces arising from its use of financial instruments are:
(i) market risk (including foreign currency risk, interest rate risk and other price risk)
(ii) liquidity risk
(iii) credit risk
These risks, with the exception of liquidity risk, and the Directors’ approach to the management of them, are set
out in the Strategic Report on pages 25 to 27. The AIFM, in close co-operation with the Board and the Portfolio
Manager, co-ordinates the Company’s risk management.
77
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
17. FINANCIAL INSTRUMENTS continued
Foreign currency sensitivity
The following table details the sensitivity of the Company’s net return for the year and shareholders’ funds to a
10% increase and decrease in sterling against the relevant currency.
These percentages have been determined based on market volatility in exchange rates over the period since
launch. The sensitivity analysis is based on the Company’s significant foreign currency exposures at each
Statement of Financial Position date.
2021 2020
USD EUR Other USD EUR Other
£’000 £’000 £’000 £’000 £’000 £’000
Sterling depreciates 6,016 828 4 4,143 855 3
Sterling appreciates (4,922) (678) (3) (3,390) (700) (3)
(iii) Interest rate risk
Interest rate changes may affect:
– the level of income receivable from floating and fixed rate securities and cash at bank and on deposit; and
– the fair value of investments in fixed interest securities.
Interest rate exposure
The exposure of financial assets and liabilities to fixed and floating interest rates, is shown below.
2021 2020
Fixed Floating Fixed Floating
rate rate rate rate
£’000 £’000 £’000 £’000
Cash – 878 – 1,413
– 878 – 1,413
Interest rate sensitivity
If interest rates had been 1% higher or lower and all other variables were held constant, the Company’s netreturn
for the year ended 31 December 2021 and the net assets would increase/decrease by £9,000 (2020:£14,000).
(iv) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
The main liquidity requirements the Company may face are its commitments to the investments in limited
partnership funds, as set out in note 19 on page 80. These commitments can be drawn down on 3 or 10 days
notice. Having reviewed the nature of the investment and the track record of the underlying mandate for the
most significant commitment, to TCI Real Estate Fund III Limited, the Board consider that it will be drawn down
gradually over the life of the investment and as such poses a low risk to the liquidity of the Company. Frostrow
and/or the Portfolio Manager are in regular contact with the managers of the limited partnership funds, as a part
of which they would be made aware of, and plan accordingly for any drawdowns under those commitments.
The Company’s assets comprise quoted securities (equity shares, fixed income and fund investments), cash,
and unquoted limited partnership funds and investments. Whilst the unquoted investments are illiquid, short-
term flexibility is achieved through the quoted securities, which are liquid, and cash which is available on demand.
79
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
17. FINANCIAL INSTRUMENTS continued
Level 3 investments at 31 December 2020
Cost Value
’000 £’000 Ownership Valuation basis
Helios Co-Invest LP
1
US$7,484 11,120 4.73% NAV
WCP Growth Fund LP £7,447 26 10.30% Discount to adjusted NAV
TCI Real Estate Partners Fund III Ltd US$2,713 2,235 1.18% NAV
1
Described as X-ELIO in the portfolio statement
During the year, the Company realised a gain of £996,000 on Helios Co-Invest LP after receiving a distribution
of £2,034,000, which followed the disposal of a portfolio of X-ELIO’s operating assets in Spain (2020: the
Company realised a gain of £1,267,000 after receiving a £5,017,000 distribution from Helios Co-Invest LP,
following the sale of its 30% stake in X-ELIO). Helios Co-Invest LP remained the largest unquoted investment of
the Company as at 31 December 2021.
In December 2021, the Company completed a new co-investment with KKR in John Laing with an initial
investment of £4 million. It is expected that the development pipeline of infrastructure assets developed by John
Laing will provide the Company with opportunities to commit additional capital over time.
The fair value WCP Growth Fund LP was written down by £26,000 during the year (2020: £416,000).
If a 25% discount to NAV was applied to the NAV of the level 3 investments as at 31 December 2021, or the
discount already applied was increased by 25%, the impact would have been a decrease of £3,512,000
(2020:£3,217,000) in net assets and the net return for the year.
(vii) Capital management policies and procedures
The Company’s capital management objectives are to ensure that it will be able to continue as a going concern
and to maximise the income and capital return to its equity shareholders through an appropriate level of gearing.
The Board’s policy is to limit gearing to a maximum of 20% of the Company’s net assets. Currently the Company
does not have any gearing and there are no facilities in place.
The capital structure of the Company comprises the equity share capital (ordinary shares), retained earnings and
other reserves as disclosed on the Statement of Financial Position on page 64.
The Board, with the assistance of the AIFM and the Portfolio Manager, monitors and reviews the broad structure
of the Company’s capital on an ongoing basis. This includes a review of:
– the planned level of gearing, which takes into account the Portfolio Manager’s view of the market;
– whether to buy back equity shares, either for cancellation or to hold in treasury, in light of any share price
discount to net asset value per share;
– whether to issue new equity shares; and,
– the extent to which revenue in excess of that required for distributions should be retained.
81
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Financial Calendar
31 December Financial Year End
March/April Final Results Announced
June Annual General Meeting, Dividend Payable (if any)
30 June Half Year End
September Half Year Results Announced
Annual General Meeting
The Annual General Meeting of Menhaden Resource Efficiency PLC will be held at the offices of Frostrow Capital LLP,
25 Southampton Buildings, London WC2A 1AL on 22 June 2022 at 12 noon.
Share Prices
The Company’s ordinary shares are listed on the London Stock Exchange under ‘Investment Companies’. The price is
given daily in the Financial Times and other newspapers.
Change of Address
Communications with shareholders are mailed to the address held on the share register. In the event of a change of
address or other amendment this should be notified to the Company’s Registrar, Link Group, under the signature of
the registered holder.
Net Asset Value
The net asset value of the Company’s shares can be obtained on the Company’s website at www.menhaden.com and
is published daily via the London Stock Exchange.
Profile of the Company’s Ownership
% of ordinary shares held at:
31 December 2021 31 December 2020
16.8%
10.2%
29.5%
43.5%
Institutions
Wealth Managers & Private Banks
Family Offices
Retail Platforms
19.9%
13.0%
33.1%
34.0%
Institutions
Wealth Managers & Private Banks
Family Offices
Retail Platforms
Shareholder Information
83
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
NAV Total Return (APM)
The theoretical total return on shareholders’ funds per share, reflecting the change in NAV assuming that any dividends
paid to shareholders were reinvested at NAV at the time the shares were quoted ex-dividend. A way of measuring
investment management performance of investment trusts which is not affected by movements in the share price.
31 December 31 December
2021 2020
Opening NAV 132.7p 117.5p
Increase in NAV 23.0p 15.2p
Closing NAV 155.7p 132.7p
% increase in NAV 17.3% 12.9%
Impact of dividend reinvested – 0.3%
NAV total return 17.3% 13.2%
Share Price Total Return (APM)
The return to the investor, on a last traded price to a last traded price basis, assuming that all dividends paid were
reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.
31 December 31 December
2021 2020
Opening share price 99.0p 96.5p
Increase in share price 13.0p 2.5p
Closing share price 112.0p 99.0p
% increase in share price 13.1% 2.6%
Impact of dividend reinvested – 0.4%
Share price total return 13.1% 3.0%
Ongoing Charges (APM)
Ongoing charges are calculated by taking the Company’s annualised operating expenses and expressing them as a
percentage of the average daily net asset value of the Company over the year. The costs of buying and selling
investments are excluded, as are interest costs, taxation, costs of buying back or issuing shares and other non-recurring
costs. These items are excluded because if included, they could distort the understanding of the Company’s
performance for the year and the comparability between periods.
31 December 31 December
2021 2020
£’000 £’000
Total Expenses 2,138 1,913
Average NAVs 117,721 93,724
Ongoing charge ratio 1.8% 2.0%
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Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Risk warnings
– Past performance is no guarantee of future performance.
– The value of your investment and any income from it may go down as well as up and you may not get back the
amount invested. This is because the share price is determined by the changing conditions in the relevant stock
markets in which the Company invests and by the supply and demand for the Company’s shares.
– As the shares in an investment trust are traded on a stock market, the share price will fluctuate in accordance with
supply and demand and may not reflect the underlying net asset value of the shares; where the share price is less
than the underlying value of the assets, the difference is known as the ‘discount’. For these reasons, investors may
not get back the original amount invested.
– Although the Company’s financial statements are denominated in sterling, it may invest in stocks and shares that
are denominated in currencies other than sterling and to the extent they do so, they may be affected by movements
in exchange rates. As a result, the value of your investment may rise or fall with movements in exchange rates.
– Investors should note that tax rates and reliefs may change at any time in the future.
– The value of ISA and Junior ISA tax advantages will depend on personal circumstances. The favourable tax treatment
of ISAs and Junior ISAs may not be maintained.
87
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
section 560 of the Act) for cash pursuant to the authority conferred on them by resolution 10 set out in the notice
convening the Annual General Meeting at which this resolution is proposed or otherwise as if section 561(1) of
the Act did not apply to any such allotment and to sell relevant shares (within the meaning of section 560 of the
Act, which includes the sale of relevant shares which, immediately before the sale, were held by the Company as
treasury shares) for cash as if section 561(1) of the Act did not apply to any such sale, provided that this power
shall be limited to the allotment of equity securities pursuant to:
(a) an offer of equity securities open for acceptance for a period fixed by the Directors where the equity securities
respectively attributable to the interests of holders of shares of 1 penny each in the Company (“Shares”) are
proportionate (as nearly as may be) to the respective numbers of Shares held by them but subject to such
exclusions or other arrangements in connection with the issue as the Directors may consider necessary,
appropriate, or expedient to deal with equity securities representing fractional entitlements or to deal with legal
or practical problems arising in any overseas territory, the requirements of any regulatory body or stock
exchange, or any other matter whatsoever; and
(b) (otherwise than pursuant to sub-paragraph (a) above) an offer or offers of equity securities of up to an
aggregate nominal value of £80,000 (or if changed, the number representing 10% of the issued share capital
of the Company at the date of the meeting at which this resolution is proposed) and expires at the conclusion
of the next Annual General Meeting of the Company after the passing of this resolution or 15 months from the
date of passing this resolution, whichever is the earlier, unless previously revoked, varied or renewed by the
Company in general meeting and provided that the Company shall be entitled to make, prior to the expiry of
such authority, an offer or agreement which would or might require equity securities to be allotted after such
expiry and the Directors may allot equity securities pursuant to such offer or agreement as if the power
conferred hereby had not expired.
Authority to Repurchase ordinary shares
12. THAT the Company be and is hereby generally and unconditionally authorised in accordance with section 701 of
the Companies Act 2006 (the “Act”) to make one or more market purchases (within the meaning of section 693(4)
of the Act) of ordinary shares of 1 penny each in the capital of the Company (“Shares”) (either for cancellation or
to be held, sold or otherwise dealt with as treasury shares in accordance with the Act) provided that:
(a) the maximum aggregate number of Shares authorised to be purchased is 11,992,000 or, if changed, the
number representing approximately 14.99% of the issued share capital of the Company at the date of the
meeting at which this resolution is proposed;
(b) the minimum price (exclusive of expenses) which may be paid for a Share is 1 penny;
(c) the maximum price (exclusive of expenses) which may be paid for a Share is an amount equal to the greater
of (i) 105% of the average of the middle market quotations for a Share as derived from the Daily Official List
of the London Stock Exchange for the five business days immediately preceding the day on which that Share
is purchased and (ii) the higher of the price of the last independent trade in shares and the highest then current
independent bid for shares on the London Stock Exchange;
(d) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company
to be held in 2023 or, if earlier, on the expiry of 15 months from the date of the passing of this resolution unless
such authority is renewed prior to such time; and
(e) the Company may make a contract to purchase Shares under this authority before the expiry of such authority
which will or may be executed wholly or partly after the expiration of such authority, and may make a purchase
of Shares in pursuance of any such contract.
89
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Notes
1. Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the
meeting. A shareholder may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise
the rights attached to a different share or shares held by that shareholder. A proxy need not be a shareholder of the Company. However,
if you appoint the Chairman of the AGM as your proxy, this will ensure that your votes are cast in accordance with your wishes in the
event that restrictions on attendance are imposed by the Government at the time of the meeting. In such an eventuality, if any other
person is appointed as your proxy, they may not be able to attend the meeting to vote on your behalf.
2. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolutions.
If no voting indication is given, a proxy may vote or abstain from voting at his/her discretion. A proxy may vote (or abstain from voting)
as he or she thinks fit in relation to any other matter which is put before the meeting.
3. Hard copy forms of proxy have not been included with this notice. Members can vote by: logging onto www.signalshares.com and
following instructions, requesting a hard copy form of proxy directly from the registrars, Link Group, by emailing
enquiries@linkgroup.co.uk; or, in the case of CREST members, utilising the CREST electronic proxy appointment service in accordance
with the procedures set out below. To be valid any appointment of a proxy must be completed, signed and received at Link Group,
PXS1, Central Square, 29 Wellington Street, Leeds LS1 4DL no later than 12 noon on 20 June 2022.
4. In the case of a member which is a company, the instrument appointing a proxy must be executed under its seal or signed on its behalf
by a duly authorised officer or attorney or other person authorised to sign. Any power of attorney or other authority under which the
instrument is signed (or a certified copy of it) must be included with the instrument.
5. The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described below) will not prevent a
shareholder attending the meeting and voting in person if he/she wishes to do so.
6. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information
rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have
a right to be appointed (or have someone else appointed) as a proxy for the meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
7. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 3 above does not apply to
Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the Company.
8. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, only shareholders registered on the register of members
of the Company (the “Register of Members”) at close of business on 20 June 2022 (or, in the event of any adjournment, on the date
which is two business days before the time of the adjourned meeting) will be entitled to attend and vote or be represented at the
meeting in respect of shares registered in their name at that time. Changes to the Register of Members after that time will be disregarded
in determining the rights of any person to attend and vote at the meeting.
9. As at 19 April 2022 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of
80,000,001 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 19 April 2022 are 80,000,001.
10. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using
the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST
members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able
to take the appropriate action on their behalf.
11. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message
(a“CREST Proxy Instruction”) must be properly authenticated in accordance with the specifications of Euroclear UK and Ireland Limited
(“CRESTCo”), and must contain the information required for such instruction, as described in the CREST Manual. The message,
regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA10) no later than 48 hours before the
time appointed for holding the meeting, excluding non-business days. For this purpose, the time of receipt will be taken to be the time
(as determined by the timestamp applied to the message by the CREST Application Host) from which the 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 proxies appointed
through CREST should be communicated to the appointee through other means.
12. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that CRESTCo does not make
available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation
to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a
CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by
any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
91
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Resolution 1 – To receive the Annual Report
The Annual Report for the year ended 31 December 2021,
incorporating the financial statements and this Notice of
Meeting, will be presented to the Annual General
Meeting(AGM).
Resolution 2 – Directors’ Remuneration Report
It is mandatory for listed companies to put their report on
Directors’ remuneration to an advisory shareholder vote
every year. The Directors’ Remuneration Report is set out
on pages 51 and 52 of this Annual Report.
Resolution 3 – Directors' Remuneration Policy
It is mandatory for listed companies to put their Directors'
remuneration policy to a binding shareholder vote at least
every three years. The Directors' Remuneration Policy is
set out on page 53 of this Annual Report.
Resolution 4 – Dividend
It is necessary for the Company to pay a dividend in
respect of the year ended 31 December 2021 in order for
it to retain investment trust status. Accordingly, the Board
is recommending the declaration of a dividend of 0.2p per
ordinary share, payment of which will afford compliance
with the requirement for the Company to retain no more
than 15% of the income from shares and securities in the
year.
Resolutions 5 to 8 – Re-election and Election of Directors
Resolutions 5 to 8 deal with the re-election and election
of the Directors. Biographies of each of the Directors can
be found on pages 34 and 35 of this Annual Report.
The specific reasons why (in the Board’s opinion) each
Directors’ contribution is, and continues to be, important
to the Company’s long-term sustainable success are as
follows:
Sir Ian Cheshire
Sir Ian’s leadership of the Board draws on 30 years’
experience in the retail, charity, and banking sectors. His
focus is on long-term strategic issues, including the
sustainability and environmental impact of the portfolio.
Duncan Budge
Duncan has over 35 years’ experience from his career in
the city and the investment trust sector, and his first-hand
knowledge enables the Board to engage authoritatively
with the Portfolio Manager on their investment strategy.
Barbara Donoghue
Barbara has a wealth of experience gained over more than
30 years to contribute to Board and Committee decision
making, including from past board room appointments,
corporate finance and private equity.
Howard Pearce
Howard has over 30 years’ experience advising at Board
level on green investment and significant expertise of audit
committee chairmanship which aids the Company’s
financial and environmental impact reporting.
Resolution 9 – Re-appointment of Auditor and the
determination of their remuneration
Resolution 9 is for the re-appointment of Mazars LLP as
the Company’s independent Auditor to hold office until the
next AGM of the Company and also authorises the Audit
Committee to set their remuneration. Following the
implementation of the Competition and Markets Authority
order on Statutory Audit Services, only the Audit
Committee may negotiate and agree the terms of the
Auditor’s service agreement.
Resolutions 10 and 11 – Issue of Shares
Ordinary Resolution 10 in the Notice of Annual General
Meeting is to renew the authority to allot new ordinary
shares up to an aggregate of 10% of the Company’s
existing issued share capital at the date of the Annual
General Meeting). This authority (if granted) will expire on
the date of the next Annual General Meeting or after a
period of 15months from the date of the passing of the
resolution, whichever is earlier. This means that the
authority will have to be renewed at the next Annual
General Meeting unless previously renewed.
When shares are to be allotted, Section 551 of the
Companies Act 2006 (the “Act”) provides that existing
shareholders have pre-emption rights and that the new
shares must be offered first to such shareholders in
proportion to their existing holding of shares. However,
shareholders can, by special resolution, authorise the
Directors to allot shares otherwise than by a pro rata issue
Explanatory Notes to the Resolutions
93
Menhaden Resource Efficiency PLC
Annual Report for the year ended 31 December 2021
Directors
Sir Ian Cheshire (Chairman)
Duncan Budge
Barbara Donoghue (with effect from 1 February 2022)
Emma Howard Boyd
Howard Pearce
Company Registration Number
09242421 (Registered in England and Wales)
The Company is an investment company as defined under
Section 833 of the Companies Act 2006
The Company was incorporated on 30 September 2014. The
Company was incorporated as BGT Capital PLC.
Website
Website: www.menhaden.com
Registered Office
25 Southampton Buildings
London WC2A 1AL
Alternative Investment Fund Manager,
Company Secretary and Administrator
Frostrow Capital LLP
25 Southampton Buildings, London WC2A 1AL
Telephone: 0203 008 4910
E-mail: info@frostrow.com
Website: www.frostrow.com
Authorised and regulated by the Financial Conduct Authority
If you have an enquiry about the Company or if you would like
to receive a copy of the Company’s monthly fact sheet by
e-mail, please contact Frostrow Capital using the above e-mail
address.
Portfolio Manager
Menhaden Capital Management LLP
2nd Floor
Heathmans House
19 Heathmans Road
London
SW6 4TJ
Authorised and regulated by the Financial Conduct Authority
Depositary
J.P. Morgan Europe Limited
25 Bank Street
London E14 5JP
Auditor
Mazars LLP
The Pinnacle
160 Midsummer Boulevard
Milton Keynes
MK9 1FF
Corporate Broker
Numis Securities Limited
45 Gresham St
London
EC2V 7BF
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Telephone: + 44 371 664 0300
E-mail: enquiries@linkgroup.co.uk
Shareholder Portal: www.signalshares.com
Website: www.linkgroup.eu
Please contact the Registrars if you have a query about a
certificated holding in the Company’s shares.
†Calls are charged at the standard geographic rate and will vary by provider. Calls
outside the UK will be charged at the applicable international rate. Lines are open
from 9.00 a.m. to 5.30 p.m. Monday to Friday excluding public holidays in England
and Wales.
Share Price Listings
The price of your shares can be found in various publications
including the Financial Times, The Daily Telegraph, The Times
and The Scotsman.
The Company’s net asset value per share is announced daily
and is available, together with the share price, on the TrustNet
website at www.trustnet.com.
Identification Codes
Shares: SEDOL : BZ0XWD0
ISIN : GB00BZ0XWD04
BLOOMBERG : MHN LN
EPIC : MHN
Legal Entity Identifier
2138004NTCUZTHFWXS17
Company Information
Environment
This report is printed on Revive 100% White Silk a totally recycled paper produced using 100% recycled waste at a mill that has been awarded
the ISO 14001 certificate for environmental management.
The pulp is bleached using a totally chlorine free (TCF) process.
Menhaden Resource Efficiency PLC
25 Southampton Buildings
London WC2A 1AL
www.menhaden.com
Tel +44(0) 203 008 4910
A member of the Association of Investment Companies
Disability Act
Copies of this annual report and other documents issued by the Company are available from the Company Secretary. If needed, copies can be
made available in a variety of formats, including Braille, audio tape or larger type as appropriate. You can contact the Registrar to the Company,
Link Asset Services, which has installed telephones to allow speech and hearing impaired people who have their own telephone to contact them directly,
without the need for an intermediate operator, for this service please call 0800 731 1888.
Specially trained operators are available during normal business hours to answer queries via this service. Alternatively, if you prefer to go through
a ‘typetalk’ operator (provided by the RNID) you should dial 18001 followed by the number you wish to dial.
Menhaden PLC – Annual Report
Company Summary
Menhaden PLC (the “Company”) is an investment trust. Its shares are listed on the premium segment of the Official
List and traded on the main market of the London Stock Exchange. The Company is a member of the Association of
Investment Companies.
Investment Objective
The Company aims to generate long-term shareholder returns, predominantly in the form of capital growth, by investing
in businesses and opportunities delivering or benefiting from the efficient use of energy and resources irrespective of
their size, location or stage of development.
Management
The Company employs Frostrow Capital LLP as its Alternative Investment Fund Manager (“AIFM”) to provide company
management, company secretarial, administrative and marketing services. Frostrow and the Company have jointly
appointed Menhaden Capital Management LLP as the Portfolio Manager. Further details of these appointments are
provided on pages 25 and 26.
Capital Structure
The Company’s capital structure is composed solely of Ordinary Shares. Details are given on page 36 and in note 12
to the financial statements on page 75.
ISA Status
The Company’s shares are eligible for Stocks and Shares ISAs.
Retail Investors advised by IFAs
The Company currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers
(“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”) rules in relation
to non-mainstream investment products and intends to continue to do so. The shares are excluded from the FCA’s
restrictions which apply to non-mainstream pooled investment products because they are shares in an investment
trust.
Menhaden
Menhaden are forage fish that occur in great abundance in the West Atlantic Ocean. The name, Menhaden, is derived
from the Native American expression “he fertilises” referring to the wide spread use of the fish as a fertiliser. Menhaden
filter vast quantities of water and play a key role in the food chain. It has been argued that the environmental movement
and fisheries ecology rose from the first collapse in the population of Menhaden in the 1860s as this was used as a
prominent example of mankind’s impact on the oceans and the importance of using resources sustainably.
Menhaden Capital PLC
Annual Report for the period from incorporation on
30 September 2014 to 31 December 2015
A member of the Association of Investment Companies
Disability Act
Copies of this annual report and other documents issued by the Company are available from the Company Secretary. If needed, copies can be
made available in a variety of formats, including Braille, audio tape or larger type as appropriate. You can contact the Registrar to the Company,
Link Asset Services, which has installed telephones to allow speech and hearing impaired people who have their own telephone to contact them directly,
without the need for an intermediate operator, for this service please call 0800 731 1888.
Specially trained operators are available during normal business hours to answer queries via this service. Alternatively, if you prefer to go through
a ‘typetalk’ operator (provided by the RNID) you should dial 18001 followed by the number you wish to dial.
Environment
This report is printed on Revive 100% White Silk a totally recycled paper produced using 100% recycled waste at a mill that has been awarded
the ISO 14001 certificate for environmental management.
The pulp is bleached using a totally chlorine free (TCF) process.
Menhaden PLC
25 Southampton Buildings
London WC2A 1AL
www.menhaden.com
Tel +44(0) 203 008 4910
Perivan 257636
Perivan 262674
Menhaden Resource Efficiency PLC Annual Report for the year ended 31 December 2021