Susan Johnston

Independence, diversity and experience are all important considerations for a well-balanced board of directors. A myopic focus on a single factor, however, can lead to serious unintended consequences. In this article, senior investment professionals Karl Leinberger and Neville Chester highlight the value that a non-executive director with the necessary business acumen and experience can add to a company whose board they serve on. They illustrate this point through case studies of two companies recently facing challenges: the retailer Spar and restaurant group Spur, both overseen by chairman Mike Bosman.

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While the advice community has restructured fees in response to Consumer Duty, the discretionary fund management sector has been slower to adapt. Many DFMs still charge based on AUM, which doesn't align with the incremental workload. Sparrows Capital Limited is challenging this with our capped-fee proposition, which we believe is a game-changer. We're committed to delivering the scale benefits of platform technology directly to the end client. Time to rethink the fee model for better client outcomes?

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This should be required reading for investors. Kudos to Caroline Escott and Chris Hodge. Audit underpins market integrity, yet there is strong evidence that it is failing. The US regulator’s latest inspections bring this to life (https://lnkd.in/eVxwrhkZ): 34% of reviewed audits by six global firms lacked evidence to support their opinions. High rates of audit deficiencies are repeated globally (International Forum of Independent Audit Regulators (IFIAR). Two points I’d highlight on the back of this report: 1. Investors should use their votes Of the steps that Railpen points to, one that investors can immediately action is their vote. Despite audit failings, investors keep reappointing auditors and audit committees. Auditors in the UK received an average 99% support in 2023. In the US, the figure was 98%. Investor indifference permits poor audit quality. Please see my article on the need for robust voting: https://lnkd.in/epsep6WK 2. Poor audit quality is a risk to capital protection One insidious consequence of audit weakness is not getting the attention it should. Auditors appear to be failing to check company compliance with capital maintenance rules, opening the door to over-distribution, weaker capital buffers and heightened risk of failure. Auditors generally have a role in policing capital maintenance rules (not the same as accounting standards – https://lnkd.in/eWzBy3_7). Critically, companies generally mustn’t distribute (i.e. pay dividends / share buybacks) out of unrealised (e.g. mark-to-market) gains. It is not clear, however, that this is being enforced. This was a key conclusion of the UK’s BEIS Select Committee 2019 inquiry into audit (https://lnkd.in/e8vqGGBd), chaired by Rt Hon Rachel Reeves, now Chancellor. The Committee called for urgent action to enforce capital maintenance rules. Recent research by Andy Haldane (https://lnkd.in/ecqct3Tj) and Adam Leaver (https://lnkd.in/ev43tNP6) underlines ongoing problems of overdistribution. As the UK advances its Audit and Corporate Governance Reform Bill, it should return to the Select Committee’s original proposals. Companies should publish in full their distributable reserves and a breakdown of their unrealised and realised profits, taking away the veil which can enable over-distribution. Auditors should be held accountable for ensuring this is done. Of the options on the table to boost growth, this has the advantage of being fiscally neutral. For their part, investors should start holding auditors and audit committees accountable for capital maintenance.

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A reader asks: How worried should we be about government debt levels? People like Paul Tudor Jones and Elon Musk keep talking about how we’re going broke but what is the catalyst for an actual crisis here? I talked to Cullen Roche on Ask the Compound to discuss government debt levels, deficit spending, inflation, tariffs, interest rates and more: https://lnkd.in/gPg9Dabk

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The Post Office Horizon scandal serves as a stark reminder of the ethical considerations surrounding the technology we rely on. This case, centred on faulty software that led to the wrongful targeting of postmasters, highlights the importance of scepticism and data oversight in the age of automation and our increasing reliance on technology. Please take a look at our recent blog to read more on this important topic: https://lnkd.in/eU5jqExP

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Adamantean is a proud founder member of The Guild Of Business Finance Professionals. If you're considering using a finance broker, look for the logo as a sign that your broker is dedicated to upholding robust professional ethics and the best benchmarking standards. The article gives more detail.

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Speculation on Labour’s plans for CGT and IHT has grown enormously in the past two weeks, and it seems almost certain that there will be reform, particularly as expectations of an enormous Labour majority sinks in with the pundits. As anyone attending the Symvan investor lunches/forums since January will attest, we have been anticipating these significant tax changes for some time and for the same reason, the most fundamental being that there is simply no room to increase income or VAT taxes, so something must give. CGT is a prime target because most countries align capital and income tax, it is an effective way to address the PE ‘carried interest’ conundrum for Labour, and it will raise real money. On 7th June, Kealan Doyle and Guy Tolhurst discussed this issue and why it should bode well for the EIS market over the forthcoming year. https://lnkd.in/eChCKPbP #EIS #CGT #IHT #Labour

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BHP makes all-share bid for its London peer Anglo American. The unusual deal structure what makes it even more interesting to follow. BHP proposing a demerger of some of the target’s biggest listed assets and pre-positioning a sale of its diamond operation De Beers. Fin out more from the insight put together by Will Cain #mergersandandacquisitions #mining #merger #demerger #dealstructure #dealexecution #mergermarket

Automotive earnings drive markets in the right direction, while politics appears to make the road ahead a little foggy for now. In brief: - Equities finally pick up on the higher interest rates in 2025 story. - The labour party leaks budget plans in the build up to the announcement. - Trump is really trumping in the polls. Read the latest #weeklymarket views in full including the week ahead: #MPS #Marketcommentary #investing https://bit.ly/3NBhi4S

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Like many other UK #corpgov issues right now, the UK #execpay debate is in danger of becoming a little simplistic, as some hope that by emulating a few specific US-style governance practices they might achieve US-style capital markets. At Railpen, we think carefully about both the structure and the quantum of pay packages at portfolio companies and welcome the opportunities for engagement on this issue that the current UK policy framework provides. The way #executiveremuneration is structured is, of course, fundamental to ensuring senior company executives are aligned with the interests of their long-term shareholders. But there's also a growing body of evidence to demonstrate that fair pay practices are a fundamental ingredient for the motivated, fulfilled and engaged workers that are necessary to companies' long-term financial performance. So the free-to-access Fair Reward Framework (FRF) is more timely than ever. Kudos to The Church of England Pensions Board, Brunel Pension Partnership Limited, Scottish Widows, High Pay Centre, People's Partnership and Minerva Analytics Ltd for this important contribution to the debate. We are pleased to have played a small part in supporting and shaping it #fairpay #stewardship #workforcedirectors Clare Richards Adam Matthews Stephen Barrie Helen Price Leanne Clements Vaishnavi Ravishankar Faith Ward Shipra Gupta Luke Hildyard Shane McCullagh, CFA

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Hear about Utilico Emerging Markets Trust in 60 seconds - thanks to Edison Group and Mel Jenner for sharing this summary. #investmenttrusts #utilities #infrastructure #emergingmarkets

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In 2024, the #regulation stops grandfathering tenured #IndependentDirectors i.e. those who have been independent directors on a board before 2014. #Boards, as a consequence, are getting a refresh with tenured independent directors leaving boards - and will continue to do so over the next 18 months. Yet, several business groups are resisting change, and finding ways to maintain old ties – whom they lose on the roundabout, they want to retain on the swing. While compliant with regulations, we believe these practices defeat the purpose of mandating rotation of independent directors. #corpgov #independentdirector #directorrotation Securities and Exchange Board of India (SEBI) #resistingchange #boardrefresh2024 #boardrefresh #Compliance #ComplianceVsGovernance Institutional Investor Advisory Services (IiAS)

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No loss. The Greens have shown themselves to be effective campaigners and relentless disruptors but inflexible, ineffective in government. The Green agenda and decarbonisation is too important to be owned by a deeply ragged coalition of agendas ranging from gender identity, puberty blocking, to land reform and de-growth economic anarchists. Good work on decarbonisation is being done and more needs doing, but by effective and competent ministers with a well advised and informed civil service. No place , then, for Harvie and Slater.

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This is a fabulous podcast and well worth a listen (even if I say so myself). Henry Cobbe, CFA takes me through the retirement income advice review and what advisers need to do about it. #retirementincome #advice Financial Conduct Authority

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Amidst the political drama of last week (so much so that the collapse of the German government has barely made it to footnote status) it was fantastic to take part in Dunedin Income Growth Investment Trust PLC debut at the Citywire studios with my co-manager Rebecca Maclean, CFA and our wonderful host Gavin Lumsden. Highlighting the triple discount opportunity of an undervalued portfolio of fantastic companies, in an unloved UK market in an investment trust wrapper that is trading at what we think is a crazy double digit discount. Also an opportunity to illustrate the differentiation that the trust offers within the income space making it a highly complimentary holding to many other strategies. 🏴󠁧󠁢󠁳󠁣󠁴󠁿 Tremendous Heritage 💰 Focus on Total Return 🧗‍♂️ Highly Active Positioning 🛡 Resilient Income Delivery ♻ Integrated Sustainability As ever with investing past performance is not a guide to the future and invested capital is at risk. For more details do visit the Trust website which includes the KID and latest annual report.

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Shaw and Partners is pleased to be appointed as Joint Lead Manager to the proposed capital raising by DroneShield (ASX.DRO). DroneShield is proposing to raise up to approximately A$120 million by way of a single tranche Placement comprising the issue of up to approximately 104.3 million new fully paid ordinary shares issued at $1.15. The offer price of $1.15 represents a 17.3% discount to last close of A$1.39 and a 18.9% discount to 5-day VWAP of A$1.417. Funds will be utilised on DroneShield’s technology development plans and on strategic bolt-on acquisitions. DroneShield provides world-leading Artificial Intelligence platforms for protection against drones. Its hardware and software detect and safely neutralize small drones used for warfare, terrorism, contraband delivery, and airport disruptions. DRO’s market-leading software, hardware, and engineering capabilities provide the platform with the opportunity to further entrench its market leadership and facilitate future growth. The offer is available to Australian Sophisticated and Professional Investors only. For more information, please contact your Shaw and Partners Adviser. Anderson Abraham Akra, PhD Christopher Ziomek Jake Burgess Chris Dorney Edward Walker Sam Christie Mark Hardman Michael De Palma Mike Stanford Paul Johnston Gauthier Merlin Lindsay Archibald Maxwell Davies Russell Karlson Will MacPherson Anthony Wilson

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A reminder that private equity investment is not a silver bullet for sports. Far better to sort your own political issues out and operate on a long term financially sustainable basis. PE’s sole objective is to make money and then sell their stake for a profit. They are the Glazers on steroids. Sports need to enter any such relationships with their eyes wide open. The only justification is if the sport cannot otherwise afford the costs of restructure required to return to sustainable finances. The cost is a loss of future income. But sport should have the skills to run itself. If it doesn’t have them, get them. Don’t rely on Bankers who only care about their next bonus. The ECB needs to tread very carefully when seeking long term investment for the Hundred. Do not sell the family silver because it’s easier than taking difficult decisions. Owen Slot Prof. Rob Wilson https://lnkd.in/errZEqDX

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Power, politics, pay. Voting and engagement are key parts of understanding companies deeply and challenging to raise standards. The latest on the AGM season here from Hayley Grafton of EdenTree Investment Management: For Professional Investors only.

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