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MITON GLOBAL OPPORTUNITIES PLC - Annual Financial Report

Miton Global Opportunities plc

Audited Results for the Year Ended 30 April 2016

The Company's annual report will be posted to shareholders on 11 July 2016. Members of the public may obtain copies from Frostrow Capital LLP, 25 Southampton Buildings, London WC2A 1AL or from the Company's website at:

www.mitongroup.com.com

The Company's annual report for the year ended 30 April 2016 has been submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM):

www.morningstar.co.uk/uk/nsm

(Documents will usually be available for inspection within two business days of this notice being given)


Mark Pope, Frostrow Capital LLP, Company Secretary - 0203 008 4913

1 July 2016

Financial Highlights
30 April 201630 April 2015% change
Net asset value per Ordinary share182.4p181.6p0.4
Share price164.3p162.8p0.9
Discount of share price to net asset value
per ordinary share10.0%10.4%-
Net assets£46.1m£45.9m0.4
Gearing10.8%6.5%-
Ongoing charges*1.4%1.2%-

* See Glossary .

Total Return Performance to 30 April 2016
1 Year
%
3 Years
%
5 Years
%
Since launch
%
Net asset value0.415.719.187.4
Share price0.914.717.660.2
Sterling 3 month LIBOR +2%2.67.914.170.5



Strategic Report

Chairman's Statement

Introduction

This is the twelfth annual report for Miton Global Opportunities plc and the first since the Company's change of name from Miton Worldwide Growth Investment Trust plc, which took effect on 5 January 2016. This report covers the year ended 30 April 2016.

Performance

During the year under review, your Company's net asset value per share rose to 182.4p, a total return of 0.4%. The share price ended on an all-time high of 164.25p, a total return of 0.9%.

As explained in my previous reports, the Company does not have a formal equity benchmark against which the Board reviews long-term performance and our Investment Manager does not invest by reference to an index. However, your Board has noted that that the FTSE All-Share Index, measured on a total return basis, fell by 5.7% over the year and the FTSE 350 Investment Companies Index fell by 0.5%. Our Benchmark, Sterling 3 Month LIBOR +2%, rose by 2.6%.

Our Investment Manager provides a comprehensive review of the performance and developments within your portfolio during the year under review in their report. Their report also includes a thorough analysis of the macro-economic conditions affecting the portfolio as well as recent developments in the investment trust sector.

Discount

Our discount remained at approximately 10% throughout the year under review. It was pleasing to note that the discount had narrowed to under 9% although following the Brexit vote it widened to over 10%. The Board continues to keep the level of the discount under review. Over the course of the year the Board has given consideration to ways in which share price performance can be enhanced and in September, shareholders passed the Board's proposals to remove the requirement to hold continuation votes every three years and instead provide an unconditional realisation opportunity, with effect from the Annual General Meeting to be held in 2018. A description of the changes is set out in the Report of the Directors.

It is the Board's belief that these changes will improve the liquidity of, and therefore increase demand for, the Company's shares, eventually allowing us to grow. In the meantime, the Board will continue to consider ways in which the share price performance may be enhanced in the medium term, including the effectiveness of marketing.

Dividend

The Board has not recommended a dividend this year, and does not expect to do so in the future as the portfolio continues to generate a modest yield, most of which is absorbed by running expenses. The Company will comply with the investment trust rules regarding distributable income but the Company's objective is to provide capital growth rather than income. Any dividends and distributions will be at the discretion of the Board from time to time.

Gearing

The Company renewed its £7 million loan facility with the Royal Bank of Scotland at the end of January. The Investment Manager drew down £2 million during the year under review, meaning that £5 million has been drawn down in total from this facility.

Management and Adviser Changes

The Board was pleased to announce the appointment of Frostrow Capital LLP ("Frostrow") with effect from 1 February 2016. Frostrow will provide company secretarial, administration, accounting and marketing services to the Company.

In addition, and as explained in more detail in the Audit Committee Report, the Directors have recommended that PricewaterhouseCoopers LLP be appointed as the Company's Auditor for the year ending 30 April 2017. This followed a competitive tender process in accordance with new EU regulations on audit tendering and rotation.

Lastly, in September, shareholders approved the new fee arrangements payable by the Company to the AIFM, which reflected the share reorganisation and realisation opportunity. Full details of the new fee arrangements are set out in the Strategic Report.

Outlook

As our Investment Manager explains, the investment trust sector is increasingly becoming the home of alternative and specialist asset classes and your portfolio reflects that evolution. The Board believes that the investment case of your Company, exploiting the inefficiencies across the investment company market and delivering capital growth whilst being aware of downside risks, is as strong as ever.

The victory for the 'Leave' vote in last week's EU referendum has created a great deal of uncertainty as the implications for the UK and also for companies are worked out. The Board and our Investment Manager will be keeping developments under close review.

Annual General Meeting

The Annual General Meeting of the Company this year will again be held at the offices of the Association of Investment Companies 9th Floor, 24 Chiswell Street, London EC1Y 4YY on Friday, 30 September 2016 at 12 noon. This will be an opportunity to meet the Board and to receive a presentation from our Investment Manager, and we hope as many shareholders as possible will attend. Any shareholders who are unable to attend or wish to discuss any matters with the Board are invited to contact me through the Company Secretary.

The notice convening the Annual General Meeting can be found at the end of this report and an explanation of the proposed special business resolutions can be found in the Report of the Directors.



Anthony Townsend
Chairman
30 June 2016



Investment Manager's Report

Performance

Our shares ended the financial year standing at an all-time high, moving from 162.75p to 164.25p during the year. This modest progress disguised what turned out to be a rollercoaster year for markets. Rapid sell offs took place in August and again early in the New Year. These were ascribed at the time to the Federal Reserve's decision not to increase interest rates and concerns over China's economic outlook respectively. In practice the substantial quantities of debt which have built up within the financial system since zero interest rate policies were adopted after the 2008 crisis have left markets vulnerable to investor's sudden losses of confidence. We should expect to hit further air pockets. This situation has been exacerbated by regulatory changes that reduce the ability of some major market participants to hold inventory, leaving them unable to act as shock absorbers. Indices such as the FTSE All-Share recovered some ground during the spring, however they ended the reporting period well short of their starting points in local currency terms.

Sales

The portfolio has evolved during the year with 13 positions having been sold and only five new entrants. The shorter roll of holdings is the result of a less than exciting outlook for equities. Reducing the list is a natural consequence of removing positions where we judged that the majority of returns would be generated from the general direction of the equity market. In addition to this elimination of some mainstream funds, there were developments which led to one successful and one less successful disposal. Japan Residential, a trust which focused on property in Tokyo, was subject to an agreed takeover from Blackstone at a level well in excess of stated net asset value. The premium that Blackstone were prepared to pay can be justified by the fact that portfolios of property often attract a higher price than single properties. The stated net asset value is simply the aggregate of individually valued assets. A less successful, albeit still profitable, departure was Marwyn Investors. Its board decided to issue a substantial amount of stock to Invesco at a significant discount. It is difficult to evaluate an investment when there is the constant threat of dilution. Therefore we felt that we could better deploy our capital elsewhere.

New Entrants

Two of the new entrants to the portfolio are drawn from the private equity sector; Dunedin Enterprise and Standard Life European Private Equity. This industry has in recent years raised vast sums of cash from investors. According to Bain & Company's Global Private Equity Report 2015, in excess of a trillion dollars is sat as dry powder awaiting investment into unquoted businesses. An established private equity investment trust owning a mature portfolio holds exactly the sort of assets that this wall of cash will be used to acquire. Unsurprisingly a sellers' market has developed. Therefore we believe that stated asset values within this sector understate the value at which the underlying portfolios could be disposed of in current conditions. Phoenix Spree is a trust which focusses on residential property in Berlin similar to our existing investment, Taliesin. Both funds are arbitraging the disparity in valuations between the value of rental and privately owned apartments in the German capital. Locals tend to be tenants rather than owner occupiers hence there is a prevalence of landlord unfriendly polices. Phoenix Spree and Taliesin are converting their apartments into private sector assets and disposing of them at a significant premium to carrying value which reflects the much lower value as rental properties. Sanditon owns a substantial stake in its eponymously named manager which is still valued at cost despite Sanditon Asset Management becoming established and now managing over £700 million of client funds. Middlefield Canadian was rather harshly treated by the market despite successfully taking an aggressively underweight position in resources, a sector which dominates the Toronto market. Given the attractive yield and wide discount we felt the shares were attractive.

Contributors

Our winners came from a wide variety of investments. Taliesin has already been discussed but mention must be made of Chelverton Growth Trust where the shares appreciated by a heady 60% following the takeover of its largest holding which was financial platform, Parmenion. Chelverton invests in very small companies with a market value not exceeding £50 million. Its success has come from identifying early stage businesses which, in our view, have potential to grow significantly. Property specialist Alpha Real still trades at a 32% discount which fails to reflect the true value of its portfolio. Nevertheless this discount narrowed from extreme levels during the reporting period helped by the shares being enthusiastically recommended by the Investors Chronicle. In the past we have not been fans of the listed funds of the hedge fund sector however we were convinced that the managers of Boussard & Gavaudan would take whatever actions were necessary to narrow the discount that their trust languished on. They have had some success on that front however solid investment performance generated the bulk of a useful 20% return during the year. Rights and Issues Investment Trust has also traded on a deep discount for many years despite being one of the better UK smaller company trusts. Unfortunately its impenetrable capital structure deterred the majority of potential investors. The board's decision to reconstruct the trust, which will in future have only one class of share and a discount control mechanism, triggered a rerating. Finally Phaunos Timber's new management performed sterling work in disposing of poor quality plantations and refocusing on assets which can generate both capital growth and cash flow.

Detractors

The key detractors from performance came from our exposure to Asia and Resources. The most notable declines came from Geiger Counter and Macau Property Opportunities. We have recently added to both positions. Geiger Counter owns a portfolio of uranium producers. The metal initially declined in value as the result of the nuclear accident in Fukushima in 2011. More recently sentiment has suffered as the mining industry moved into a bear phase as concerns grew regarding the sustainability of demand for basic resources from China. Nevertheless uranium's open market price bottomed at around its current spot price as far back as 2014. Little new supply is planned as this would be uneconomic at current prices. The amount now extracted is now substantially below what is needed annually by the nuclear power industry. This shortfall will increase as more mines are exhausted and new reactors come online. The crackdown on corruption on the Chinese mainland has led to a decline in the number of visitors to Macau as public officials do not want to be seen there in such a climate. Therefore sentiment towards Macau Property Opportunities, a trust that owns residential property, is unsurprisingly poor. The casino industry in the former Portuguese colony is moving towards the Las Vegas model where a greater proportion of profits come from conventions and entertainment rather than gambling. To this end six new casinos are either close to completion or have just opened. In aggregate these will require 35,000 additional staff placing the local housing market under pressure. Our other notable loser was Juridica, a trust that invests in civil legal cases. The company suffered a reverse in court which led to investors questioning its valuation policy, as a result the board placed the company into orderly realisation. We suspect that value remains in Juridica shares but the situation was too opaque to justify adding to our holding.

Outlook

Looking forward, after enjoying a bull run which started in early 2009, there are signs that during the next phase it will prove rather more testing for investors to make money. Commodities, on some measures, have plumbed depths not seen for generations. Furthermore a substantial proportion of government bonds now offer negative absolute returns and US margin debt outstanding has reached extreme levels. All three indicators are signaling that the world has moved into little charted territory. It will be challenging for equity markets to continue making progress.

Investors will need to look away from the mainstream if they are to be successful in generating positive returns. Miton Global Opportunities focusses on a lowly correlated corner of the markets. Many of the investments we make are into the shares of unloved and overlooked investment trusts which have already fallen below the radar. The defensive benefit of this approach was demonstrated during the turmoil in the immediate aftermath of the "Brexit" referendum result.

Development in the Sector

Traditionally, private client stock brokers were the natural customers of the investment trust industry. In recent years these have merged into vast wealth management chains. These typically run many billions and it is almost impossible for them to use investment trusts, other than the very largest. This has created a barbell market where the shares of better known trusts such as Bankers and Scottish Mortgage trade close to the value of the underlying portfolio whereas smaller trusts often trade at a substantial discount.

Many of these smaller trusts are doing nothing wrong. They are delivering on their investment objectives. It is just that their client base has moved on. They now have few natural buyers therefore it only takes a modest amount of selling to drive their open market price downwards, irrespective of how the underlying portfolio is performing. Historically if a trust was trading on a wide discount this would suggest that there was an issue. It may have been that the trust was perceived as being low quality, had performed poorly or had a dysfunctional share register. Today the overriding factor which has led to smaller and medium sized closed ended funds trading at wide discounts is structural change. This has transformed the balance of supply and demand. Therefore we find ourselves in a position where quality funds are available at sizeable discounts to the value of their portfolios. Sadly when a fund trades on such a wide discount, it is vulnerable to corporate raiders or its board pulling up stumps as they struggle to see where their trust can find an audience in a changed world. In this environment the most common exit from positions within our portfolio now comes as funds move into realisation.

A helpful development is that the closed end sector is increasingly becoming the natural home for alternative asset classes. Funds focusing on areas such as; Property, Infrastructure, Reinsurance, Forestry and Peer to Peer Lending have illiquid portfolios unsuited to being owned within an open ended structure offering unit holders daily liquidity. The methodology for calculating asset values for Alternative Funds is more subjective than when valuing pure equity portfolios. Often this process fails to accurately reflect the level at which portfolios could be realised on the open market. Our Berlin residential positions are a prime example of this phenomenon where assets are regularly being disposed of well above carrying value. This type of opportunity will increasingly figure within our portfolio.

Since the global financial crisis, Miton Global Opportunities has generated attractive risk adjusted returns. Two factors which have created the opportunity to achieve this are becoming more prevalent. The first is the increased drive towards standardised client portfolios which will force more trusts below the radar. Secondly, regulations forcing fund managers to unbundle what they pay for research and execution of trades has drained liquidity from the market in trusts. This has caused pricing to become less efficient.

Our closed end status allows us to retain illiquid investments until we judge it has become the right time to sell. This leaves us well positioned to extract the embedded value which has developed within our investable universe.


Nick Greenwood
Miton Asset Management Limited
30 June 2016




10 Year Record

Year ended 30 April2016201520142013201220112010200920082007
Net asset value per Ordinary share182.4p181.6p167.4p157.8p141.8p153.2p136.5p95.8p142.1p160.4p
Share price164.3p162.8p149.5p143.3p127.5p139.6p118.8p84.3p133.3p154.3p
Discount to net asset value10.0%10.4%10.7%9.2%10.1%8.8%13.0%12.0%6.2%3.8%
Net assets£46.1m£45.9m£42.3m£39.9m£35.8m£38.7m£34.5m£24.2m£38.6m£49.1m
Gearing10.8%6.5%7.1%2.5%0.0%7.8%8.7%15.5%9.7%7.6%



Portfolio Valuation as at 30 April 2016

Rank (2016)Rank (2015)CompanyValuation
2016
£'000
% of portfolioType of share/ entity held
11Taliesin Property Fund*3,3956.9Ordinary
22India Capital Growth Fund*3,0536.2Ordinary
33Establishment Investment Trust2,4414.9Ordinary
46Alternative Asset Opportunities"2,4184.9Preference
517Pantheon International Participations2,3984.9Ordinary
610Alpha Real Trust2,0664.2Ordinary
716Rights & Issues Investment Trust1,9363.9Capital
8(-)Phoenix Spree Deutschland1,8453.7Ordinary
95JPMorgan Japanese Smaller Companies1,8323.7Ordinary
1011Better Capital"1,7853.6Ordinary
Top 10 investments23,16946.9
1114Phaunos Timber Fund1,7463.5Ordinary
1215New Star Investment Trust1,6313.3Ordinary
1313Prospect Japan Fund1,4663.0Ordinary
1412Aurora Investment Trust1,4342.9Ordinary
154Real Estate Investors*1,4212.9Ordinary
16(-)Standard Life European Private Equity Trust1,3762.8Ordinary
1718EPE Special Opportunities*1,3202.7Ordinary
18(-)Sanditon Investment Trust1,2312.5Ordinary
19(-)Boussard & Gavaudan Holding1,1652.3Ordinary
207Macau Property Opportunities Fund"1,1302.3Ordinary
Top 20 investments37,08975.1
21(-)F&C Private Equity Trust1,1252.3Ordinary
22(-)Monks Investment Trust1,0632.2Ordinary
2319Geiger Counter9972.0Ordinary
2429Artemis Alpha Trust9021.8Ordinary
2533Terra Catalyst Fund*"8511.7Ordinary
26(-)Dunedin Enterprise Investment Trust"7931.6Ordinary
2727Pacific Horizon Investment Trust6951.4Ordinary
28(-)Middlefield Canadian Income Trusts6451.3Redeemable
2930Aseana Properties"6161.2Ordinary
3038Eredene Capital"5561.1Ordinary
Top 30 investments45,33291.7
3128Invesco Perpetual Japan Fund5341.1Open Ended Fund
3242Chelverton Growth Trust4951.0Ordinary
3332Private Equity Investor"4951.0Ordinary
3425RENN Universal Growth Investment Trust"4290.9Ordinary
3523Juridica Investments*"3920.8Ordinary
3635Baker Steel Resources Trust3730.8Ordinary
3739New City Energy3250.7Ordinary
3853Global Fixed Income Realisation"2550.5Ordinary
3949Reconstruction Capital II*"2190.4Ordinary
4045Cambium Global Timberland*"1720.4Ordinary
4144Camper & Nicholsons Marina Investments*1580.3Ordinary
4247St Peter Port Capital*"640.1Ordinary
4350Auctus Growth550.1Ordinary
44(-)Duke Royalty*510.1Ordinary
4552India Capital Growth Fund*270.1Subscription
4663Jupiter Second Split Trust"13-Geared Ordinary
4756Global Resources Investment Trust13-Ordinary
4858Tau Capital*"9-Capital
4954Aurora Russia"4-Ordinary
5060Absolute Return Trust"--Ordinary
5161Dexion Absolute"--Preference
5262Douglasbay Capital"--Subscription
5351Interntional Oil and Gas Technology"--Ordinary
5443Origo Partners"--Ordinary
5564PSource Structured Debt"--Ordinary
5665Sofia Property Fund"--Ordinary
5766Thames River Multi-Hedge"--Subscription
Total investments in the portfolio49,415100.0

* AIM/ISDX listed.

" In liquidation or in a process of realisation.

Portfolio Analysis

as at 30 April 2016

  • Portfolio geographical exposure*
  • European 24.8% (2015: 11.9%)
  • Global 24.1% (27.0%)
  • UK 17.8% (20.7%)
  • Emerging Markets 12.2% (13.9%)
  • North America 7.7% (5.4%)
  • Japan 7.6% (12.8%)
  • Asia Pacific 1.4% (2.5%)
  • Fixed Interest 1.4% (2.0%)
  • Cash 3.0% (3.8%)
  • Portfolio by asset type*
  • Equity 49.0% (2015: 49.2%)
  • Property 20.9% (20.6%)
  • Private Equity 14.0% (12.6%)
  • Other 4.8% (4.6%)
  • Multi-Asset 4.7% (6.6%)
  • Fund of Funds 2.2% (1.1%)
  • Fixed Income 1.4% (1.5%)
  • Cash 3.0% (3.8%)
  • Calculated on a 'look through' basis based on the mandates of the investments held by the Company. Source: Miton Asset Management Limited

The Strategic Report contains a review of the Company's business model and strategy, an analysis of its performance during the period and its future developments, and details of the principle risks and challenges it faces. Its purpose is to inform the shareholders of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company.

Business Model

The Company is an externally managed investment trust and its shares are premium listed on the Official List and traded on the main market of the London Stock Exchange.

The Company is an Alternative Investment Fund ("AIF") under the European Union's Alternative Investment Fund Manager's Directive ("AIFMD") and has appointed Miton Trust Managers Limited as its Alternative Investment Fund Manager ("AIFM").

As an externally managed investment trust, all of the Company's day to day management and administrative functions are outsourced to service providers. As a result, the Company has no executive directors, employees or internal operations.

Investment objective

The objective of the Company is to outperform Sterling 3 month LIBOR plus 2% (the 'Benchmark') over the longer term, principally through exploiting inefficiencies in the pricing of closed-end funds. This objective is intended to reflect the Company's aim of providing a better return to shareholders over the longer term than they would get by placing money on deposit.

The Benchmark is a target only and should not be treated as a guarantee of the performance of the Company or its portfolio.

Investment policy

The Company invests in closed-end investment funds traded on the London Stock Exchange's main market, but has the flexibility to invest in investment funds listed or dealt on other recognised stock exchanges, in unlisted closed-end funds (including, but not limited to, funds traded on AIM) and in open-ended investment funds. The funds in which the Company invests may include all types of investment trusts, companies and funds established onshore or offshore. The Company has the flexibility to invest in any class of security issued by investment funds including, without limitation, equity, debt, warrants or other convertible securities. In addition, the Company may invest in other securities, such as non-investment fund debt, if deemed to be appropriate to produce the desired returns to shareholders.

The Company is unrestricted in the number of funds it holds. However, at the time of acquisition, no investment will have an aggregated value totaling more than 15% of the gross assets of the Company. Furthermore, the Company will not invest more than 10%, in aggregate, of the value of its gross assets at the time of acquisition in other listed closed-end investment funds, although this restriction does not apply to investments in any such funds which themselves have stated investment policies to invest no more than 15% of their gross assets in other listed closed- end investment funds. In addition, the Company will not invest more than 25%, in aggregate, of the value of its gross assets at the time of acquisition in open-ended funds.

There are no prescriptive limits on allocation of assets in terms of asset class or geography.

There are no limits imposed on the size of hedging contracts, save that their aggregated value will not exceed 20% of the portfolio's gross assets at the time they are entered into.

The Board permits borrowings of up to 20% of the Company's net asset value (measured at the time new borrowings are incurred).

The Company's investment objective may lead, on occasions, to a significant amount of cash or near cash being held.

Performance and Risks

Key Performance Indicators

The key performance indicators ("KPIs") used to measure the progress of the Company during the year under review are as follows:

NAV and the movement of the NAV compared to the notional returns available for cash - defined as Sterling 3 month LIBOR plus 2%, the Company's BenchmarkThe NAV total return per Ordinary share for the year was 0.4%, compared to the Benchmark return of 2.6%.
NAV volatilityThe Company aims to deliver its performance with a lower level of volatility in the NAV than equity markets. For the year to 30 April 2016, the Company's NAV had a volatility of 6.4% (2015: 4.4%)*, compared to the volatility of the FTSE All Share of 18.1% (2015: 11.7%)*.
The movement in the Company's share priceThe Ordinary share price has increased by 0.9% over the year.
Discount of the share price in relation to the NAVOver the year, the discount of the Ordinary share price in relation to the NAV has ranged from 6.5% to 12.1%. At the year end, it stood at 10.0%.

Principal Risks and Uncertainties

The Board has undertaken a robust assessment of the principal risks and uncertainties facing the Company including those that would threaten its business model, future performance, solvency and liquidity. Mitigation of these risks is sought and achieved in a number of ways, although it is important to note that the systems in place cannot eliminate the risk of failure to achieve the Company's investment objective. Information regarding the Company's risk assessment and internal control procedures is provided in the Audit Committee Report.

The principal risks are categorised under the following broad headings:

  • investment risks (including borrowing risks);
  • strategic risks (including shareholder relations and share price performance risks); and
  • operational risks (including financial, corporate governance, accounting, legal and regulatory risks).
  • Source: Frostrow Capital LLP.

Investment risks

Market and discount risk

The Company aims to capitalise on the opportunities that exist due to inefficiencies in the pricing of closed-end funds and is exposed to fluctuations in the market prices of those funds and their underlying assets. Additionally the Company is exposed to the risk that the market price of its investments differs from that of their NAV - purchasing funds whose market price is at a discount to NAV can result in significant gains on the upside, but can also lead to exposure to poor performing companies.

The Company also uses borrowing, the effect of which is to amplify the gains or losses the Company experiences.

Investors should be aware that by investing in the Company they are exposing themselves to the market risks associated with owning publicly traded shares, and the additional discount risk specific to investing in closed-ended funds.
To manage this risk the Board and the AIFM have appointed the Investment Manager to manage the portfolio within the remit of the Investment Objective and Policy and borrowing limits. Compliance with the Investment Policy and borrowing limits is monitored on a daily basis by the AIFM and reported to the Board at each Board meeting.

The Investment Manager monitors the volatility, discount, discount management policy, quality of underlying assets, and level of gearing within the portfolio holdings and potential investments. The results of this feed into the stock selection process and consideration of the portfolio constituents. In addition, the Investment Manager reports at each Board meeting on the performance of the portfolio, encompassing, inter alia, rationale for stock selection decisions, make-up of the portfolio, and portfolio company updates.
Liquidity risk
The market in closed end funds can often be illiquid. As such the Company is exposed to the risk that it will not be able to sell its investment at the current market value, or on a timely basis, when the Investment Manager chooses or it is required to do so to meet financial liabilities.The Investment Manager monitors volume and price based trade measures and looks to ensure that a proportion of the portfolio is invested in readily realisable funds.
The Board also receives an update on the liquidity of the portfolio and the current level of liquidity of the Company on a regular basis.

Further details on market, liquidity and other financial risks can be found in note 15.

Strategic risks

Shareholder relations and share price performance

The Company and its shareholders are exposed to the risk, particularly if the investment strategy and approach are unsuccessful, that the Company may be viewed unfavourably or underperform resulting in the Company becoming unattractive to investors and a widening of the share price discount to NAV.In managing this risk the Board reviews the Company's Investment Objective in relation to market and economic conditions and the performance of its peers and discusses at each Board meeting the Company's future development and strategy.
The Board does not seek to manage the discount on a day to day basis but does monitor the trend over longer periods and considers how share price performance may be enhanced, including the effectiveness of marketing and the possibility of share buybacks. Given the size of the Company the Board is conscious of the impact of share buybacks on liquidity and the ongoing charges of the Company.
Having considered the above matters during the course of the year under review the Board put a number of proposals to shareholders on the future of the Company. In addition it appointed Frostrow Capital LLP to provide, inter alia, marketing support to the Company with the intention of increasing the demand for the Company's shares, which in turn is intended to help reduce the discount.

Operational risks

Service provider risk

The Board is reliant on the systems of the Company's service providers and as such a disruption to, or a failure of, those systems could lead to a failure to comply with law and regulations leading to reputational damage to the Company and/or financial loss.To manage these risks the Board: receives reports from the AIFM and Frostrow on compliance with applicable laws and regulations; reviews internal control reports and key policies of the AIFM, Investment Manager and Frostrow; maintains a risk matrix which details the risks the Company is exposed to and the controls relied on to manage those risks; and, receives updates on pending changes to the legal and regulatory environment and progress towards the Company's compliance with those.

Management, Social, Environmental and Diversity Matters

Management Arrangements

AIFM and Investment Manager

Miton Trust Managers Limited is the appointed AIFM for the Company pursuant to an Investment Management Agreement dated 22 July 2014 (the "IMA"), as amended on 9 September 2015.

Under the terms of the IMA, the AIFM provides, inter alia, the following services:

  • risk management services;
  • monitoring the compliance by the Investment Manager with the Company's investment objective and investment policy and reporting any non-compliance in a timely manner to the Investment Manager and the Board;
  • determining the net asset value per share on a daily basis;
  • maintaining professional indemnity insurance at the level required under the AIFM Rules;
  • preparing the monthly factsheets for the Company; and
  • upholding compliance with applicable tax, legal and regulatory requirements.

The AIFM has appointed Miton Asset Management Limited as the Investment Manager pursuant to a Delegation Agreement. The Delegation Agreement replaced the previously existing investment management agreement between the Company and the Investment Manager, which had been in place since 9 March 2004, and was put in place to ensure that the relationship between the Investment Manager and the Company is compliant with the requirements of the AIFMD.

Under the terms of the Delegation Agreement, the Investment Manager provides, inter alia, the following services:

  • seeking out and evaluating investment opportunities;
  • deciding the manner by which monies should be invested, divested, retained or realised;
  • deciding 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.

The management fee payable to the AIFM is calculated at an annual rate of 0.65% of the adjusted market capitalisation of the Ordinary Shares and 0.5% of the Adjusted Market Capitalisation of any Realisation Shares. If the Company as a whole has moved to a realisation basis then the AIFM will be paid 0.5% of the adjusted market capitalisation of the Company as a whole. The management fee accrues daily and is payable in arrears in respect of each calendar month.

The performance fee that was previously payable to the AIFM was removed on 9 September 2015. No performance fee was payable for the year ended 30 April 2016 or for the year ended 30 April 2015.

A performance fee is only payable in future by the Company in respect of the realisation of assets in the Realisation Pool or the realisation of assets where the Company as a whole moves onto a realisation basis. In such cases the performance fee will be 15% of all cash realised and returned to shareholders in excess of a hurdle of LIBOR Plus 5%.

The IMA and Delegation Agreement may be terminated by six months' written notice subject to the provisions for earlier termination as provided therein.

There are no specific provisions contained within the IMA relating to compensation payable in the event of termination of the agreement other than the entitlement to fees which would have been payable within any notice period.

Continuing Appointment of the AIFM and Investment Manager

The Board, through the Management Engagement Committee, keeps the performance of the Investment Manager under review. It is the opinion of the Directors that the continuing appointment of the AIFM and Investment Manager is in the interests of shareholders as a whole. In coming to this decision, the Board took into consideration, inter alia, the following: that Nick Greenwood has been the Company's lead portfolio manager since launch; the investment performance of the Company is satisfactory relative to that of the markets in which the Company invests; and the remuneration of the AIFM and Investment Manager is reasonable both in absolute terms and evaluated against managers of comparable investment companies. The Directors continue to believe that by paying the management fee calculated on a market capitalisation basis, rather than a percentage of assets basis, the interests of the AIFM and Investment Manager are more closely aligned with those of shareholders.

Depositary and Custodian

The Board appointed BNY Mellon Trust & Depositary (UK) Limited as its Depositary and Custodian on the terms and subject to the conditions of an agreement dated 22 July 2014 (the "Depositary Agreement"). An annual fee of 0.025% of the gross asset value of the Company, subject to a minimum fee of £15,000, is payable to the Depositary monthly in arrears. The Company and the Depositary may terminate the Depositary Agreement with three months' written notice.

The Depositary provides the following services, inter alia, under the Depositary Agreement:

  • safekeeping and custody of the Company's custodial investments and cash;
  • processing of transactions; and
  • foreign exchange services.

Company Secretary, Marketing and Administration

Company secretarial, marketing, and administrative services are provided by Frostrow Capital LLP ('Frostrow') under an agreement dated 1 February 2016. An annual management services fee of 25 basis points, charged quarterly in arrears, is payable, subject to a minimum annual fee of £120,000. The agreement may be terminated by either party on six months' written notice.

Frostrow provides the following services, inter alia, under its agreement with the Company:

  • marketing and shareholder services;
  • administrative and company 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
  • ensuring compliance with applicable legal and regulatory requirements.

Company secretarial and administration services until 31 January 2016, were provided by Capita Sinclair Henderson Limited. Details of the fees paid to Frostrow and Capita for their services during the year are set out in note 4 to the Financial Statements.

Environmental, Human Rights and Social Issues

The Company has no employees and the Board consists entirely of non-executive Directors. Day-to-day management of the Company's business is delegated to the Investment Manager. The Company itself has no environmental, human rights, social or community policies. In carrying out its activities and in relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.

The Directors, through the Investment Manager, encourage companies in which investments are made to adhere to best practice with regard to corporate governance.

Board Diversity

The Board of Directors of the Company comprises four male Directors. The Board supports the principle of boardroom diversity, of which gender is one important aspect, and the recommendations of Lord Davies' review. The Board's aim is to have a broad range of backgrounds, skills and experience represented on the Board and to make appointments on merit against objective criteria, including diversity. To this end, the Board will dedicate time to considering diversity during any director search process.

On behalf of the Board

Anthony Townsend

Chairman

30 June 2016

Board of Directors

The Board of Directors all of whom are non-executive, supervise the management of the Company and look after the interests of shareholders. The Board considers that all the Directors are independent and there are no relationships or circumstances which are likely to affect or could appear to affect their judgement.

Anthony Townsend, Chairman

Anthony Townsend has spent over 40 years working in the City and was chairman of the Association of Investment Companies from 2001 to 2003. He is chairman of British & American Investment Trust plc, F&C Global Smaller Companies plc, Baronsmead Second Venture Trust plc, Gresham House plc and Finsbury Growth & Income Trust PLC.

James Fox, Chairman of the Audit Committee

James Fox has over 40 years' experience in investment management and the investment trust industry. He is a past deputy chairman of the Association of Investment Companies and a past chairman of the Association of Investment Companies' Tax Committee.

Michael Phillips

Michael Phillips founded iimia Investment Group plc in 2001 (which became MAM Funds plc in 2010 and is now Miton Group plc) and in a period of seven years built it into a group with funds under management and advice of over £2.8 billion. As chief executive he was responsible for the day to day operations of the Group until September 2008 when he left to pursue other interests. He is an executive director of Gresham House plc and a Fellow of the Chartered Institute for Securities & Investment.

Hugh van Cutsem

Hugh van Cutsem has worked in the investment company sector for a number of years. He started his career at Cazenove on the sell side, specialising in investment companies. He left in 2003 to start up a funds business for a boutique corporate advisory business and specialised in marketing listed funds to the UK wealth management sector. In 2008, he co-founded Kepler Partners LLP which focuses on marketing both listed and open-ended funds to the UK fund management industry and also advises on the structuring of both listed and UCITS funds.

Report of the Directors

The Directors present their report and the audited financial statements for the year ended 30 April 2016. The Corporate Governance Statement forms part of this report.

Overview

The Company was launched on 6 April 2004 as iimia Investment Trust PLC, changing its name on 11 October 2010 to Miton Worldwide Growth Investment Trust PLC and to Miton Global Opportunities plc on 5 January 2016. It is registered in England as a public limited company (registration number 5020752) and is an investment company as defined under Section 833 of the Companies Act 2006.

Activity and Status

The principal activity of the Company is to carry on business as an investment trust. The Company has been granted approval from HM Revenue & Customs as an investment trust under Section 1158 of the Corporation Tax Act 2010. The Company will be treated as an investment trust company, subject to there being no subsequent serious breaches of the regulations. The Directors do not envisage any change in this activity in the future.

The Company's status as an investment trust allows it to obtain an exemption from paying taxes on the profits made from the sale of its investments. Investment trusts offer a number of advantages for investors, including access to investment opportunities that might not be open to private investors and to professional stock selection skills at low cost.

Directors

The Directors in office during the year and up to the date of this report are:


Anthony Townsend
Date of appointment
23 February 2004
James Fox23 February 2004
Michael Phillips23 February 2004
Hugh van Cutsem31 March 2010

None of the Directors nor any persons connected with them had a material interest in the transactions, arrangements and agreements of the AIFM or the Investment Manager during the year.

The Board has adopted a policy whereby all Directors are required to stand for re-election annually, regardless of their length of tenure.

The Board has concluded, following formal performance evaluation, that each of the Directors continues to demonstrate effectiveness, a high level of commitment to the Company, independence from the Investment Manager and a keen desire to act in the best interests of the shareholders as a whole. Furthermore, the Board considers that the experience, expertise and knowledge contributed by each Director is of notable benefit to the Company.

Accordingly, the Board recommends the re-election of each of the Directors.


Substantial Shareholdings
The Directors have been informed of the following substantial interests in the Company's voting rights as at 30 April 2016:
ShareholdersOrdinary
shares
% of voting rights
CG Asset Management Limited2,805,00011.1
Premier Asset Management Limited2,650,00010.5
Armstrong Investments Limited2,395,0009.5
Charles Stanley & Co Limited1,553,5996.2
M&G Investment Management1,401,1415.5
Standard Life Investments1,343,3855.3
Rath Dhu Limited1,100,0004.4
Rathbones1,074,9254.3
Philip J Milton1,049,3754.2
Schroder Investment Management1,025,0004.1
Smith & Williamson929,1403.7

The Company has been informed of the following changes between 30 April 2016 and the date of this Report:

ShareholdersOrdinary
shares
% of voting rights
Premier Asset Management Limited2,526,0009.9
Armstrong Investments Limited2,100,0008.3
Charles Stanley & Co Limited1,243,6684.9

Capital Structure and Continuation of the Company

At a General Meeting of the Company held on 9 September 2015, shareholders approved proposals to remove the requirement for future continuation votes in the Company's Articles of Association and instead include provisions enabling shareholders to elect, in 2018 and then at three year intervals, for the realisation of all or part of their shareholding. The Company's share capital therefore comprises Ordinary shares of 1p each with one vote per share and Realisation shares of 1p each, when in issue, with one vote per share.

The rights of holders of Ordinary shares (being shares in respect of which no election for realisation has been made) and of Realisation shares (being shares in respect of which an election for realisation has been made), when in issue, will be as follows: the portfolio will be split into two separate and distinct pools, namely a continuation pool comprising assets attributable to the continuing Ordinary shares (the "Continuation Pool") and a realisation pool comprising the assets attributable to the Realisation shares (the "Realisation Pool"). The assets in the Realisation Pool will be managed in accordance with an orderly realisation programme with the aim of making progressive returns of cash to holders of Realisation shares as soon as practicable. The precise mechanism for any return of cash to holders of Realisation shares will depend upon the relevant factors prevailing at the time and will be at the discretion of the Board.

Share Issues

At 30 April 2016 and the date of this report, the number of Ordinary shares in issue was 25,279,985. No shares have been issued during the year. The shares carry one vote each.

The Directors have the authority to issue shares up to an aggregate nominal amount equal to one-third of the issued share capital of the Company. They also have authority to issue shares, or sell Treasury shares, up to an aggregate nominal amount equal to 10% of the issued share capital for cash, without pre-emption rights applying. These authorities will expire at the Annual General Meeting to be held in September 2016, when resolutions to renew them will be proposed.

Repurchase of Own Shares

At the Annual General Meeting held on 9 September 2015, the Directors were granted the authority to repurchase up to 3,789,469 Ordinary shares, being 14.99% of the Company's Ordinary share capital. No Ordinary shares were purchased during the year. This authority will expire at the Annual General Meeting to be held in 2016, when a resolution to renew the authority will be proposed.

Treasury Shares

The Company may make market purchases of its own shares for cancellation or for holding in Treasury where it is considered by the Board to be cost effective and positive for the management of the Company's capital base to do so. During the year, and since the year end, no shares were purchased for, or held in, Treasury.

Long-Term Viability

In accordance with the UK Corporate Governance Code and the Listing Rules, the Directors have assessed the prospects of the Company over a longer period than the 12 months required by the 'Going Concern' provision. In order to address this new requirement, the Board must take into account the Company's current position and the principal risks.

To provide this assessment the Board has considered the Company's financial position and its ability to liquidate its portfolio and meet its expenses as they fall due:

  • the majority of the portfolio consists of investments actively traded on major international stock exchanges;
  • the expenses of the Company are predictable and modest in comparison with the liquid assets and there are no capital commitments foreseen which would alter that position; and
  • the Company has no employees, only non-executive directors and consequently does not have redundancy or other employment related liabilities or responsibilities.

The Board, as well as considering the principal risks and the financial position of the Company as described above, also made the following assumptions in considering the longer-term viability of the Company:

  • the Board and the Investment Manager will continue to adopt a long-term view when making investments;
  • there will continue to be demand for investment trusts;
  • regulation will not increase to a level that makes the running of the Company uneconomical; and
  • the performance of the Company will be satisfactory and should performance be less than the Board deem acceptable it has powers to take appropriate action.

The Company is intended to operate over the long-term, however, shareholders approved a proposal during the course of the year, which established a possible re-organisation of the share capital at the AGM in 2018 and the ability for shareholders to elect to receive a Realisation Class of Shares. In this situation, two portfolios will be created and the assets in the Realisation Portfolio will be sold. As part of these proposals, if the Net Asset Value of the Ordinary Shares is less than £30m after the re-organisation, the Directors would follow the provisions in the Articles of Association relating to the winding-up of the Company and the realisation of its assets, which give the Board significant discretion to set the terms for the return of capital to shareholders. Many of the Company's expenses are variable and related to the size of the portfolio. Accordingly, the Directors have formed a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three years.

Securities Carrying Voting Rights

The following additional information is provided in accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and DTR 7.2.6 of the UKLA DTRs: there are no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no agreements known to the Company between holders of securities that may restrict the transfer of securities; and no agreements to which the Company is party that might affect its control following a successful takeover bid.

Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, including those within the underlying investment portfolio.

Requirements of the Listing Rules

Listing Rule 9.8.4 requires the Company to include certain information in a single identifiable section of the Annual Report or a cross reference table indicating where the information is set out. The Directors confirm that there are no disclosures to be made in this regard.

Annual General Meeting

In addition to the ordinary business of the meeting, the following resolutions will be proposed as special business:

An Ordinary Resolution to renew the Directors' authority to allot shares up to an aggregate nominal amount of

£84,266 representing approximately one-third of the Company's issued share capital will be proposed as Resolution 9.

A Special Resolution to authorise the Directors to issue new shares or sell shares from Treasury for cash, up to an aggregate nominal amount of £25,280, which is equivalent to approximately 10% of the Company's issued share capital, at a price per share not less than the net asset value per share, and to disapply pre-emption rights in respect of such shares, will be proposed as Resolution 10.

A Special Resolution to renew for a further year the Company's authority to purchase (either for cancellation or for placing into Treasury, at the discretion of the Directors) up to 14.99% of the Ordinary shares in circulation will be put to shareholders as Resolution 11. Purchases will be made on the open market and prices will be in accordance with the terms set out in Resolution 11.

The Directors will exercise the authorities granted to them by the passing of Resolutions 9 to 11 only if, in their opinion, it would be in the best interests of the shareholders as a whole. If passed, these authorities will expire at the Annual General Meeting to be held in 2017, when resolutions for their renewal will be proposed.

A Special Resolution that will allow the Directors to convene general meetings, other than Annual General Meetings, on a minimum of 14 clear days' notice, will be proposed as Resolution 12. The minimum notice period for Annual General Meetings will remain at 21 clear days. This approval would be effective until the Company's Annual General Meeting to be held in 2017, at which it is intended that renewal will be sought. The Company will have to offer facilities for all shareholders to vote by electronic means for any general meeting convened on 14 days' notice. The Directors will only call a general meeting on 14 days' notice where they consider it to be in the interests of shareholders to do so and the relevant matter is required to be dealt with expedientally.

Recommendation

Full details of the above resolutions are contained in the Notice of Annual General Meeting. Ordinary resolutions require that more than 50% of the votes cast at the relevant meeting must be in favour of the resolutions. Special resolutions require that at least 75% of the votes cast must be in favour of the resolution to be passed.

The Directors consider that all the resolutions to be proposed at the Meeting are in the best interests of the Company and its members as a whole. The Directors unanimously recommend that shareholders vote in favour of all the resolutions, as they intend to do in respect of their own beneficial holdings.

Audit Information

The Directors who held office at the date of this report confirm that, so far as they are aware, there is no relevant audit information of which the Company's Auditor is unaware and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's Auditor is aware of that information. This information should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

On behalf of the Board

Anthony Townsend

Chairman

30 June 2016

Audit Committee Report

I am pleased to present the Audit Committee Report for the year ended 30 April 2016.

Role of the Audit Committee

The Audit Committee (the "Committee") provides a forum through which the Company's Auditor reports to the Board. The Committee is responsible for monitoring the process of production and ensuring the integrity of the Company's financial statements. The other primary responsibilities of the Committee are:

  • to monitor adherence to best practice in corporate governance;
  • to review the Company's half year and annual report;
  • to review the effectiveness of the internal control and risk management environment of the Company;
  • to receive and consider reports from the Compliance Officer of the Investment Manager;
  • to consider the accounting policies of the Company;
  • to make recommendations to the Board in relation to the re-appointment of the Auditor;
  • to approve the Auditor's remuneration and terms of engagement; and
  • to review and monitor the Auditor's independence and objectivity and the effectiveness of the audit process.

Matters Considered in the Year

The Committee met twice during the financial year. It has:

  • reviewed the internal controls and risk management systems of the Company and its third party service providers;
  • held a tender process as a result of which a recommendation was made to the Board that PricewaterhouseCoopers LLP ("PwC") be appointed as Auditor with effect from the conclusion of the Company's AGM to be held on 30 September 2016;
  • received and discussed with the Auditor their report on the results of the 2015 audit;
  • agreed the audit plan and fee for the 2016 audit with the Auditor, including the principal areas of focus; and
  • reviewed the Company's financial statements and advised the Board accordingly.

Subsequent to the year end, the Committee received and discussed with the Auditor their report on the results of the 2016 audit.

The significant reporting matters considered by the Committee during the year were:

  1. Investments

Verification of ownership and valuation of the Company's holdings are key issues. The Audit Committee dealt with this matter by ensuring that all investment holdings and cash balances are reconciled, at least monthly for investments and daily for cash, to the position at the independent Depositary and by reconfirming its understanding of the processes in place to value the portfolio and to record investment transactions and income. A full portfolio valuation was reviewed by the Committee at the half year and year end.

The portfolio contains a significant number of holdings where the investee company is in a process of realisation/ liquidation. As at 30 April 2016, 25 out of 57 holdings were in liquidation or in a process of realisation, representing 20.5% of the portfolio. The Investment Manager provides comprehensive updates on investee companies at each meeting and the Directors have regular discussions with the Investment Manager about the impact of this 'tail' on the Company and its performance.

b. Adoption of new UK GAAP and Corporate Governance Code

The Company adopted FRS 102 during the year. The Committee dealt with this by:

  • arranging for all Directors to be briefed by the Company's auditors on the changes made to UK GAAP and the impact on the Company; and
  • receiving a report from Frostrow of the changes made to the Annual Report.

Financial Statements

The Board has asked the Committee to confirm that in its opinion the Board can make the 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 its review of the whole document, underpinned by involvement in the planning for its preparation and review of the processes to assure the accuracy of factual content.

The Committee is satisfied that it is appropriate for the Board to prepare the financial statements on the going concern basis.

The Committee also reviewed the financial position and principal risks of the Company in connection with the Board's statement on the long-term viability of the Company, which is set out in the Report of the Directors.

Internal Controls and Risk Management

The Board is responsible for the risk assessment and review of the internal controls of the Company, undertaken in the context of its investment objective.

The review covers the key business, operational, compliance and financial risks facing the Company. In arriving at its judgement of what risks the Company faces, the Board has considered the Company's operations in light of the following factors:

  • the nature of the Company, with all management functions outsourced to third party service providers;
  • the nature and extent of risk which it regards as acceptable for the Company to bear within its overall investment objective;
  • the threat of such risks becoming a reality; and
  • the Company's ability to reduce the incidence and impact of risk on its performance.

Against this background, a risk map has been developed which covers all key risks that the Company faces, the likelihood of their occurrence and their potential impact, how these risks are monitored and the mitigating controls in place. The Board has delegated to the Audit Committee the responsibility for the review and maintenance of the risk matrix and it reviews, in detail, the risk matrix each time it meets, bearing in mind any changes to the Company, its environment or service providers since the last review.

The Committee receives an internal controls report and reviews the internal controls in place at the Investment Manager and AIFM, as well as other major service providers, and is satisfied that they are sufficiently robust and appropriate.

Internal Audit

The Company does not have an internal audit function as all of its day-to-day operations are delegated to third parties, all of whom have their own internal control procedures. The Committee discussed whether it would be appropriate to establish an internal audit function, and agreed that the existing system of monitoring and reporting by third parties remains appropriate and sufficient.

External Auditor

The Committee monitors and reviews the effectiveness of the external audit process and makes decisions on the re-appointment, remuneration and terms of engagement of the Auditor.

Ahead of each audit, the Committee considers the appropriateness of the scope of the audit plan, the terms under which the audit is to be conducted as well as the matter of remuneration, with a view to ensuring the best interests of the Company are promoted.

Grant Thornton (UK) LLP ("Grant Thornton") carried out the audit for the year under review and were considered by the Audit Committee to be independent. The audit fee for the year ended 30 April 2016 was £23,175, an increase of £515 on the previous year.

Grant Thornton did not provide any non-audit services to the Company during the year. In the event of any proposed non-audit services, the Committee would review the scope and nature of the proposed non-audit service before engagement, to ensure that Auditor independence and objectivity was safeguarded.

It was noted by the Committee that the Company's current Auditor, Grant Thornton UK LLP and its predecessor firm, had been in office since 2004, during which time no audit tender had taken place. Whilst the audit partner has changed periodically in accordance with professional and regulatory standards to protect independence and objectivity, in accordance with best practice and the new EU regulations on auditor rotation, a formal audit tender was undertaken.

Following this formal tender process, the Directors are proposing to appoint PricewaterhouseCoopers LLP as Auditor of the Company, with effect from the next AGM on 30 September 2016. A resolution to appoint PwC as Auditor and to authorise the Audit Committee to determine their remuneration will be proposed at the forthcoming AGM.

As resigning Auditor, Grant Thornton will provide the Company with a 'statement of circumstances' confirming that it resigned as Auditor of the Company following the tender process. A copy of this statement will be available from the Company Secretary on request.

Audit Committee Confirmation

The Audit Committee confirm that they have carried out a review of the effectiveness of the system of internal financial control and risk management during the year, as set out above and that:

  1. an ongoing procedure for identifying, evaluating and managing significant risks faced by the Company was in place for the year under review and up to the date of this report. This procedure is regularly reviewed by the Board; and
  2. they are responsible for the Company's system of internal controls and for reviewing its effectiveness and that it is designed to manage the risk of failure to achieve business objectives. This can only provide reasonable not absolute assurance against material misstatement or loss.

James Fox

Audit Committee Chairman

30 June 2016

Directors' Remuneration Report

for the year ended 30 April 2016

The Board has prepared this report in accordance with the requirements of the Large and Medium Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and in accordance with the Listing Rules of The Financial Conduct Authority. Ordinary resolutions for the approval of this report will be put to shareholders at the forthcoming Annual General Meeting.

The law requires the Company's Auditor, Grant Thornton, to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such. The Auditor's opinion is included in the "Independent Auditor's Report".

Statement from the Chairman

I am pleased to present the Directors' Remuneration Report for the year ended 30 April 2016.

The Board consists entirely of independent non-executive Directors and the Company has no employees. We have not, therefore, reported on those aspects of remuneration that relate to executive Directors. Due to the small size and nature of the Board, it is not considered appropriate for the Company to establish a separate remuneration committee, and the remuneration of the Directors is therefore dealt with by the Board as a whole.

During the year ended 30 April 2016, the fees were set at the rate of £27,500 per annum for the Chairman, £20,000 per annum for other non-executive Directors, and an additional £4,000 per annum for the Chairman of the Audit Committee.

As described in last year's report, the Directors' fees were increased with effect from 1 May 2012 to bring them more in line with the market. At the most recent review, held on 22 June 2016, it was agreed that the Directors' fees would remain unchanged for 2017. All levels of remuneration reflect both the time commitment and responsibility of the role.

Directors' Fees for the Year (audited)

The Directors who served during the year received the following emoluments:

Fees Expenses* Total

Year to 30 April
2016
£
Year to 30 April
2015
£
Year to 30 April
2016
£
Year to 30 April
2015
£
Year to 30 April
2016
£
Year to 30 April
2015
£
Anthony Townsend (Chairman)27,50020,000--27,50020,000
James Fox24,00017,00025136524,25117,365
Michael Phillips20,00014,0004591,34320,45915,343
Hugh van Cutsem20,00014,000-1020,00014,010
91,50065,0007101,71892,21066,718

* travel expenses for attendance at Board meetings.

Relative Importance of Spend on Pay

This report is required to include a table showing actual expenditure by the Company on remuneration and distributions to shareholders for the current and prior year. However, as the Company has not yet declared a dividend, this information has not been presented.

Directors' Beneficial and Family Interests (audited)

The interests of the Directors and their families in the Ordinary shares of the Company are set out below:

At 30 April 2016 Number of sharesAt 30 April 2015 Number of shares
Anthony Townsend25,00025,000
James Fox40,00040,000
Michael Phillips107,795107,795
Hugh van Cutsem6,234-

There have been no changes to any of the above holdings between 30 April 2016 and the date of this Report. There is no requirement under the Company's Articles of Association for Directors to hold shares in the Company.

Statement of Voting at Annual General Meeting

The Directors' Remuneration Report for the year ended 30 April 2015 and the Directors' Remuneration Policy were approved by shareholders at the Annual General Meeting held on 9 September 2015.

The votes cast by proxy were as follows:

Directors' Remuneration ReportDirectors' Remuneration Policy
Number of votes% of votes castNumber of votes% of votes cast
For*16,706,2539916,706,25399
Against14,767114,7671
Total votes cast16,721,02010016,721,020100
Number of votes withheld179,200179,200

* Any proxy votes which were at the discretion of the Chairman have been included in the "for" total.

Approval

The Directors' Remuneration Report was approved by the Board of Directors on 30 June 2016 and signed on its behalf by:

Anthony Townsend

Chairman

Directors' Remuneration Policy

The Board's policy is that the remuneration of the Directors should reflect the experience of the Board as a whole, and is determined with reference to comparable organisations and appointments.

The level of remuneration has been set in order to attract individuals of a calibre appropriate to the future development of the Company. The remuneration of the Directors will take into account the duties and responsibilities of the Directors and the expected time commitment to the Company's affairs.

The fees of the Directors are determined within the limits set out in the Company's Articles of Association, which stipulate that the aggregate amount of Directors' fees shall not exceed £150,000 in any financial year or any greater sum that may be determined from time to time by ordinary resolution of the Company. The Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits. There are no performance conditions attaching to the remuneration of the Directors as the Board does not feel this to be appropriate for non-executive Directors.

As set out in the Company's Articles of Association, Directors are entitled to be paid all reasonable travel, hotel or other expenses properly incurred in or about the performance of their duties as Directors, including expenses incurred in attending Board or shareholder meetings.

In certain circumstances, under HMRC rules travel and other out of pocket expenses reimbursed to the Directors may be considered as taxable benefits. Where expenses are classed as taxable under HMRC guidance, they are shown in the taxable expenses column of the Directors' remuneration table along with the associated tax liability.

Expected fees
for year to
30 April 2017
£

Fees for year to
30 April 2016
£
Chairman27,50027,500
Audit Committee Chairman24,00024,000
Non-executive Director20,00020,000
Total aggregate annual fees that may be paid150,000150,000

Fees for any new Director appointed will be on the above basis. Fees payable in respect of subsequent periods will be determined following an annual review. Any views expressed by shareholders on the fees being paid to Directors will be taken into consideration by the Board.

None of the Directors has a contract of service with the Company, but letters of appointment setting out the terms of their appointment as non-executive Directors are in place and are available on request from the Company Secretary and will be available at the Company's Annual General Meeting. The Company's Articles of Association provide that a Director shall retire and be subject to election at the first Annual General Meeting after appointment, and that one-third of the Directors retire by rotation at subsequent Annual General Meetings, with each Director retiring at least every third year. In addition to these requirements, the Board has agreed that all Directors will stand for re-election annually. Compensation will not be paid upon loss of office.

This policy was approved by shareholders at the last Annual General Meeting held in 2015. 16,706,253 (99%) of votes were received in favour, 14,767 (1%) were against and 179,200 were withheld, the percentage of votes excludes votes withheld.

In accordance with the regulations, an ordinary resolution to approve the Directors' Remuneration Policy will be put to shareholders at least once every three years and therefore it is expected that it will next be put to shareholders in 2018.

Corporate Governance

This Corporate Governance Statement forms part of the Report of the Directors.

The Company is committed to the highest standards of corporate governance and the Board is accountable to shareholders for the governance of the Company's affairs.

Statement of Compliance with the AIC Code of Corporate Governance

The Board of Miton Global Opportunities plc has considered the principles and recommendations of the AIC Code of Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses the main principles set out in the UK Corporate Governance Code (the "UK Code"), as well as setting out additional principles and recommendations on issues that are of specific relevance to investment trusts.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Code), provides better information to shareholders.

The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except as set out below.

The UK Code includes provisions relating to:

  • the role of the chief executive;
  • executive directors' remuneration; and
  • the need for an internal audit function.

For the reasons set out in the AIC Guide and as explained in the UK Code, the Board considers these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive Directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

Board of Directors

The Board consists entirely of non-executive Directors.

The Directors meet at regular Board meetings, held at least once a quarter, with additional meetings arranged as necessary. During the year to 30 April 2016, the number of scheduled Board and Committee meetings attended by each Director was as follows:



Board meetings

Audit Committee meetings
Management Engagement Committee meetings
Anthony Townsend4 (4)3 (3)1 (1)
James Fox4 (4)3 (3)1 (1)
Michael Phillips4 (4)3 (3)1 (1)
Hugh van Cutsem4 (4)3 (3)0 (1)

Figures in brackets indicate maximum number of meetings held in the year in respect of which the individual was a Board/Committee member.

The Board is responsible for all matters of direction and control of the Company, including its investment policy, and no one individual has unfettered powers of decision. The Directors possess a wide range of business and financial expertise relevant to the Company and consider that they commit sufficient time to the Company's affairs. Brief biographical details of the Directors, including details of their significant commitments, can be found in the Strategic Report. There are no qualifying third party indemnity provisions in place.

A procedure for the induction of new Directors has been established, including the provision of an induction pack containing relevant information about the Company, its processes and procedures. New appointees will also have the opportunity of meeting with the Chairman and relevant persons at the AIFM, Investment Manager and Company Secretary.

Policy on Tenure

The Board subscribes to the view expressed within the AIC Code that long-serving directors should not be prevented from forming part of an independent majority. It does not consider that a director's tenure necessarily reduces his/her ability to act independently and, following appropriate, formal performance evaluations, believes that directors may be considered independent in character and judgement. The Board's policy on tenure is that continuity and experience are considered to add significantly to the strength of the Board and, as such, no limit has been imposed. In view of its non-executive nature, the Board considers that it is not appropriate for directors to be appointed for a specified term, although new directors will be appointed with the expectation that they will serve for a minimum period of three years subject to shareholder approval. The Board has adopted a policy whereby all Directors will be required to stand for re-election annually, regardless of their length of tenure.

Board Review

The Board has established a formal process, led by the Chairman, for the annual evaluation of the performance of the Board, its Committees and the individual Directors. The annual appraisal process was conducted by interview. The appraisal of the Chairman followed the same process and was conducted by the Chairman of the Audit Committee, Mr Fox. Having considered and discussed the points raised by Directors during the evaluation, the Board concluded that it had the appropriate balance of skills, experience, length of service and knowledge, and that the Directors worked well together.

Chairman and Senior Independent Director

The Chairman, Mr Townsend, is deemed by his fellow independent Board members to be independent and to have no conflicting relationships. Mr Townsend is chairman of five other investment companies but the Board considers that he has sufficient time to commit to the Company's affairs as necessary. Given the size and nature of the Board, the Board has not considered it appropriate to appoint a Senior Independent Director.

Conflicts of Interest

The Articles of Association permit the Board to consider and, if it sees fit, to authorise situations where a Director has an interest that conflicts, or may possibly conflict, with the interests of the Company. There is in place a formal system for the Board to consider authorising such conflicts, whereby the Directors who have no interest in the matter decide whether to authorise the conflict and any conditions to be attached to such authorisations.

Directors' Independence

In accordance with the AIC Code, as part of the evaluation process, the Board has reviewed the independence of each individual Director and the Board as a whole.

The AIC Code requires that this report should identify each non-executive Director the Board considers to be independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, a Director's judgement, stating its reasons if it determines that a Director is independent notwithstanding the existence of relationships or circumstances which may appear to be relevant to its determination.

Mr Townsend is the non-executive chairman of Gresham House plc and Mr Phillips is an executive director of Gresham House plc. However, the Board is satisfied that they are demonstrably independent of each other and that their independence as Directors of the Company is not affected.

Mr Townsend, Mr Fox and Mr Phillips have each held office for eleven years, since the launch of the Company in 2004. The Board considers, however, that longevity of service does not impede a Director's ability to act independently. Following formal performance evaluation, and having noted the willingness of each Director to challenge and debate the activities of the AIFM and Investment Manager, the Board has concluded that each Director is independent in character and judgement and that there are no relationships or circumstances which are likely to affect the judgement of any Director.

Board Responsibilities and Relationship with the AIFM and the Investment Manager

The Board is responsible for the determination and implementation of the Company's investment policy and for monitoring compliance with the Company's investment objective. At each Board meeting, the Directors follow a formal agenda, which is circulated in advance by the Company Secretary. The Board's main roles are to create value for shareholders, to provide leadership to the Company and to approve the Company's strategic objectives. Specific responsibilities of the Board include: reviewing the Company's investments, asset allocation, gearing policy, cash management, peer group performance, investment outlook and revenue forecasts and outlook.

In order to discharge these responsibilities, the Board requires that Frostrow, the AIFM and the Investment Manager provide financial information, together with briefing notes and papers in relation to changes in the Company's economic and financial environment, statutory and regulatory changes and corporate governance best practice.

The Board has a schedule of matters reserved for decision by the full Board, which is regularly reviewed.

The Board has delegated certain of its responsibilities to the Audit Committee and the Management Engagement Committee, the terms of reference for which are available on the Company's website, www.mitongroup.com/migo.

At each Board meeting, representatives from the AIFM and Investment Manager are in attendance to present verbal and written reports covering its activity, portfolio and investment performance over the preceding period, and compliance with the applicable rules and guidance of the FCA and the UK Stewardship Code. Ongoing communication with the Board is maintained between formal meetings. The Board and the Investment Manager operate in a supportive, co-operative and open environment.

Engagement with Investee Companies

As an externally managed investment company, the Board delegates the majority of its responsibilities in relation to engagement with investee companies to the Company's Investment Manager. However, the Board retains oversight of this process by receiving regular updates from the Investment Manager on its engagement activities and by reviewing the Investment Manager's engagement and voting policies. The Investment Manager has published a statement of compliance with the UK Stewardship Code. Further details of the Investment Manager's approach to engaging with investee companies can be found on its website at www.mitongroup.com/index.php/corporate/shareholder-information.

Committees

The Directors have decided that, given the size of the Board, it is unnecessary to form separate Remuneration and Nomination Committees; the duties that would ordinarily fall to those Committees are carried out by the Board as a whole.

Audit Committee

The Board has established an Audit Committee, which comprises all the Directors and is chaired by Mr Fox. With such a small Board, it is deemed both proportionate and practical to involve all Directors.

The Audit Committee meets at least twice yearly, and meetings are arranged to coincide with the publication of the Company's financial statements.

Management Engagement Committee

The Management Engagement Committee comprises all the Directors and is chaired by Mr Townsend. The Committee meets at least once a year to review the performance of the AIFM and Investment Manager's obligations under the IMA and Delegation Agreement and to consider any variation to the terms of these agreements. The Management Engagement Committee then makes a recommendation to the Board about the continuing appointment of the AIFM and Investment Manager under the terms of the IMA and Delegation Agreement. The Management Engagement Committee also reviews the performance of Frostrow, the Depositary, the Custodian, the Registrar and any matters concerning their respective agreements with the Company.

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.

The Company has arranged Directors' and Officers' Liability Insurance which provides cover for legal expenses under certain circumstances. This was in force for the entire period under review and up to the date of this report.

Company Secretary

The Board has direct access to the advice and services of the Company Secretary, Frostrow, which is responsible for ensuring that the Board and Committee procedures are followed and that applicable regulations are complied with. The Company Secretary is also responsible to the Board for ensuring timely delivery of the information and reports and that statutory obligations of the Company are met.

Dialogue with Shareholders

Communication with shareholders is given a high priority by the Board, the AIFM and the Investment Manager and the Directors are available to enter into dialogue with shareholders. Major shareholders of the Company are offered the opportunity to meet with the Investment Manager and the Directors to ensure that their views are understood. All shareholders are encouraged to attend and vote at the Annual General Meeting, during which the Board and the Investment Manager are available to discuss issues affecting the Company and shareholders have the opportunity to address questions to the Investment Manager and the Board.

Any shareholder who would like to lodge questions in advance of the Annual General Meeting is invited to do so, either on the reverse side of the proxy card or in writing to the Company Secretary. The Company always responds to letters from individual shareholders.

The Annual and Half-Yearly Reports of the Company are prepared by the Board and its advisers to present a full and readily understandable review of the Company's performance. Copies are dispatched to shareholders by mail and are also available from Frostrow or by downloading from the Company's website: www.mitongroup.com/migo.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial period. Under that law, the Directors must not approve the financial statements unless they are satisfied that they present fairly the financial position, financial performance and cash flows of the Company for that period. In preparing these financial statements, the Directors are required to:

  • select suitable accounting policies and then apply them consistently;
  • make judgements and estimates that are reasonable and prudent;
  • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
  • prepare the financial statements on a going concern basis unless it is inappropriate to assume that the Company will continue in business; and
  • prepare annual reports and financial statements that, taken as a whole, are fair, balanced and understandable and provide the necessary information for shareholders to assess the Company's position and performance, business model and strategy.

The Directors have confirmed that the financial statements, which have been prepared in accordance with UK Generally Accepted Accounting Practice, comply with the above requirements.

The Directors are responsible for ensuring that the Strategic Report, Report of the Directors and other information included in the Annual Report are prepared in accordance with company law in the UK. They are responsible for ensuring that the Annual Report includes information required by the Listing Rules of the UKLA.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy, at any time, the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for the Company's system of internal financial control, for safeguarding the assets of the Company and hence taking reasonable steps for the prevention and detection of fraud and other irregularities.

Miton Trust Managers Limited is responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Visitors to the website should be aware that legislation in the UK governing the preparation of the financial statements may differ from legislation in other jurisdictions.

The Directors confirm that to the best of their knowledge:

  • the financial statements have been prepared in accordance with UK accounting standards, give a true and fair view of the assets, liabilities, financial position and the profit for the year ended 30 April 2016; and
  • the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The Annual Report and financial statements, taken as a whole, are considered by the Board to be fair, balanced and understandable and provide the necessary information for shareholders to assess the Company's performance, position, business model and strategy.

On behalf of the Board

Anthony Townsend

Chairman

30 June 2016

Independent Auditor's Report

to the members of Miton Global Opportunities plc

Our opinion on the financial statements is unmodified

In our opinion the financial statements:

  • give a true and fair view of the state of the company's affairs as at 30 April 2016 and of its return for the year then ended;
  • have been properly prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'; and
  • have been prepared in accordance with the requirements of the Companies Act 2006.

Who we are reporting to

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.

What we have audited

Miton Global Opportunity plc's financial statements for the year ended 30 April 2016 comprise the Income Statement, the Statement of Changes in Equity, the Statement of Financial Position, the Statement of Cashflows and the related notes.

The financial reporting framework that has been applied in their preparation is United Kingdom Generally Accepted Accounting Practice including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Overview of our audit approach

  • Overall materiality: £461,200, which represents 1% of the Company's net assets; and
  • Key audit risks were identified as existence and valuation of investments.

Our assessment of risk

In arriving at our opinions set out in this report, we highlight the following risks that, in our judgement, had the greatest effect on our audit:

Audit risk

Existence and valuation of investments

The Company's objective is to outperform 3 month LIBOR plus 2% over the longer term, principally through exploiting inefficiencies in the pricing of closed-end funds. Accordingly, the investment portfolio is a significant, material balance in the financial statements. We therefore identified the existence and valuation of investments as risks that require particular audit attention.

How we responded to the risk

Our audit work on the risk of existence included, but was not restricted to:

  • obtaining an understanding of management's processes to recognise and measure investments, including ownership of those investments, entered into by the Company's Investment Manager;
  • obtaining a confirmation of investments held at the year end directly from the independent Custodian;
  • testing the reconciliation of the Custodian records to the Company's records;
  • testing a sample of investment additions and disposals shown in the Company's records to broker confirmations and verifying cash movements.

Our audit work on the risk of valuation included, but was not restricted to:

  • testing the valuation of unquoted investments to net asset value statements, audited financial statements or administrators distribution statements;
  • reviewing and challenging the reasonableness of both the valuation techniques used and the assumptions made by management; and
  • agreeing the valuation of quoted investments to an independent source of market prices.

The company's accounting policy on investments, including their valuation, is shown in note 1 and related disclosures are included in note 8. The Audit Committee identified the portfolio, including the verification of ownership and valuation of investments, as a principal issue in its report, where the Committee also described the action that it has taken to address this issue.

Our application of materiality and an overview of the scope of our audit

Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our work and in evaluating the results of that work.

We determined materiality for the audit of the financial statements as a whole to be £461,200, which is 1% of net assets. This benchmark is considered the most appropriate because net assets, which is primarily composed of the Company's investment portfolio, is considered to be the key driver of the Company's total return performance.

Materiality for the current year is lower than the level that we determined for the year ended 30 April 2015 to reflect a change in our benchmark from investments to net assets. This change was to better reflect how performance of the business is measured.

We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 75% of financial statement materiality. We also determine a lower level of specific materiality for directors' remuneration, this was set at £1.

We determined the threshold at which we will communicate misstatements to the audit committee to be £23,000. In addition we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.

Overview of the scope of our audit

A description of the generic scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

We conducted our audit in accordance with International Standards on Auditing (ISAs) (UK and Ireland). Our responsibilities under those standards are further described in the 'Responsibilities for the financial statements and the audit' section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Overview of the scope of our audit continued

We are independent of the company in accordance with the Auditing Practices Board's Ethical Standards for Auditors, and we have fulfilled our other ethical responsibilities in accordance with those Ethical Standards.

Our audit approach was based on a thorough understanding of the company's business and is risk based. The day-to-day management of the Company's investment portfolio, the custody of its investments and the maintenance of the Company's accounting records are outsourced to third-party service providers. Accordingly our audit work included:

  • obtaining an understanding of, and evaluating, relevant internal controls at the Company and at relevant third- party service providers;
  • inspecting records and documents held by the Company and third-party service providers;
  • reviewing reports on the description, design and operating effectiveness of internal controls at the relevant third- party service providers; and
  • substantive testing of significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment and management of specific risks.

Other reporting required by regulations

Our opinion on other matters prescribed by the Companies Act 2006 is unmodified

In our opinion:

  • the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
  • the information given in the Strategic Report and Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

Under the Companies Act 2006 we are required to report to you if, in our opinion:

  • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
  • the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
  • certain disclosures of directors' remuneration specified by law are not made; or
  • we have not received all the information and explanations we require for our audit.

Under the Listing Rules, we are required to review:

  • the directors' statements in relation to going concern and longer-term viability; and
  • the 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.

Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:

  • materially inconsistent with the information in the audited financial statements; or
  • apparently materially incorrect based on, or materially inconsistent with, our knowledge of the company acquired in the course of performing our audit; or
  • otherwise misleading.

In particular, we are required to report to you if:

  • we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the annual report is fair, balanced and understandable; or
  • the annual report does not appropriately disclose those matters that were communicated to the audit committee which we consider should have been disclosed.

We have nothing to report in respect of the above.

We also confirm that we do not have anything material to add or to draw attention to in relation to:

  • the directors' confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the company including those that would threaten its business model, future performance, solvency or liquidity;
  • the disclosures in the annual report that describe those risks and explain how they are being managed or mitigated;
  • the directors' statement in the financial statements about whether they have considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the company's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; and
  • the directors' explanation in the annual report as to how they have assessed the prospects of the company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Responsibilities for the financial statements and the audit

What the directors are responsible for:

As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

What we are responsible for:

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Christopher Smith

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London

30 June 2016

Income Statement

for the year ended 30 April 2016

NoteYear ended 30 April 2016Year ended 30 April 2015
Revenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000
Gains on investments8-524524-3,5093,509
Income2521-521681-681
Management fee3(238)-(238)(197)-(197)
Exchange losses on capital items-(3)(3)-(22)(22)
Other expenses4(514)-(514)(320)-(320)
(Loss)/return on ordinary activities before finance
costs and taxation(231)5212901643,4873,651
Finance costs5(86)-(86)(60)-(60)
(Loss)/return on ordinary activities before taxation(317)5212041043,4873,591
Taxation6------
(Loss)/return on ordinary activities after taxation(317)5212041043,4873,591

(Loss)/return per Ordinary share

7
pence
(1.3)
pence
2.1
pence
0.8
pence
0.4
pence
13.8
pence
14.2

The total column of this statement is the Income Statement of the Company. The supplementary revenue and capital columns have been prepared in accordance with guidance issued by the AIC.

All revenue and capital items in the above statement derive from continuing operations. There are no recognised gains or losses other than those passing through the Income Statement and therefore no Statement of Total Comprehensive Income has been presented.

Statement of Changes in Equity

for the year ended 30 April 2016

Share
capital
£'000
Capital redemption
reserve
£'000
Share premium account
£'000

Special reserve
£'000

Capital reserve
£'000

Revenue reserve
£'000


Total
£'000
Balance at 30 April 20142526016,72710,00815,540(261)42,326
Movement for the year
Return for the year----3,4871043,591
Balance at 30 April 20152526016,72710,00819,027(157)45,917
Movement for the year
Return/(loss) for the year---521(317)204
Balance at 30 April 20162526016,72710,00819,548(474)46,121

Statement of Financial Position

as at 30 April 2016


Note
30 April 2016
£'000
30 April 2015
£'000
Non-current assets
Investments849,41546,940
Current assets
Debtors10326411
Cash1,5031,868
1,8292,279
Creditors: amounts falling due within one year11
Current liabilities
Bank loan(5,000)(3,000)
Other creditors(123)(302)
(5,123)(3,302)
Net current assets(3,294)(1,023)
Net assets46,12145,917
Share capital and reserves:
Share capital12252252
Capital redemption reserve6060
Share premium account16,72716,727
Special reserve10,00810,008
Capital reserve19,54819,027
Revenue reserve(474)(157)
Equity shareholders' funds46,12145,917

Net asset value per Ordinary share

14
pence
182.4
pence
181.6

These financial statements were approved by the Board of Directors and authorised for issue on 30 June 2016, and signed on its behalf by:

Anthony Townsend

Chairman

Company No. 5020752

Statement of Cash Flow

for the year ended 30 April 2016


Note
30 April 2016
£'000
30 April 2015
£'000
Net cash (outflow)/inflow from operating activities13(243)169
Investing Activities
Purchases of investments(14,403)(18,652)
Sales of investments12,37016,325
Net cash outflow from investing activities(2,033)(2,327)
Financing activities
Revolving credit facility drawdown2,000-
Interest paid(89)(60)
Net cash inflow/(outflow) from financing activities1,911(60)
Decrease in cash(365)(2,218)

Notes to the Financial Statements

for the year ended 30 April 2016

1.Accounting policies

The Company is a public limited company (PLC) incorporated in England and Wales, with registered office of Paternoster House, 65 St Paul's Churchyard, London, EC4M 8AB.

Accounting convention

The financial statements are prepared on a going concern basis, under the historical cost convention, modified by the valuation of investments at fair value, in accordance with the Companies Act 2006, UK applicable accounting standards and the Statement of Recommended Practice regarding the Financial Statements of Investment Trust Companies and Venture Capital Trusts ("SORP") dated November 2014.

In preparing these financial statements the Company has applied FRS 102 'The Financial Reporting Standard applicable in the UK and Ireland', for the first time and adopted in full the provisions of sections 11 and 12 of FRS 102. On adopting FRS 102 there have been no changes to the Company's accounting policies nor restatements required to the Company's previously reported financial position and financial performance. The Statement of Cashflows has been updated to the format specified in FRS 102, none of the figures therein have been affected by this change in format.

The Company's financial statements are presented in sterling, being the functional and presentational currency of the Company. All values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.

Presentation of the Income Statement

In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Sections 1158 and 1159 of the Corporation Tax Act 2010.

Going concern

The Directors have made an assessment of the Company's ability to continue as a going concern and, having taken into account the liquidity of the Company's portfolio and the Company's financial position in respect of its cash flows and borrowing facilities, are satisfied that the Company has the resources to continue in business for 12 months from the date of approval of this report. The Company, therefore, continues to adopt the going concern basis in preparing its financial statements. Further information on the Company's borrowings is given in note 11.

Income recognition

Dividends receivable are recognised when the investments concerned are quoted 'ex-dividend'. Where no ex-dividend date is quoted dividends are recognised when the Company's right to receive payment is established.

Expenses and finance costs

All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows:

  • transaction costs which are incidental to the acquisition or disposal of an investment are included within gains/ (losses) on investments and disclosed in note 8; and
  • investment performance fees are charged to the capital column of the Income Statement as the Directors expect that, in the long term, virtually all of the Company's returns will come from capital.

Foreign currency transactions

Transactions denominated in foreign currencies are translated into Sterling at the rates of exchange ruling at the date of the transaction.

Investments are converted to Sterling at the rates of exchange ruling at the Statement of Financial Position date. Any gains or losses on the re-translation of assets or liabilities are taken to the revenue or capital column of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature.

Investments

Investments are measured initially, and at subsequent reporting dates, at fair value, and are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned. For quoted securities fair value is either bid price or last traded price, depending on the convention of the exchange on which the investment is listed. Unquoted securities are ordinarily valued using the net asset value of the security after adjustment for proceeds received between the date of valuation and date of measurement, and after adjustment for factors that the AIFM and Board believe would affect the amount of cash that the Company would receive if the security were realised as at the Statement of Financial Position date. The valuation of unquoted securities is carried out in accordance with the International Private Equity and Venture Capital Association valuation guidelines. Changes in fair value and gains or losses on disposal are included in the Income Statement as a capital item.

Taxation

The charge for taxation is based on net revenue for the year.

The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue as set out in note 6 to the financial statements. The standard rate of corporation tax is applied to taxable net revenue. Any adjustment resulting from relief for overseas tax is allocated to the revenue reserve.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date where transactions or events that result in an obligation to pay more, or right to pay less, tax in future have occurred at the Statement of Financial Position date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Deferred tax is measured without discounting and based on enacted tax rates. Due to the Company's status as an investment trust, and the intention to meet the conditions required to obtain approval under Sections 1158 and 1159 of the Corporation Tax Act 2010 the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

Capital reserve

Gains or losses on disposal of investments and changes in fair values of investments (investment holding gains) are charged to the capital column of the Income Statement and taken to the capital reserve.

Certain expenses net of any related taxation effects are charged to this reserve in accordance with the expenses policy.

Revenue Reserve

The revenue reserve is distributable by way of dividends.

Special Reserve

The special reserve arose following court approval in 2004 to cancel the share premium account. The Reserve is distributable and has historically been used to fund any share buy-backs by the Company.

Capital Redemption Reserve

This reserve arose when shares were bought back by the Company and subsequently cancelled at which point an amount equal to the par value of the shares was transferred from share capital to this reserve.

2.Income

Year ended 30 April 2016
£'000
Year ended 30 April 2015
£'000
Income from investments
UK dividends
Unfranked dividend income UK fixed interest

302
209
10

374
290
16
521680
Other income
Bank deposit interest


-


1
Total income521681

3.Management fee



Revenue
£'000
Year ended 30 April 2016
Capital
£'000


Total
£'000


Revenue
£'000
Year ended 30 April 2015
Capital
£'000


Total
£'000
Managementfee238-238197-197

Further details on the management and performance fee arrangements can be found in the Strategic Report.

4.Other expenses

Year ended 30 April 2016
£'000
Year ended 30 April 2015
£'000
Management services^30-
Secretarial services"6068
Auditor's remuneration for:
Audit services2322
Directors' remuneration*9265
Employers NIC on directors' remuneration53
Legal and professional fees**13320
Broker fees4230
Other expenses129112
514320

* See Directors' Remuneration Report for analysis.

^ Management services are provided by Frostrow Capital LLP from 1 February 2016.

" Secretarial and Administration services were provided by Capita until 31 January 2016.

** Legal and professional fees of £115,000 were incurred in relation to the realisation proposals put to shareholders.

5.Finance costs



Revenue
£'000
Year ended 30 April 2016
Capital
£'000


Total
£'000


Revenue
£'000
Year ended 30 April 2015
Capital
£'000


Total
£'000
InterestPayable86-8660-60

Relates to interest charged on the revolving loan facility, details of which are disclosed in note 11.

6.Taxation



Revenue
£'000
Year ended 30 April 2016
Capital
£'000


Total
£'000


Revenue
£'000
Year ended 30 April 2015
Capital
£'000


Total
£'000
Corporation tax at 20% (2015: 20.92%)------

The current taxation charge for the year is lower than the standard rate of corporation tax in the UK of 20%. The differences are explained below:

Year ended 30 April 2016
Revenue Capital
£'000 £'000


Total
£'000
Year ended 30 April 2015
Revenue Capital
£'000 £'000


Total
£'000
(Loss)/return on ordinary activities before taxation(317)5212041043,4873,591
Theoretical tax at UK corporation tax rate of 20%
(2015: 20.92%)(63)1044122729751
Effects of:
- UK dividends that are not taxable(64)-(64)(78)-(78)
- Overseas dividends that are not taxable(38)-(38)(61)-(61)
- Gains on investment and exchange gains on capital items-(104)(104)-(729)(729)
- Expenses not deductible for tax23-23---
- Unrelieved expenses142-142117-117
Actual current tax charge------

Factors that may affect future tax charges

Based on current estimates and including the accumulation of net allowable losses, the Company has unrelieved losses of £5,874,000 (2015: £5,162,000) that are available to offset future taxable revenue. A deferred tax asset of

£1,057,000 (2015: £1,080,000) has not been recognised because the Company is not expected to generate sufficient taxable income in the near future periods in excess of the available deductible expenses and accordingly, the Company is unlikely to be able to reduce future tax liabilities through the use of existing surplus losses.

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an investment trust company.

7.Return per share

The Capital, Revenue and Total Return per Ordinary Share are based on the Net (loss)/return shown in the Income Statement and the weighted average number of shares in issue 25,279,985 (2015: 25,279,985).

8.Investments

30 April 2016
£'000
30 April 2015
£'000
Investment portfolio summary
Cost at 1 May45,24240,300
Investment holding gains at 1 May1,698807
Total investments46,94041,107

30 April 2016
£'000
30 April 2015
£'000
Analysis of investment portfolio movements
Opening valuation46,94041,107
Movements in the year:
Purchases at cost14,21218,827
Sales - proceeds(12,261)(16,503)
- gains on disposal702,618
Increase in investment holding gains454891
Valuation at 31 April49,41546,940
Cost at 31 April47,26345,242
Investment holding gains at 31 April2,1521,698
Valuation at 31 April49,41546,940

A list of the portfolio holdings by their fair value is given in the Portfolio Valuation.

Transaction costs incidental to the acquisitions of investments totalled £63,000 (2015: £79,000) and disposals of investments totalled £15,000 (2015: £25,000) for the year. These are included in gains on investments in the Income Statement.

Year ended 30 April 2016
£'000
Year ended 30 April 2015
£'000
Gains on disposal
Movement in investment holding gains
70
454
2,618
891
Gains on investments5243,509

Fair value hierarchy

FRS 102 requires financial companies to disclose the fair value hierarchy that classifies financial instruments measured at fair value at one of three levels based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Classification Input

Level 1 Valued using quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 Valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1; and

Level 3 Valued by reference to valuation techniques using inputs that are not based on observable market data.

In preparing this classification the Company has early adopted 'Amendments to FRS 102: Fair Value hierarchy disclosures (March 2016)' published by the FRC.

The valuation techniques used by the Company are explained in the accounting policies. The table below sets out the Company's fair value hierarchy measurements as at 30 April 2016 and 30 April 2015.

Financial assets at fair value through profit or loss as at 30 April 2016:

30 April 2016
£'000
30 April 2015
£'000
Level 1
Quoted equities44,81542,863
Fixed interest and convertibles-202
Preference shares3,0631,957
Total Level 147,87845,022
Level 2
OEICs534635
Total Level 2534635
Level 3
Equities1,0031,200
Preference shares-83
Total Level 31,0031,283
Total49,41546,940

Quoted securities

The fair value of the Company's investments has been determined by reference to their quoted prices at the reporting date.

Level 2 financial assets include Invesco Perpetual Japan Fund (2015: Invesco Perpetual Japan Fund).

Level 3 financial assets include Absolute Return Trust, Aurora Russia, Dexion Absolute, Douglasbay Capital, Eredene Capital, International Oil and Gas Technology, Jupiter Second Split Trust, Origo Partners, PSource Structured Debt, RENN Universal Growth Investment Trust, Sofia Property Fund and Thames River Multi-Hedge (2015: Absolute Return Trust, BlackRock Absolute Return Strategies, Dexion Absolute, Douglasbay Capital, Eredene Capital, International Oil and Gas Technology, Jupiter Second Split Trust, PSource Structured Debt, RENN Universal Growth Investment Trust, Sofia Property Fund and Thames River Multi-Hedge).

9.Significant interests

The Company had holdings of 3% or more of the voting rights attached to shares that is material in the context of the financial statements in the following investments:

30 April 2016
% of voting rights
Security
Chelverton Growth Trust11.8
Geiger Counter8.8
Establishment Trust7.5
Alternative Asset Opportunities7.4
India Capital Growth Fund - Ordinary6.7
Terra Catalyst Fund5.9
New City Energy5.9
Global Fixed Income Realisation5.9
India Capital Growth Fund - Subscription5.7
Auctus Growth4.9
Aurora Investment Trust4.7
Cambium Global Timberland4.0
EPE Special Opportunities3.8
Alpha Real Trust3.8
New Star Investment Trust3.2

10.Debtors

30 April 2016
£'000
30 April 2015
£'000
Amounts due from brokers270379
Dividends and interest receivable4020
Prepayments and other debtors1612
326411

11.Creditors: amounts falling due within one year

30 April 2016
£'000
30 April 2015
£'000
Bank loan5,0003,000
Amounts due to brokers-189
Interest payable36
Other creditors120107
5,1233,302

The bank loan with The Royal Bank of Scotland is a £7,000,000 revolving credit facility and bears interest at the rate of 0.9% over LIBOR on any drawn balance and 0.6% on any undrawn balance. The facility may be drawn in Sterling or other currencies as approved by the lender.

The bank loan facility contains covenants which require that net borrowings will not at any time exceed 25% of the adjusted net asset value, which shall at all times be equal to or greater than £20,000,000. If the Company breaches either covenant, then it is required to notify the Bank of any default and the steps being taken to remedy it.

At 30 April 2016, the Company had drawn down £5,000,000 (2015: £3,000,000) under the facility. The facility is due for renewal on 31 January 2018.

12.Share capital

30 April 2016
£'000
30 April 2015
£'000
Allotted, called-up and fully paid:
25,279,985 (2015: 25,279,985) Ordinary shares of 1p each

252

252

No shares were bought back in the year and no shares were held in Treasury during the year or at the year end.

13.Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities

30 April 2016
£'000
30 April 2015
£'000
Net return before finance costs and taxation2903,651
Adjustments for:
Gains on investments(524)(3,509)
Exchange losses on capital items222
Increase/(decrease) in creditors and accruals13(7)
(Increase)/decrease in prepayments and accrued income(24)12
Net cash (outflow)/inflow from operating activities(243)169

14.Net asset value per Ordinary share

The net asset value per Ordinary share is based on net assets at the year end as shown in the Statement of Financial Position and 25,279,985 (2015: 25,279,985) Ordinary shares, being the number of Ordinary shares in issue at the year end.

15.Analysis of financial assets and liabilities

The Company's financial instruments comprise investments, cash balances and debtors and creditors that arise from its operations.

The risk management policies and procedures outlined in this note have not changed substantially from the previous year.

The principal risks the Company faces in its portfolio management activities are:

  • Market risk - arising from fluctuations in the fair value or future cash flows of a financial instrument used by the Company because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk:
    • Currency risk - arising from the value of future transactions, and financial assets and liabilities denominated in foreign currencies fluctuating due to changes in currency rates;
    • Interest rate risk - arising from fluctuations in the fair value or future cash flows of a financial instrument because of changes in interest rates;
    • Other price risk - arising from fluctuations in the fair value of investments due to changes in market prices; and
  • Liquidity risk - arising from any difficulties in meeting obligations associated with financial liabilities.
  • Credit risk - arising from financial loss for the Company where the other party to a financial instrument fails to discharge an obligation.

The AIFM monitors the financial risks affecting the Company on a daily basis. The Directors receive financial information on a monthly basis which is used to identify and monitor risk.

The AIFM's policies for managing these risks are summarised below and have been applied throughout the year:

Credit Risk

Credit risk is the risk of financial loss to the Company if a counterparty fails to meet its obligations.

The risk is minimised by using only approved and reputable counterparties with the main counterparty being the Company's Depositary. Under the AIFMD the Depositary is liable for the loss of any financial asset held by it or its delegates and in accordance within its agreement with the Company is required to segregate such assets from its own assets.

Other Price Risk

Other price risk arises mainly from uncertainty about future prices of financial instruments. The value of shares and the income from them may fall as well as rise and shareholders may not get back the full amount invested. The AIFM continues to monitor the prices of financial instruments held by the Company on a real time basis. Adherence to the Company's investment objective and policy mitigates the risk of excessive exposure to one issuer or sector.

The Board manages market risk inherent in the investment portfolio by ensuring full and timely access to relevant information from the Manager. The Board meets regularly and at each meeting reviews the investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company's investment objective and policy. The portfolio does not seek to reproduce any index, investments are selected based upon the merit of individual companies and therefore the portfolio may well diverge from the short- term fluctuations of the benchmark.

A list of the investments held by the Company at 30 April 2016 is shown in the Portfolio Valuation.

Other price risk (i.e. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.

It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. The allocation of assets to international markets and the stock selection process both act to reduce market risk. The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide, but predominantly in the UK.

If the investment portfolio valuation fell by 10% from the amount detailed in the financial statements as at 30 April 2016, it would have the effect, with all other variables held constant, of reducing the net capital return before taxation by £4,898,000 (2015: £4,694,000). An increase of 10% in the investment portfolio valuation would have an equal and opposite effect on the net capital return before taxation and equity reserves.

Currency Risk

Although the Company's performance is measured in Sterling, a proportion of the Company's assets may be either denominated in other currencies or are in investments with currency exposure. The Company was not exposed to material direct foreign currency risk during the year. At the year end, the Company held four (2015: five) US Dollar denominated investments with the Sterling equivalent of £3,837,000 (2015: £3,411,000). The Company also held two (2015: two) Euro denominated equity investments with the Sterling equivalent of £1,384,000 (2015: £624,000)..

The Investment Manager reviews the risks of adverse currency movements and where necessary may use derivatives to mitigate the risk of adverse currency movements, although none have been used to date.

Interest Rate Risk

The Company finances its operations through existing reserves and a revolving credit facility. The Company's financial assets and liabilities, excluding short-term debtors and creditors, may include investments in fixed interest securities, whose fair value may be affected by movements in interest rates. Details of such holdings can be found in the Portfolio Valuation.

During the year, the Company had in place a revolving credit facility of £7,000,000 with The Royal Bank of Scotland. The facility matured and was renewed in January 2016 at revised interest rates of 0.9% over LIBOR on any drawn down balance and 0.6% on any undrawn balance (previously 1.35% and 0.6% respectively). At 30 April 2016, the Company had drawn down £5,000,000 (2015: £3,000,000) under the facility. The effect of a movement of +/-100 basis points in the interest rate would result in a decrease/increase to the Company's Income Statement of £50,000 (2015: £30,000). The amount of such borrowings and the approved levels are monitored and reviewed regularly by the Board.

The Company's short-term bank deposits earn interest at a variable rate which is subject to fluctuations in interest rates. At the year end, the Company's bank deposits were £1,503,000 (2015: £1,868,000). The interest received in the year amounted to £nil (2015: £1,000).

Liquidity Risk

Liquidity is the risk that the Company will encounter difficulty in meeting its financial liabilities as they fall due. The Investment Manager does not invest in unlisted securities on behalf of the Company. However, the investments held by the Company may include UK AIM quoted and ISDX quoted companies which can be less liquid than listed companies. Short-term flexibility is achieved through the use of bank borrowings. Liquidity risk is mitigated by the fact that the Company has £1.5 million cash at bank which can satisfy its creditors and that, as a closed-end fund, assets do not need to be liquidated to meet redemptions, and sufficient liquid investments are held to be able to meet any foreseeable liabilities.

Capital Management

The Company does not have any externally imposed capital requirements, other than those relating to the revolving credit facility. The main covenants relating to the loan facility are:

  • net borrowings will not at any time exceed 25% of the adjusted net asset value; and
  • adjusted net asset value shall at all times be equal to or greater than £20,000,000.

The Board considers the capital of the Company to be its issued share capital, reserves and debt. The capital of the Company is managed in accordance with its investment policy in pursuit of its investment objective.

30 April 2016
£'000
30 April 2015
£'000
The Company's capital at 30 April comprised:
Debt
Revolving bank credit facility drawndown5,0003,000
Equity
Equity share capital252252
Retained earnings and other reserves45,86945,665
46,12145,917
Debt as a percentage of net assets10.8%6.5%

Gearing

Gearing can have amplified effects on the net asset value of the Company. It can be positive for a company's performance, although it can have negative effects on performance in falling markets. It is the Company's policy to determine the adequate level of gearing appropriate to its own risk profile.

16.Related Parties

The following are considered to be related parties:

  • The Directors of the Company

Details of the remuneration of all Directors can be found in note 4 and in the Directors Remuneration Report.

17.Transactions with Management

  • Miton Trust Managers Limited (the 'AIFM') and Miton Asset Management Limited (the 'Investment Manager') are considered related parties under the Listing Rules.

Details of the IMA with the AIFM and the Delegation Agreement with the Investment Manager are set out in the Strategic Report and also in note 3.

Shareholder Information

Share Dealing

Shares can be traded through your usual stockbroker or other authorised intermediary. The Company's Ordinary shares are traded on the main market of the London Stock Exchange. The Company's shares are fully qualifying investments for Individual Savings Accounts ("ISAs").

Share Register Enquiries

The register for the Ordinary shares is maintained by Capita Asset Services. In the event of queries regarding your holding, please contact the Registrar on 0871 664 0300 (+44 371 664 0300 from overseas) (Calls cost 12p per minute plus your phone company's is access charge and may be recorded for training purposes. Calls outside the UK will be charged at the applicable international rate. Lines are open between 09.00 and 17.30 Monday to Friday excluding public holidays in England and Wales) or email: shareholderenquiries@capita.co.uk. Changes of name and/or address must be notified in writing to the Registrar: Shareholder Services, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU of via the shareholder portal at www.capitashareportal.com.

Share Capital and Net Asset Value Information

Ordinary 1p shares 25,279,985 at 30 April 2016

SEDOL number 3436594

ISIN number GB0034365949

Bloomberg symbol MIGO

The Company releases its net asset value per Ordinary share to the London Stock Exchange daily.

Share Prices

The mid-market prices are quoted daily in the Financial Times under 'Investment Companies'.

Financial Calendar
Company's year end


30 April


Company's half-year end


31 October
Annual results announced Annual General MeetingJune/July SeptemberHalf-Yearly results announcedDecember

Annual and Half-Yearly Reports

Copies of the Annual and Half-Yearly Reports are available from the Company Secretary on 0203 008 4910 and are available on the Company's website, www.mitongroup.com/migo.

AIFM: Miton Trust Managers Limited

The Company's AIFM is Miton Trust Managers Limited, a wholly owned subsidiary of Miton Group plc. Miton Group is listed on the AIM market for smaller and growing companies.

Investor updates in the form of monthly factsheets are available from the Company's website, www.mitongroup.com/migo.

Association of Investment Companies

The Company is a member of the Association of Investment Companies.

AIFMD Disclosures* (unaudited)

The Company's AIFM is Miton Trust Managers Limited.

The AIFMD requires certain information to be made available to investors in Alternative Investment Funds ("AIFs") before they invest and requires that material changes to this information be disclosed in the annual report of each AIF. Those disclosures that are required to be made pre-investment are included within a Pre-Investor Information Document ("PIID") which can be found on the Company's website www.mitongroup.com/migo. There have been no material changes to the disclosures contained within the PIID since publication in September 2014.

All authorised AIFMs are required to comply with the AIFMD Remuneration Code.

Remuneration

Miton Trust Managers Limited (the "Firm") is required in this Annual Report to make certain disclosures in respect of remuneration paid to its staff. The following disclosures are made in line with the Firm's interpretation of currently available regulatory guidance on remuneration disclosures.

The total amount of remuneration paid (or to be paid) by the Firm to its staff in respect of the financial year ended 31 December 2015 has been attributed (using an objective apportionment methodology) to Miton Global Opportunities Plc for which the Firm acts as the alternative investment fund manager. The amount of the total remuneration paid (or to be paid) by the Firm to its staff which has been attributed to Miton Global Opportunities Plc in respect of the financial year ended 31 December 2015 is £125,736. This figure is comprised of fixed remuneration of £109,584 and variable remuneration of £16,152.

There were a total of 7 beneficiaries of the remuneration described above.

The amount of the aggregate remuneration paid (or to be paid) by the Firm to its senior management which has been attributed to Miton Global Opportunities plc in respect of the financial year ended 31 December 2015 was

£125,736. The Firm delegates investment management activity to Miton Asset Management Limited and therefore there are no members of staff whose actions have a material impact on the risk profile of Miton Global Opportunities plc.

Remuneration Policy of the Firm

The Firm is authorised and regulated by the UK Financial Conduct Authority ("FCA") as an Alternative Investment Fund Manager ("AIFM") and as such must comply with the rules contained in the FCA's AIFM Remuneration Code within SYSC 19B in a manner that is appropriate to its size, internal organisation and the nature, scope and complexities of its activities.

Staff included in the aggregated figures disclosed above are rewarded in line with the Firm's remuneration policy (the "Remuneration Policy") which is determined and implemented by the Remuneration Committee (comprising senior executives and non-executives of Miton Group plc) and is subject to independent review. The Remuneration Policy reflects the Firm's ethos of good governance and encapsulates the following principal objectives:

  • to provide a clear link between remuneration and performance of the Firm and to avoid rewarding for failure;
  • to promote sound and effective risk management consistent with the risk profiles of the Alternative Investment Funds ("Funds") managed by the Firm; and
  • to remunerate staff in line with the business strategy, objectives, values and interests of the Firm and the Funds managed by the Firm in a manner that avoids conflicts of interest.

The Firm assesses performance for the purposes of determining payments in respect of performance-related remuneration by reference to a broad range of measures including (i) individual performance (using financial and non-financial criteria), (ii) performance of the business unit or relevant Fund for which the individual provides services and (iii) the overall performance of the Firm. Assessment of performance is set within a multi-year framework, reflecting the cycles of the relevant Fund, to ensure the process is based on longer-term performance and spread over time.

The elements of remuneration are balanced between fixed and variable and the management function sets fixed salaries at a level sufficient to ensure that variable remuneration incentivises and rewards strong performance but does not encourage excessive risk taking.

The Firm operates a discretionary bonus scheme.

The Firm is entitled to disapply the requirements of SYSC 19B in relation to deferral and payment of remuneration in instruments, therefore, due to the Firm's size, internal organisation and the nature, scope and complexities of its activities the Firm does not currently operate deferral of remuneration.

Mechanisms are in place to ensure that remuneration does not reward failure, whether on the early termination of a contract or otherwise.

No individual is involved in setting his or her own remuneration.

Leverage

For the purposes of the AIFMD, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and is calculated under the Gross and Commitment Methods, in accordance with AIFMD. Under the Gross Method, exposure represents the sum of the Company's positions without taking account of any netting or hedging arrangements. Under the Commitment Method, exposure is calculated after certain hedging and netting positions are offset against each other.

The Company is required to state its maximum and actual leverage levels, calculated as prescribed by the AIFMD

as at 30 April 2016. This gives the following figures.

Leverage exposure
Maximum limit
Gross Method
200%
Commitment Method
200%
Actual level110%107%

* Source: Miton Trust Managers Limited

Glossary

AIFMD

The Alternative Investment Fund Managers Directive (the 'Directive') is a European Union Directive that came into force on 22 July 2013. The Directive regulates EU fund managers that manage alternative investment funds (this includes investment trusts).

AIFM

The Alternative Investment Fund Manager of the Company is Miton Trust Managers Limited.

Discount/Premium

If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, the shares are said to be trading at a premium.

Gearing

Gearing is the process whereby changes in the total assets of a company has an exaggerated effect on the net asset value of that Company's Ordinary shares due to the presence of borrowings or share classes with a prior ranking entitlement to capital.

There are several methods of calculating gearing and the following has been selected:

The amount of borrowings as a proportion of net assets, expressed as a percentage.

Leverage

Leverage is defined in the AIFMD as any method by which the AIFM increases the exposure of an AIF. In addition to the gearing limit the Company also has to comply with the AIFMD leverage requirements. This limit is expressed as a % with 100% representing no leverage or gearing in the Company. There are two methods of calculating leverage as follows:

The Gross Method is calculated as total exposure divided by Shareholders' Funds. Total exposure is calculated as net assets, less cash and cash equivalents, adding back cash borrowing.

The Commitment Method is calculated as total exposure divided by Shareholders Funds. In this instance total exposure is calculated as net assets, less cash and cash equivalents, adding back cash borrowing adjusted for netting and hedging arrangements.

Net Asset Value ("NAV")

The NAV is shareholders' funds expressed as an amount per individual share. Shareholders' funds are the total value of all the Company's assets, at current market value, having deducted all liabilities and prior charges at their par value (or at their asset value).

Ongoing Charges

As recommended by the AIC in its guidance updated in October 2015, Ongoing Charges are the Company's annualised revenue and capitalised expenses (excluding finance costs and certain non-recurring items) expressed as a percentage of the average monthly net assets of the Company during the year.

The Ongoing Charges % reflects the costs incurred directly by the Company which are associated with the management of a static investment portfolio. Consistent with the AIC guidance, the Ongoing Charges % excludes non-recurring items. In addition, the NAV performance also includes the costs incurred directly or indirectly in investments that are managed by external fund managers. Many of these managers net these costs off within their valuations, and therefore form part of the Company's investment return, and it is not practical to calculate an Ongoing Charges % from the information they provide.

Total Return

The combined effect of any dividends paid, together with the rise or fall in the share price or NAV. Total return statistics enable the investor to make performance comparisons between trusts with different dividend policies. Any dividends (after tax) received by a shareholder are assumed to have been reinvested in either additional shares of the trust at the time the shares go ex-dividend (the share price total return) or in the assets of the trust at its NAV per share (the NAV total return).

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the twelfth ANNUAL GENERAL MEETING of Miton Global Opportunities plc will be held on Friday, 30 September 2016 at 12.00 noon at the Association of Investment Companies, 9th Floor, 24 Chiswell Street, London EC1Y 4YY for the following purposes:

Resolutions 1 to 9 (inclusive) are proposed as Ordinary Resolutions and Resolutions 10 to 12 (inclusive) are proposed as Special Resolutions.

Ordinary business

  1. To receive and accept the Strategic report, Report of the Directors and Auditor's Report and the audited financial statements for the year ended 30 April 2016.
  2. To receive and approve the Directors' Remuneration Report for the year ended 30 April 2016.
  3. To re-elect Mr Townsend as a Director of the Company.
  4. To re-elect Mr Fox as a Director of the Company.
  5. To re-elect Mr Phillips as a Director of the Company.
  6. To re-elect Mr van Cutsem as a Director of the Company.
  7. To appoint PricewaterhouseCoopers LLP as Auditor of the Company.
  8. To authorise the Audit Committee to determine the Auditor's remuneration.

Special business

9 THAT

The Directors of the Company be and are hereby generally and unconditionally authorised (in substitution for any authorities previously granted to the Directors to the extent unused) pursuant to Section 551 of the Companies Act 2006 (the "Act") to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company ("Rights") up to an aggregate nominal amount of £84,266 (representing approximately one-third of the issued share capital (excluding treasury shares) as at the date of this notice) during the period commencing on the passing of this Resolution and expiring (unless previously revoked, varied, renewed or extended by the Company in general meeting) at the conclusion of the Annual General Meeting of the Company to be held in 2017 (the "Section 551 period"), but so that the Directors may, at any time prior to the expiry of the Section 551 period, make offers or agreements which would or might require shares to be allotted or Rights to be granted after the expiry of the Section 551 period and the Directors may allot shares or grant Rights in pursuance of such offers or agreements as if the authority conferred by this Resolution had not expired.

10 THAT

In substitution for any existing power under Section 570 of the Companies Act 2006 (the "Act"), but without prejudice to the exercise of any such power prior to the date of this Resolution, the Directors be and they are hereby empowered, in accordance with Sections 570 and 573 of the Act, to allot equity securities (as defined in Section 560(1) of the Act) for cash, pursuant to the authority under Section 551 of the Act conferred on the Directors by Resolution 9 above as if Section 561(1) of the Act did not apply to any such allotment or sale, up to an aggregate nominal amount of £25,280, at a price per share not less than the net asset value per share, such power to expire at the conclusion of the Annual General Meeting of the Company to be held in 2017, unless previously revoked, varied or renewed by the Company in General Meeting, save that the Company may, at any time prior to the expiry of such power, make an offer to enter into an agreement which would or might require equity securities or relevant shares to be allotted or sold after the expiry of such power and the Directors may allot equity securities or sell relevant shares in pursuance of such an offer or agreement as if such power had not expired.

11 THAT

The Company is hereby generally and unconditionally authorised in accordance with Section 701 of the Companies Act 2006 (the "Act") to make purchases (within the meaning of Section 693(4) of the Act) of Ordinary shares of 1p each in the capital of the Company ('Ordinary shares') for cancellation or for placing into Treasury provided that:

  1. the maximum number of Ordinary shares authorised to be acquired shall be 3,789,469 (or, if less, 14.99% of the Ordinary shares in issue immediately following the passing of this Resolution);
  2. the minimum price (exclusive of expenses) which may be paid for each Ordinary share is 1p;
  3. the maximum price (exclusive of expenses) which may be paid for each Ordinary share, shall not be more than the higher of: (i) an amount equal to 105% of the average of the middle market quotations of Ordinary shares taken from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the day on which the contract of purchase is made; and (ii) the higher of the price of the last independent trade in the Ordinary shares and the highest then current bid for the Ordinary shares on the London Stock Exchange's market for larger established companies;
  4. this authority will (unless renewed) expire at the conclusion of the next Annual General Meeting of the Company held after the date on which this Resolution is passed;
  5. the Company may make a contract of purchase for Ordinary shares under this authority before this authority expires which will or may be executed wholly or partly after its expiration; and
  6. any Ordinary shares bought back under the authority hereby granted may, at the discretion of the Directors, be cancelled or held in Treasury and if held in Treasury may be resold from Treasury or cancelled at the discretion of the Directors.

12 THAT

A general meeting other than the Annual General Meeting may be called on not less than 14 clear days' notice.

By order of the Board

Frostrow Capital LLP, Company Secretary Miton Global Opportunities plc

Registered Office: Paternoster House, 65 St Paul's Churchyard, London EC4M 8AB

30 June 2016

Explanatory notes to the Notice of Meeting

As a shareholder, you have the right to attend, speak and vote at the forthcoming Annual General Meeting or at any adjournment(s) thereof. In order to exercise all or any of these rights you should read the following explanatory notes to the business of the Annual General Meeting.

Note 1: To be entitled to attend and vote at the meeting (and for the purpose of the determination by the Company of the number of votes they may cast) members must be entered on the Company's register of members at 6.00 pm on 28 September 2016 (or in the event that the meeting is adjourned, only those shareholders registered on the Register of Members of the Company as at 6.00 pm on the day which is 48 hours prior to the adjourned meeting) shall be entitled to attend in person or by proxy and vote at the Annual General Meeting in respect of the number of shares registered in their name at that time. Changes to entries on the Register of Members after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting.

Note 2: A member entitled to attend and vote at this meeting may appoint one or more persons as his/her proxy to attend, speak and vote on his/her behalf at the meeting. A proxy need not be a member of the Company.

If multiple proxies are appointed they must not be appointed in respect of the same shares. To appoint more than one proxy, shareholders will need to complete a separate proxy form in relation to each appointment. You may photocopy the proxy form. Each proxy form must state clearly the number of shares in relation to which the proxy is appointed. A failure to specify the number of shares to which each proxy appointment relates or specifying an aggregate number of shares in excess of those held by the member will result in the proxy appointment being invalid. Please indicate if the proxy instruction is one of multiple instructions being given. All proxy forms must be signed and should be returned together in the same envelope.

To be effective, the enclosed personalised form of proxy, together with any power of attorney or other authority under which it is signed or a certified copy thereof, should be lodged at the office of the Company's Registrar, Capita Asset Services, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU not later than 48 hours before the time of the meeting, 12 noon on 28 September 2016.

The appointment of a proxy will not prevent a member from attending the meeting and voting in person if he/she so wishes. A member present in person or by proxy shall have one vote on a show of hands and on a poll every member present in person or by proxy shall have one vote for every Ordinary share of which he/she is the holder. The termination of the authority of a person to act as proxy must be notified to the Company in writing.

In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote or votes of the other joint holder or holders, and seniority shall be determined by the order in which the names of the holders stand in the register.

Any question relevant to the business of the Annual General Meeting may be asked at the meeting by anyone permitted to speak at the meeting. You may alternatively submit your question in advance by letter addressed to the Company Secretary at the registered office.

Note 3: A 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 to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.

Note 4: The statements of the rights of members in relation to the appointment of proxies in Notes 2 and 3 above do not apply to a Nominated Person. The rights described in those Notes can only be exercised by registered members of the Company.

Note 5: As at 30 June 2016 (being the last business day prior to the publication of this notice) the Company's issued share capital and total voting rights amounted to 25,279,985 Ordinary shares carrying one vote each.

Note 6: A person authorised by a corporation is entitled to exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual member of the Company. On a vote on a resolution on a show of hands, each authorised person has the same voting rights as the corporation would be entitled to. On a vote on a resolution on a poll, if more than one authorised person purports to exercise a power in respect of the same shares:

  1. if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way;
  2. if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised.

Note 7: Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under Section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstances connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with Section 437 of the Companies Act 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website.

Note 8: In accordance with Section 319A of the Companies Act 2006, the Company must cause any question relating to the business being dealt with at the meeting put by a member attending the meeting to be answered. No such answer need be given if:

  1. to do so would:
    1. interfere unduly with the preparation for the meeting, or
    2. involve the disclosure of confidential information;
  1. the answer has already been given on a website in the form of an answer to a question; or
  2. it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

Note 9: CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for this meeting by following the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, in order to be valid, must be transmitted so as to be received by the Company's agent ID RA10 by the latest time for receipt of proxy appointments specified in Note 2 above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company'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.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

Note 10: The Annual Report incorporating this Notice of Annual General Meeting and, if applicable, any members' statements, members' resolutions or members' matters of business received by the Company after the date of this Notice, will be available on the Company's website: www.mitongroup.com/migo.

Note 11: None of the Directors has a contract of service with the Company. A copy of the letters of appointment of the Directors will be available for inspection at the registered office of the Company during usual business hours on any weekday (except weekends and public holidays) until the date of the meeting and at the place of the meeting for a period of fifteen minutes prior to and during the meeting.

Frostrow Capital LLP,

Company Secretary

1 July 2016

ANNOUNCEMENT ENDS

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