REG-Miton Global Opp Plc: Annual Financial Report
04/07/2019 12:10
Miton Global Opportunities plc
(the “Company”)
LEI: 21380075RRMI7D4NQS20
Audited Results for the Year Ended 30 April 2019
The Company’s annual report for the year ended 30 April 2019 (the “Annual
Report”) will be posted to shareholders on 22 July 2019. Copies may be
obtained from the Company Secretary: Frostrow Capital LLP at 25 Southampton
Buildings, London WC2A 1AL or from the Company’s website at:
www.mitongroup.com/private/fund/miton-global-opportunities-plc
A copy of the Annual Report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at:
www.morningstar.co.uk/uk/nsm
Frostrow Capital LLP, Company Secretary – 0203 709 8732
4 July 2019
Strategic Report
Financial Highlights
30 April 2019 30 April 2018 % change
Net asset value per Ordinary share 275.6p 276.4p -0.3%
Share price 276.5p 273.0p 1.3%
Premium/(Discount) to net asset value* 0.3% (1.2%)
Net asset value volatility* 5.6% 6.0%
Gearing* 0.0% 6.7%
Ongoing charges* 1.4% 1.4%
* Alternative Performance Measure, see Glossary.
Total Return Performance to 30 April 2019
1 Year 3 Years 5 Years Since launch*
% % % %
Net asset value -0.3% 51.1% 64.6% 183.1%
Share price 1.3% 68.3% 85.0% 169.8%
3-month SONIA +2% 2.7% 7.5% 12.8% 77.6%
* 6 April 2004.
Source: Morningstar.
The Miton Global Opportunities Strategy
Key developments over the year
* A realisation opportunity was offered to shareholders during the year with
the option to either retain or realise their investment. Elections to realise
investments were received in respect of only 1.55% of shares in issue and
these shares were subsequently placed in the market
* At the general meeting of the Company held on 5 October 2018, shareholders
approved an amendment to the investment objective, changing it from
outperformance of Sterling 3-month LIBOR plus 2% to outperformance of 3-month
SONIA plus 2%; SONIA being the Sterling Overnight Index Average, the Sterling
Risk-Free Reference Rate preferred by the Bank of England for use in Sterling
derivatives and relevant financial contracts
* Shares traded at a premium at times during the year, allowing the Company to
issue 800,000 shares and, after the financial year-end, another 150,000 shares
up to the date of this report
* The Company has received further industry recognition after winning three
significant awards in a row: Investment Week’s “Investment Company of the
Year Awards” in 2017 and 2018 in the Flexible Investment category and Money
Observer’s “Trust Awards 2019” in the Best Mixed Asset Trust category
* Sterling’s continued devaluation in response to Brexit has been positive
for the portfolio
* The closed-ended fund industry continues to evolve, creating opportunities
for the Company’s mandate
Overview of strategy
* A unique investment proposition which exposes investors to the opportunities
that can be presented by under-researched investment companies
* Unconstrained fully diversified mandate with ability to uncover and exploit
fund specific anomalies and pricing inefficiencies
* Highly experienced portfolio manager with the proven ability to identify
embedded value across a diversified range of sectors and stocks
* Provides exposure to the global macro and market movements that give rise to
these opportunities
* Closed-end structure protects portfolio from inflows and outflows and allows
us to invest for the long term
Chairman’s Statement
Introduction
This is the fifteenth annual report for Miton Global Opportunities plc and my
first statement for the annual report, covering the year ended 30 April 2019.
Performance
During the year under review, your Company’s net asset value per share
remained broadly flat at 275.6p (2018: 276.4p), giving a decrease of 0.3%
(2018: total return of 11.1%) with the share price ending at 276.5p (2018:
273.0p), giving a total return of 1.3% (2018: 12.7%).
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. The Company’s new formal cash Benchmark, 3 Month
SONIA +2%, rose by 2.7% (2018: +2.4%).
Our Investment Managers Nick Greenwood and Charlotte Cuthbertson provide a
comprehensive appraisal of the performance of, and developments within, your
portfolio during the year under review in their report. The report includes an
analysis of our sector’s evolution, portfolio themes including contributors
and detractors, and the outlook.
Discount, Premium and Share Issues
At the year-end, the Company’s shares traded at a 0.3% premium to net asset
value per share, having traded at a 1.2% discount at the 2018 year-end. A
premium rating to net asset value per share at various times during the year
enabled the Company to issue 800,000 shares, raising £2.3 million of new
funds. These new funds were invested in accordance with the Company’s
investment objective and policy. As at the date of this report, the discount
stands at 3.25%.
Realisation Opportunity
As already reported in the half-yearly report, the Company offered a
realisation opportunity during the year, giving shareholders the option either
to retain their investment in the Company or to realise their investment by
making a realisation election at a 1.6% discount to net asset value per share.
By the deadline of 1 October 2018, elections had been received in respect of
434,197 ordinary shares or 1.55% of the shares in issue, and these shares were
subsequently placed in the market into ongoing demand. The Board was pleased
with the outcome of the realisation vote as a vote of support for the
investment strategy and results. The tight trading of shares around NAV levels
and the ability to issue shares are helped by the existence of the realisation
opportunity and the next one will be offered to shareholders in 2021.
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 ongoing charges. The Investment Manager’s style is
one that focuses on uncovering long-term value, much of which will be realised
through capital gains or distributions. As such the Company anticipates that
it will comply with the investment trust rules regarding distributable income
and will pay a dividend only if the need arises in order to comply with
investment trust status.
The Board
In line with good corporate governance practice, a Board refreshment exercise
was undertaken during the last financial year and, this year, a review of the
effectiveness of the Board and its Committees was performed. The Board also
pays close attention to the capacity of individual directors to carry out
their work on behalf of the Company. To this end, all proposed external
appointments are submitted to the Board for scrutiny and approval.
In accordance with our policy of all Directors standing for re-election
annually, you will find the appropriate resolutions in the Notice of the AGM.
In recommending individual Directors to shareholders for re-election, we
considered their other Board positions and their time commitments and are
satisfied that each Director has the capacity to be fully engaged with the
Company’s business.
Gearing
Due to the Company’s large cash holding (enhanced by holdings that were
involved in takeovers and capital returns through the year), the level of
borrowing was reduced to zero during the year under review, down from £5.0
million. The available facility remains at £9.0 million.
Outlook
Our investment manager is well positioned to take advantage of opportunities
and redeploy the cash held from last year’s takeovers and realisations as
they arise. Current areas of interest are discussed in the commentary in the
Investment Manager’s Report.
Change within the sector seems to be accelerating and the ongoing
consolidation of wealth managers is continuing to lead to changes in
investment company shareholder lists. In addition, as interest rates remain
low, the attractiveness of alternative assets in the investment trust world
has been higher than historically. Investment trusts remain an ideal vehicle
for such assets but all trusts are liable to discounts to NAV developing at
some point and creating opportunity for our shareholders. A glance down the
Company’s investments shows that we are far from a fund of equity funds.
Following the realisation exercise last year, the Company is now on a much
stronger footing for the next phase in its development and your Board
continues to believe that the long-term investor will be well rewarded.
Winning Investment Week’s “Investment Company of the Year Awards” in the
Flexible Investment category for the second time running and, more recently,
Money Observer’s “Trust Awards 2019” in the Best Mixed Asset Trust
category confirms that our industry holds the Company in high regard.
Annual General Meeting
The AGM of the Company this year will be held at the offices of our legal
advisers Eversheds Sutherland (International) LLP, One Wood St, London EC2V
7WS on Thursday, 12 September 2019 at 12 noon. The notice convening the AGM
can be found at the end of this document and an explanation of the proposed
special business resolutions can be found in the Report of the Directors.
This year we have not included paper forms of proxy to accompany the notice of
AGM at the end of this report. Shareholders can vote online by visiting
www.signalshares.com and following the instructions. However, any shareholders
who require a hard copy form of proxy may request one from the registrar, Link
Asset Services. Instructions are provided in the explanatory notes to the
Notice of Meeting.
The AGM provides shareholders with an opportunity to meet the Board and also
to receive a presentation from our Investment Manager, and we hope as many
shareholders as possible will attend.
Richard Davidson
Chairman
4 July 2019
Investment Manager’s Report
Performance
During the year under review, our net asset value declined from 276.4p to
275.6p. This represents a fall of 0.3%. In comparison, the FTSE Index
appreciated 3.1%, and the MSCI (World) Index in Sterling rose 13.0%, on a
total return basis. The move from a discount to a premium allowed our shares
to register a gain of 1.3%. The last day of our financial year coincided with
a market high, immediately prior to May’s trade war inspired sell off. The
disparity between the two indices can be largely explained by the appreciation
of the US dollar relative to the pound.
Continuing Evolution of the Sector
As the closed-ended sector evolves, our returns will increasingly become less
correlated with equity markets. Over the last five financial years, our shares
have appreciated by 85%. This is not dissimilar to the return generated by the
MSCI (World) Index and well ahead of the gain in the FTSE 100 Index. This has
been achieved with a significantly lower level of volatility than has been
demonstrated by the mainstream equity indices. Our investment style would
normally be expected to lag in bull market conditions.
Move to Alternatives
Looking forward, it is likely that our exposure to equities will decline as
they become more sparsely represented within our universe. The closed-end
world is increasingly the natural home for alternative asset classes. For
example, recently launched trusts have focused on energy storage, shipping and
song rights. Since the open-ended property funds debacle in 2016, investors
have increasingly recognised that fund structures offering daily liquidity are
inappropriate where a portfolio’s assets are illiquid. The new breed of
closed-ended companies tend to be specialist funds offered to a generalist
audience.
Over time pricing anomalies are inevitably going to develop which will provide
opportunities for us to exploit. Our day job is increasingly to understand
valuation methodologies of these specialist asset classes and trying to
identify where stated net asset values are at a variance with what the
underlying assets could be sold for in the real world.
Investor Changes
We have commented in the past about the rapid consolidation of the traditional
private client stockbroking firms into the vast private wealth chains. Many of
the natural buyers from the not too distant past are now running too much
money to be able to include anything other than the very largest trusts within
their portfolios.
Whilst the sector has lost one breed of customer it has gained a following
from within the self-directed investor community. A number of periodicals read
by this type of investor have highlighted that investment trusts are superior
vehicles. The protection from daily inflows and outflows enjoyed by the
manager of a closed-end fund allows them to build greater conviction within
the portfolio, safe in the knowledge that they will not be forced into an
unwilling market at short notice to sell holdings in order to meet
redemptions. Academic research from the Cass business school estimates that
closed-ended funds have outperformed their open-ended peers by 1% per annum.
The compounding effect makes this significant over time.
The typical buyer is now a self-directed investor who reads Moneyweek on a
Saturday and buys trust shares within their SIPP or ISA on a Monday. Over the
years, many commentators have forecast the death of the investment trust yet
the sector continues to evolve and remains in rude health.
Portfolio Strategy
We are well positioned to take advantage of the changing landscape of the
investment trust sector. Our strategy is to look for discount opportunities in
the closed-ended fund sector where the value of the portfolio has become
dislocated from the share price. With many smaller trusts falling below the
radar of wealth managers and, in particular, given the growth of alternative
asset classes there is a lot of scope for mispricings.
As our sector evolves and expands to incorporate new asset classes, Miton has
responded by committing greater resources to the management of your trust’s
portfolio. Charlotte Cuthbertson has been added to the team expanding its
capacity.
We are one of the few market participants able to consider trusts which are
esoteric and unloved. Our style is differentiated by the fact that there are
areas of our universe that we will not usually invest in. Having survived a
number of market crashes, we describe ourselves as “allergic to leverage”,
eschewing funds that employ high levels of structural debt. Our process relies
heavily on meeting with the management teams of our investee trusts to ensure
that we fully understand their investment strategies. Therefore, it is rare to
find a closed-end fund within our portfolio that offers poor access to its
management. We remain not wildly bullish on equities so we steer clear of
trusts with “vanilla mandates”. If a fund’s objective is to outperform
an index by a modest margin then in reality the bulk of absolute returns that
they generate will be dominated by market returns. We prefer to seek
opportunities which are benefitting from structural change. Current examples
include Indian equities and residential property in Berlin.
Given the protection from inflows and outflows accorded by the closed-ended
capital structure is key to an investment trust’s past outperformance, we
want to see this advantage properly exploited. This may be via investing in
more illiquid asset classes, taking larger position sizes or getting involved
in much smaller companies. Therefore, a trust that was a carbon copy of an
open-ended equivalent would unlikely be of interest to us. Finally, there must
be a catalyst for the discount to narrow. There are plenty of trusts trading
at wide discounts however unless we can see what will cause that discount to
narrow, we will not invest.
New Entrants and Additions
We concluded in last year’s annual report that we felt that the portfolio
was moving towards a period of transition. There have since been plenty of
disposals and a number of new entrants. These transactions have left the
portfolio more concentrated than in the past.
Unusually we backed a fund launch during the year. Merian Chrysalis started
life in March and seeks to invest in private companies which are likely to
float within a couple of years. The manager’s view is that most excitement
within UK equities now lies in unlisted rather than listed companies. In the
past a company would sell shares on the stock market in order to raise capital
to expand their business. Today, various forms of alternative financing have
developed meaning that floatation tends to come later in a company’s life
cycle. Promoters are able to retain control longer and therefore floatation is
now an end game. The typical business owned within the Merian Chrysalis
portfolio enjoys 50% annual earnings growth. Should the trust’s strategy
continue to be successful then the periodic stated net asset values published
by the trust are likely to lag progress at the coalface. True net asset value
may well comfortably exceed the open market share price, allowing us to
acquire stock at a level which does not reflect progress already achieved.
Markets sold off dramatically during December. Biotechnology specialist
Biotech Growth Trust suffered a fall of 27% between the start of the fourth
quarter and the low point on Christmas Eve. In response, we acquired a
position during December. During the global financial crisis, biotechnology
profitability lay a long way into the future. This meant the sector offered
little in the way of defensive qualities. During the intervening years, the
industry has matured and the largest biotech stocks have become dependable
profit generators. Nevertheless, biotechnology stocks were still treated
harshly during the December sell off. We took the view that this represented
an opportunity to arbitrage perception versus reality.
The very smallest UK companies have steadily derated for structural reasons.
This is another example where rapid consolidation within the fund management
industry has meant that portfolios have often become too large to include some
corners of the markets. It is difficult for many institutional investors to
buy small companies as they just cannot buy enough shares to “move the
needle”. This is unlikely to change anytime soon, however should this
derating continue then the real world will acquire assets from the stock
market. We introduced River and Mercantile Micro Cap and added to our very
small existing positions in Gresham House Strategic and Downing Strategic.
A toehold was taken in Georgia Capital, a fund focussed on the country at the
crossroads of Western Asia and Eastern Europe. This location has allowed the
country to become “Eastern Europe’s Singapore”, the conduit for business
between East and West. The trust’s dominant assets are London listed and
trade on discounts. Georgia Capital itself trades well below its own net asset
value creating a double discount.
Departures
Private Equity has been a theme within our portfolio for many years and has
served us well. There remains a vast pool of capital committed to the sector
which has yet to be deployed. This wall of cash has helped create the mother
of all sellers’ markets for private companies. Our concern has increasingly
been that it is difficult to see how the proceeds of disposals can be
reinvested profitably at this point in the cycle. Therefore during the year we
disposed of our remaining shares in both Pantheon and Standard Life Private
Equity. We have retained our position in Dunedin Enterprise which is in the
process of an orderly wind down. Cash from Dunedin’s disposals will be
returned to us at or around net asset value triggering a useful uplift from
our carrying value.
Another long-held position to depart was Aurora. We like their “blue
collar” research process which has helped it develop a following and as a
result, its shares trade at a premium. We are concerned that the managers have
acquired control of two troubled companies; Stanley Gibbons and Hornby. This
represents a change of style and a move into an area where the team is
unproven. Given the risk that the shares could fall to a discount should the
strategy prove unsuccessful, we have taken a cautious stance and sold.
A recurring theme within our portfolio is that the real world will buy into
situations where the City is not properly valuing the underlying assets.
Phaunos Timber proved to be a good example of this. The stated net asset value
had become stale and did not reflect the buoyant state of the New Zealand
forestry industry post China banning the felling of natural timber. Specialist
asset manager Stafford Timber made a successful 52p takeover bid. A level
comfortably above where we had topped up our position last spring.
A key disappointment was Prospect which we had received in exchange for the
eponymous Japanese Smaller Companies Investment Trust. We had steadily sold
down the position, however, the shares slumped in November on the announcement
that the fund was the subject of a tax investigation by the Tokyo authorities.
Whilst many commentators believe corporate governance is improving in Japan
there have been examples of backlashes against corporate activists such as
Prospect. The travails of Nissan’s Carlos Ghosn are a high-profile example.
Given that our investment in Prospect was already non-core we felt that there
was little to be gained by persevering with the position.
Other departures during our financial year included; SQN Secured Income, JP
Morgan India and Sanditon.
Diversification
The portfolio encompasses significant diversification. Whilst we may appear to
have a number of positions within a theme, they often all dance to their own
tune. In mining, our sub themes are: the mispricing of a royalty from a silver
mine, the disruption wrought on the sector through the rise of passive
investment and a macro call on Uranium. None of these will be particularly
driven by the pace of global economic growth. A similar situation exists
within our property theme where London listed trusts typically trade at a
discount given the uncertainty over the capital’s future. This seems to
apply irrespective of where a trust’s assets are physically located. Our
exposure to property includes: Birmingham, Macau, mixed light industrial units
in the UK and apartments in Berlin. The drivers of valuations of these sub
sectors are barely correlated.
Winners
Counter-intuitively, given that the sector remains resolutely out of favour,
property proved to be the greatest positive contributor to our attribution.
Macau Property Opportunities handed back some cash from the sale of a retail
development. Its shares trade on a wide discount which meant that we enjoyed a
significant uplift on the portion of our holding redeemed at net asset value.
Alpha Real sold a data centre in Frankfurt and a private rental scheme in
Leeds at levels far exceeding their carrying values. Real Estate Investors
made solid progress within its Birmingham portfolio whilst Stenprop surpassed
market expectations with the prices achieved in selling legacy assets. Phoenix
Spree only made modest progress in share price terms despite reporting a
significant increase in net asset value. The backlash against the
gentrification of Berlin has soured sentiment towards the trust. Nevertheless,
population growth remains strong in the German capital. This has exacerbated
the shortage of housing as the cost of construction remains higher than open
market values. The only resolution in the longer term is for authorities to
allow housing prices to rise so that demand and supply move into equilibrium.
Other positive contributors to last year’s attribution included
Establishment Trust which has moved into orderly wind down and EPE Special
Opportunities. We highlighted EPE as the main detractor in last year’s
annual report. Happily management have managed to turn around Luceco, its
principal investment. Whilst there was a useful gain registered during our
reporting period, much of Luceco’s progress has occurred post our year-end,
its shares having appreciated 53% in May.
Detractors
Our exposure to India, through India Capital Growth, was one of the worst
performers over the year. We pared back the position at the end of 2018 as we
anticipated that Indian markets were likely to be volatile in the run-up to
the national elections. The Sensex had a difficult start to 2019, unlike the
vast majority of world indices, as investors feared that poor economic and
unemployment data threatened the re-election of Prime Minister Modi who is
largely regarded as being market-friendly.
In May, Modi confounded expectations and was not only re-elected but with a
bigger majority than he achieved in 2014. This gives him a mandate to
introduce further reforms to cut bureaucracy and corruption. We remain bullish
on the outlook for India in the long term as favourable demographics, the
increasing move away from the informal sector and increasing urbanisation
should all drive growth.
Other notable detractors include CQS Natural Resources and Artemis Alpha. The
growth of passive investing has disrupted mining equities leading to weakness
in smaller mining stocks which is CQS’ core area of focus. In the longer
term there will be a real-world value for the products mined. Artemis Alpha
has been in a period of transition, much of the troubled unlisted portfolio
was expensively liquidated during the year. This has led to the trust posting
poor numbers which has led to its shares languishing on a discount approaching
20%.
Outlook
Looking forward the landscape seems full of uncertainties. The plunge in
global government bond yields is threatening to take yields down to levels we
have not witnessed before. The ten-year US treasury now yields a mere 2%.
Equivalent bonds in Germany, Switzerland and Japan now offer negative returns.
It is impossible to know what this move into unknown territory heralds
however, it feels akin to the tide rushing out to sea before a tsunami.
Economic growth continues to disappoint pushing investors to crowd into
equities that can demonstrate structural growth. These often trade on heroic
multiples which leave them vulnerable should they ever disappoint or economic
conditions improve. The greatest concern has to be the end of political
certainties following the collapse in support for long established political
parties. The most recent Times opinion poll indicated that the Brexit and
Liberal parties would get most votes if a UK election were held now. The
portfolio has already suffered as the result of a swing to the left in Berlin,
further political surprises seem assured. Nevertheless, there continue to be
many overlooked and unloved closed ended funds. Those that have fallen below
the radar screen offer opportunity for us to exploit hidden value.
Nick Greenwood
Charlotte Cuthbertson
Miton Asset Management Limited
4 July 2019
10 Year Record
Year ended 30 April 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
Net asset value per Ordinary share 275.6p 276.4p 248.7p 182.4p 181.6p 167.4p 157.8p 141.8p 153.2p 136.5p
Share price 276.5p 273.0p 242.3p 164.3p 162.8p 149.5p 143.3p 127.5p 139.6p 118.8p
Premium/ (Discount) to net asset value 0.3% (1.2%) (2.6%) (9.9%) (10.4%) (10.7%) (9.2%) (10.1%) (8.9%) (13.0%)
Net assets £77.2m £75.2m £62.9m £46.1m £45.9m £42.3m £39.9m £35.8m £38.7m £34.5m
Gearing 0.0% 6.7% 8.0% 10.8% 6.5% 7.1% 2.5% 0.0% 7.8% 8.7%
Portfolio Valuation
as at 30 April 2019
Investment Market Value Market Value
Security Description Sector Region £’000 % of Gross Assets
Phoenix Spree Deutschland Real Estate Europe 5,571 7.2
India Capital Growth Fund* Equity India 4,740 6.1
Alpha Real Trust Real Estate Global 4,317 5.6
Baker Steel Resources Trust Mining Global 3,658 4.7
Artemis Alpha Equity UK 3,625 4.7
Real Estate Investors* Real Estate UK 3,416 4.4
Dunedin Enterprise Investment Trust† Private Equity Global 3,385 4.4
Macau Property Opportunities Fund† Real Estate Asia Pacific 3,168 4.1
Henderson Opportunities Trust Equity UK 3,093 4.0
Vinacapital Vietnam Opportunity Private Equity Asia Pacific 2,885 3.7
Top ten investments 37,858 48.9
Ecofin Global Utilities Equity Global 2,812 3.6
Establishment Investment Trust Equity Asia Pacific 2,758 3.6
EPE Special Opportunities* Private Equity UK 2,468 3.2
New Star Investment Trust Equity Global 2,430 3.1
Rights & Issues Investment Trust Equity UK 2,407 3.1
The Biotech Growth Trust Equity North America 2,353 3.0
Atlantis Japan Growth Equity Japan 2,162 2.8
Stenprop Real Estate UK 2,158 2.8
CQS Natural Resources Mining Global 2,013 2.6
Geiger Counter* Mining Global 1,732 2.2
Top twenty investments 61,151 78.9
Life Settlement Assets Other North America 1,434 1.9
Marwyn Value Investors Equity UK 1,342 1.7
Merian Chrysalis Investment Equity UK 1,264 1.6
Downing Strategic Micro-Cap Investment Trust Equity UK 1,189 1.5
Gresham House Strategic Equity UK 946 1.2
RENN Universal Growth Investment Trust† Equity North America 809 1.1
Aseana Properties† Real Estate Asia Pacific 729 1.0
LMS Capital Private Equity Global 533 0.7
Duke Royalty* Other Global 407 0.5
Georgia Capital Equity Europe 405 0.5
Top thirty investments 70,209 90.6
River & Mercantile Equity UK 390 0.5
Cambium Global Timberland† Forestry Global 384 0.5
Terra Catalyst*† Real Estate Europe 316 0.4
Chelverton Growth Trust Equity UK 291 0.4
Better Capital - 2009† Private Equity UK 278 0.4
Reconstruction Capital II*† Equity Europe 203 0.3
Origo Partners*† Private Equity Emerging Markets 104 0.1
St Peter Port Capital*† Mining Global 58 0.1
Auctus Growth Equity Global 39 0.1
Global Resources Investment Trust Mining Global 5 0.0
Middlefield Canadian Income PCC Equity North America 1 0.0
Total investments 72,278 93.4
Cash 5,113 6.6
Gross assets 77,391 100.0
* AIM/NEX listed.
† In liquidation, in a process of realisation or has a fixed life.
Portfolio Analysis
as at 30 April 2019
Portfolio by geographical exposure*
* UK 29.5% (2018: 24.8%)
* Global 28.1% (23.8%)
* Asia Pacific (ex-Japan) 12.4% (12.1%)
* Europe 8.4% (7.0%)
* Cash 6.6% (11.7%)
* India 6.1% (9.0%)
* North America 6.0% (3.6%)
* Japan 2.8% (7.2%)
* Emerging Markets 0.1% (0.8%)
As at 30 April 2014 – 5 year comparison:
* UK 21.8%
* Europe 19.1%
* North America 14.2%
* Japan 9.4%
* Asia Pacific (ex-Japan) 24.1%
* Cash 9.4%
* Fixed Interest 2.0%
As at 30 April 2019
Portfolio by asset type*
* Equity 42.9% (2018: 41.9%)
* Real Estate 25.5% (21.1%)
* Private Equity 12.5% (13.2%)
* Mining 9.6% (7.9%)
* Cash 6.6% (11.7%)
* Other 2.4% (1.2%)
* Forestry 0.5% (3.0%)
As at 30 April 2014 – 5 year comparison:
* Equity 65.2%
* Cash 9.4%
* Private Equity 2.0%
* Fixed Interest 5.9%
* Real Estate 17.5%
* Calculated on a ‘look through’ basis based on the mandates
of the investments held by the Company.
Source: Miton Asset Management Limited
Business Review
The Strategic Report contains a review of the Company’s business model and
strategy, an analysis of its performance during the year and its future
developments, and details of the principal 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.
The Strategic Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the time of their approval of this report and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
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 3-month SONIA plus 2% (the
‘Benchmark’) over the longer term, principally through exploiting
inefficiencies in the pricing of closed-end funds. SONIA being the Sterling
Overnight Index Average, the Sterling Risk-Free Reference Rate preferred by
the Bank of England for use in Sterling derivatives and relevant financial
contracts. This is intended to reflect the aim of providing a better return to
shareholders over the longer term than they would get by placing money on
deposit.
The Benchmark was changed from sterling 3-month LIBOR plus 2% at the general
meeting held on 5 October 2018.
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 totalling
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.
Key Performance Indicators
The Company’s Board of Directors meets at least four times a year. At each
quarterly meeting it reviews performance against a number of key performance
measures, as below:
NAV and the movement of the NAV compared to the notional returns available for cash – defined as 3-month SONIA plus 2%, the Company’s Benchmark The Directors regard the Company’s net asset value (‘NAV’) per share as being the overall measure of value delivered to shareholders over the long term, as opposed to returns available for cash holdings. A full description of performance during the year
under review and the investment portfolio are contained in the Investment Manager’s Review. The NAV total return per Ordinary share for the year to 30 April 2019 was –0.3% (2018:11.1%), compared to the Benchmark return of 2.7% (2018: 2.4%, being sterling 3
-month LIBOR plus 2%).
NAV volatility^ The Company aims to deliver its performance with a lower level of volatility in the NAV than equity markets. For the year to 30 April 2019, the Company’s NAV had a volatility of 5.6% (2018: 6.0%)*, compared to the volatility of the FTSE All-Share Index of
11.8% (2018: 9.4%)*.
The movement in the Company’s share price One of the most immediate measures of the value of the Company’s Ordinary shares is their price. The Board regularly considers the Company’s investment performance and other ways in which share price performance may be enhanced, including the effectiveness
of marketing. The Ordinary share price increased by 1.3% (2018: 12.7%) over the year.
Share price in relation to the NAV per share The Board believes that an important driver of an investment trust’s discount or premium over the long term is investment performance together with a proactive marketing strategy. However, there can be volatility in the discount or premium during the year.
Therefore, the Board takes powers each year to buy back and issue shares with a view to limiting the volatility of the share price discount or premium. During the year under review, 800,000 new shares were issued by the Company, and another 150,000 since
the year-end. New shares will only be issued at a premium to the Company’s cum-income net asset value per share at the time of issue. No shares were bought back by the Company. Over the year, the Ordinary share price in relation to the NAV per share has
ranged from a premium of 2.7% to a discount of 5.1%. At the year-end, it stood at a premium of 0.3% (2018: discount of 1.2%).
* Source: Frostrow Capital LLP.
^ See Glossary for definition and calculation methodology.
Principal Risks and Uncertainties
The Board is responsible for the ongoing identification, evaluation and
management of the principal risks faced by the Company. The Audit Committee on
behalf of the Board regularly reviews these risks and how risk is managed and,
during the year under review, 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;
* strategic risks; and
* operational risks.
Principal Risk Mitigation
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 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 monthly. The Investment Manager monitors the volatility, discount, 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, the make-up of the portfolio, and portfolio company updates.
the risk that the market price of its investments differs from that of their NAV per share – purchasing funds whose market price is at a discount to NAV per share can result in significant gains on the upside, but can also lead to exposure to poorly
performing companies. The Company may use borrowing, the effect of which would be 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 risks specific to investing in closed-end funds.
Liquidity, cash and foreign exchange 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 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 as well as the Company’s cash position and any foreign exchange valuations.
so to meet financial liabilities. A proportion of the Company’s investments might also be denominated in in foreign currencies which might be subject to fluctuations in valuation and, at times, a proportion of the portfolio may be held in cash, preventing
the Company from benefiting from positive movements in the market.
Interest rate risk
The Company finances its operations through existing reserves and a revolving credit facility and may be exposed to fluctuations in interest rates. The Board monitors the effect of interest rate movements on the Company’s finances and reviews the Company’s ongoing compliance with the loan covenants on a monthly basis.
Macro risk
Significant political and economic change in the UK and abroad might lead to volatile markets impacting the Company’s performance and reduced investor appetite for the Company’s shares. Political and economic developments both in the UK and world-wide are being monitored and discussed, where relevant, between the Board and the Investment Manager as part of the portfolio review at every Board meeting. Further details in respect of Brexit are set out below.
Further details on market, liquidity and other financial risks can be found in
note 15 to the Financial Statements.
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 resulting in a widening of the share price discount to NAV per share. 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. The Board has implemented, with shareholder approval, a realisation opportunity which will be offered to shareholders every three years.
Further details are set out below.
Key person risk
The loss of a key employee of the Investment Manager could result in the deterioration of the performance of the Company. The Board considers the make-up of the team supporting the lead investment manager as part of its annual review. The Investment Manager also reports regularly to the Board on developments in their team and succession planning, where appropriate.
Company duration risk
Every three years, the Company’s shareholders are offered a realisation opportunity. Depending on the structure of the realisation opportunity and the level of take-up, amounts available to shareholders will depend on the valuation of the portfolio and its liquidity and may be lower than expected, especially in adverse market conditions. The Board will formulate the appropriate realisation opportunity based on feedback from the relevant service providers. In particular, the investor sentiment prior to the next realisation opportunity in 2021 will be monitored by the Investment Manager and
the Company’s Brokers. Further details are set out below.
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, Custodian and Frostrow; reviews reports from
the Depositary; maintains a risk matrix which details the risks to which the Company is exposed and the controls relied upon to manage those risks; and receives updates on pending changes to the legal and regulatory environment and progress towards the
Company’s compliance with any relevant future changes.
Management Arrangements
AIFM and Investment Manager
Miton Trust Managers Limited is the Alternative Investment Fund Manager
(“AIFM”) for the Company pursuant to an Investment Management Agreement
dated 22 July 2014 (the “IMA”), as amended on 9 September 2015 and 10
September 2018.
During the year, the IMA was amended to reflect the change of the Company’s
benchmark from 3-month LIBOR plus 2% to 3-month SONIA plus 2%. All other
provisions of the contract remained unaffected.
Under the terms of the IMA, the AIFM provides, inter alia, the following
services:
* risk management services;
* monitoring the Investment Manager’s compliance 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.
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 in issue at the
time. If the Company as a whole moves to a realisation basis then the AIFM
will be paid 0.5% of the adjusted market capitalisation of the Company as a
whole. Following the realisation opportunity in 2018, there are no Realisation
Shares in issue. The management fee accrues daily and is payable in arrears
monthly.
A performance fee is only payable in the future by the Company in respect of
the realisation of assets in any Realisation Pool or the realisation of assets
where the Company as a whole moves to 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 3-month SONIA plus 5%. No performance fee was payable
for the years ended 30 April 2019 and 2018.
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 be payable within any notice period.
Continuing Appointment of the AIFM
The Board, through the Management Engagement Committee, keeps the performance
of the AIFM under review. It is the opinion of the Directors that the
continuing appointment of the AIFM 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 is reasonable. 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 are more
closely aligned with those of shareholders.
Company Secretary, Marketing and Administration
Company secretarial, marketing, and administrative services are provided by
Frostrow under an agreement dated 1 February 2016. An annual management
services fee of 25 basis points of the market capitalisation of the Company,
charged quarterly in arrears, is payable, subject to a minimum annual fee of
£120,000. Frostrow’s fees will reduce from 25 basis points to 20 basis
points on market capitalisation of the Company in excess of £100 million. 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 of the annual and half yearly reports; and
* ensuring compliance with applicable legal and regulatory requirements.
In light of the high level of service provided by Frostrow in these areas, it
is the opinion of the Directors that the continuing appointment of Frostrow is
in the best interest of shareholders.
Details of the fees paid to Frostrow for their services during the year are
set out in note 4 to the Financial Statements.
Depositary and Custodian
The Board appointed BNY Mellon Trust & Depositary (UK) Limited (“BMTD”) as
the Company’s Depositary and Custodian on the terms and subject to the
conditions of an agreement dated 22 July 2014 (the “Depositary
Agreement”). As part of an internal reorganisation within the Bank of New
York Mellon group (“BNY”), BNY reorganised its internal structure so that
UK depositary services are carried out by a different company within its
group, The Bank of New York Mellon (International) Limited (“BNYMIL”).
With effect from 2 July 2018 BNYMIL was appointed by the Board as Depositary
and Custodian to the Company in place of BMTD. The rights and obligations of
BMTD under the Depositary Agreement accordingly transferred to BNYMIL from
that date. Other than a change in the provider of depositary services, the
terms of the Depositary Agreement remained unchanged.
Under the Depositary Agreement, an annual fee of 0.025% of the gross asset
value of the Company, subject to a minimum annual 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.
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. As an investment trust that invests in other funds the
Company has no direct impact on the community or the environment and therefore
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.
As an investment company, the Company does not provide goods or services in
the normal course of business and does not have customers. Accordingly, the
Company falls outside the scope of the Modern Slavery Act 2015. The
Company’s suppliers are typically professional advisers and the Company’s
supply chains are considered low risk in this regard.
The Directors, through the Investment Manager, encourage companies in which
investments are made to adhere to best practice with regard to corporate
governance.
Impact of Brexit
The Board has considered whether the United Kingdom’s exit from the European
Union (‘Brexit’) poses a discrete risk to the Company. At the date of this
report, there is still considerable uncertainty around the process and the
effects of Brexit and therefore the analysis at this stage is necessarily
general.
The effect of Brexit is likely to be limited to those of our investee
companies that have an exposure to the UK market. However, as the Company is
priced in sterling, sharp movements in exchange rates can affect the net asset
value. This is clearly not a reflection of the underlying value of the
companies in their base currencies but may lead to an increase or decrease in
the Company’s net asset value simply because of movements in sterling.
Furthermore, whilst the Company’s shareholders are predominantly UK based,
sharp or unexpected changes in investor sentiment, or tax or regulatory
changes, could lead to short-term selling pressure on the Company’s shares
which potentially could lead to the shares trading at a discount to the net
asset value per share.
Overall however, the Board believes that, over the longer term, Brexit is
unlikely to affect the Company’s business model or whether the Company’s
shares trade at a premium or discount to the net asset value per share. The
Board will continue to monitor developments as they occur.
The Board had discussed the possibility of a sterling hedge and leaves this at
the Investment Manager’s discretion.
Board Diversity
The Board supports the principle of boardroom diversity, of which gender is
one important aspect, and the recommendations of the 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.
Following the appointments of Katya Thomson and Richard Davidson at the end of
2017 and the retirement of Anthony Townsend and James Fox after the AGM in
2018, the Board of Directors of the Company currently comprises one female and
three male Directors.
On behalf of the Board
Richard Davidson
Chairman
4 July 2019
Governance
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.
Richard Davidson, Chairman
Appointed to the Board on 18 December 2017, Richard Davidson is currently
Chairman of Aberforth Smaller Companies Trust plc, Chair of the University of
Edinburgh’s Investment Committee, and a Trustee of their staff pension
scheme. Formerly, he was a partner and manager of the Macro Fund at Lansdowne
Partners. Prior to that, he was a managing director and No. 1 ranked
investment strategist at Morgan Stanley, where he worked for 15 years.
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 a Fellow of the Chartered Institute for Securities & Investment.
Ekaterina (Katya) Thomson, Chairman of the Audit Committee
Appointed to the Board on 18 December 2017, Katya Thomson is a corporate
finance, strategy and business development professional with over 25 years of
experience with UK and European blue chip companies. She is a non-executive
director of Henderson EuroTrust plc and AVI Japan Opportunity Trust plc (in
both Trusts she is also chairman of the Audit Committee), Thomas Cook
Nederland BV and The New Carnival Company CIC. She is a member of the
Institute of Chartered Accountants in England and Wales.
Hugh van Cutsem
Hugh van Cutsem has worked in the investment company sector for over 20 years,
starting his career at Cazenove. He is a founding partner of Kepler Partners
LLP, a business that specialises in both the marketing of closed-end funds and
the production of research on them. Kepler is also an asset management
platform focused on the absolute return sector.
Report of the Directors
The Directors present their report and the audited financial statements for
the year ended 30 April 2019. Disclosures relating to performance, future
developments and risk management can be found within the Strategic Report. The
Corporate Governance Report forms part of this report.
Overview
The Company 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 (the ‘Act’).
The Company’s shares are premium listed on the Official List of the UK
Listing Authority and traded on the main market of the London Stock Exchange,
which is a regulated market as defined in Section 1173 of the Act.
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 the
Company’s continued compliance with applicable laws and regulations. The
Directors do not envisage any change in this activity in the future.
Results and Dividends
The results attributable to shareholders for the year are shown in the Income
Statement below. No dividends were declared during the year and the Directors
have not recommended a final dividend for the year (2018: no dividends
declared or recommended). Information on the Company’s dividend policy is
given in the Chairman’s Statement.
Alternative Performance Measures
The financial statements set out the required statutory reporting measures of
the Company’s financial performance. In addition, the Board assesses the
Company’s performance against a range of criteria which are viewed as
particularly relevant for the Company and investment trusts, which are
summarised under Financial Highlights above and explained in greater detail in
the Strategic Report, under the heading ‘Key Performance Indicators’.
Definitions of the terms used and the basis of calculation adopted are set out
in the Glossary.
Directors
The Directors in office during the year and up to the date of this report are:
Date of retirement Date of appointment
Richard Davidson 18 December 2017
Michael Phillips 23 February 2004
Katya Thomson 18 December 2017
Hugh van Cutsem 31 March 2010
Anthony Townsend 5 October 2018 23 February 2004
James Fox 5 October 2018 23 February 2004
None of the Directors nor any persons closely associated with them had a
material interest in the transactions, arrangements and agreements of the AIFM
or the Investment Manager during the year. For information on Related Parties
please see note 16 to the Financial Statements.
The Board has adopted a policy whereby all Directors are required to stand for
re-election annually, regardless of their length of tenure.
Michael Phillips has been on the Board since the inception of the Company and
Hugh van Cutsem has been on the Board for over nine years and is connected to
Kepler Partners LLP, which provides research on the Company. The Board has
discussed these issues and is satisfied that Michael’s and Hugh’s long
service does not impact their independence and that their knowledge of the
Company’s history is extremely valuable. Furthermore, Hugh has no
involvement in Kepler’s work for the Company, he recuses himself from all
Board discussions in respect of Kepler Partners and he has no influence on
their appointment on behalf of the Company. Both Michael and Hugh are
knowledgeable and lively contributors to the Board’s discussions with the
Investment Manager and are invaluable assets to the Company.
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 at
the forthcoming Annual General Meeting.
Substantial Shareholdings
The Directors have been informed of the following substantial interests in the
Company’s voting rights as at 30 April and 31 May 2019:
at 31 May 2019 at 30 April 2019
Ordinary % of Ordinary % of
Shareholders shares voting rights shares voting rights
Hargreaves Lansdown, Stockbrokers (EO) 2,317,733 8.23 2,356,752 8.42
AJ Bell, Stockbrokers (EO) 2,282,303 8.11 2,273,115 8.12
Investec Wealth & Investment 1,683,266 5.98 1,687,636 6.03
Alliance Trust Savings 1,609,778 5.72 1,609,381 5.75
Seven Investment Management 1,532,349 5.44 1,577,154 5.63
Transact (EO) 1,437,761 5.11 1,430,193 5.11
Charles Stanley 1,271,331 4.52 1,261,799 4.51
M&G Investment Management 1,101,452 3.91 1,190,644 4.25
EFG Harris Allday, Stockbrokers 966,125 3.43 949,125 3.39
Philip J Milton, Stockbrokers 963,023 3.42 963,023 3.44
Rathbones 928,070 3.30 928,070 3.31
Smith & Williamson Wealth Management 907,675 3.22 897,565 3.21
Interactive Investor (EO) 878,726 3.12 863,432 3.08
(EO = Execution Only)
Capital Structure and Continuation of the Company
As at the date of this report, the Company’s share capital comprises
28,154,985 Ordinary shares of 1p each with one vote per share. The Company’s
Articles of Association contain provisions enabling shareholders to elect at
three-year intervals for the realisation of all or part of their shareholding
(the `Realisation Opportunity’). At the discretion of the Company,
shareholders may request that all or part of the Ordinary shares they hold be
placed, repurchased, or purchased out of the proceeds of an issue of new
ordinary shares, or purchased under a tender offer or by a market maker. If
realisation elections cannot be satisfied in their entirety through the
placing and/or repurchase mechanism, all remaining Elected shares shall be
converted into Realisation shares.
Also in the event that the Company does not make available to members an
opportunity to effect such a realisation at the appointed time, shareholders
may serve a realisation election requesting that all or part of their Ordinary
shares be converted into Realisation shares.
The portfolio would then be split into two separate and distinct pools pro
rata as between the Continuing Ordinary shares (the ‘Continuation Pool’)
and the Realisation shares (the ‘Realisation Pool’). The Continuation
Pool would be managed in accordance with the Company’s investment objective
and policy, while the assets comprising the Realisation Pool would 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 would depend upon the relevant factors prevailing at the
time and would be at the discretion of the Board. If the net asset value of
the Company’s Continuing Ordinary shares is more than £30 million, then the
Company would continue in operation.
During the year under review, the Company offered a Realisation Opportunity,
giving shareholders the option either to retain their investment in the
Company or realise their investment by making a realisation election at a 1.6%
discount to net asset value per share. By the deadline of 1 October 2018,
elections had been received in respect of 434,197 ordinary shares or 1.55% of
the shares in issue, and these shares were subsequently placed in the market
into ongoing demand. There are currently no Realisation Shares in issue. The
next Realisation Opportunity will be offered to shareholders in 2021. The
Board intends to put forward tailored proposals in relation to each
Realisation Opportunity to ensure that it can be delivered efficiently and in
accordance with the best interests of the Company, at the relevant point in
time.
Share Issues
At 30 April 2019, the number of Ordinary shares in issue was 28,004,985.
800,000 shares have been issued during the year. A further 150,000 shares were
issued after 30 April and as at the date of this report the number of Ordinary
shares in issue was 28,154,985. 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 on 12 September 2019, when resolutions to
renew them will be proposed.
Share Buybacks
At the Annual General Meeting held on 5 October 2018, the Directors were
granted the authority to repurchase up to 4,104,259 Ordinary shares, being
14.99% of the Company’s Ordinary share capital. No Ordinary shares were
re-purchased during the year. This authority will expire at the Annual General
Meeting to be held on 12 September 2019, 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.
Viability Statement
The Directors have carefully assessed the Company’s current position and
prospects as described in the Chairman’s Statement and the Investment
Manager’s Report, as well as the Principal Risks and Uncertainties outlined
above and have formed a reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they fall due over the
next three financial years.
The particular factors the Directors have considered in assessing the
prospects of the Company, its ability to liquidate its portfolio, and in
selecting a suitable period for this assessment are as follows:
* the Board and the Investment Manager will continue to adopt a long-term view
when making investments;
* the majority of the portfolio consists of investments traded on major
international stock exchanges;
* the Company’s expenses are predictable and modest in comparison with its
assets and there are no capital commitments foreseen which would alter that
position;
* the Company has no employees, only non-executive Directors, and consequently
does not have employment related liabilities or responsibilities; and
* shareholders were offered a realisation opportunity during the year under
review with the option to either retain or realise their investment. Elections
to realise investments were received in respect of only 1.55% of shares in
issue and these shares were subsequently placed in the market.
The Company is intended to operate over the long-term, however due to the
limitations and uncertainties inherent in predicting market conditions the
Directors have determined that three years is the longest period for which it
is reasonable to make this assessment.
In carrying out their assessment, the Directors made the following
assumptions:
* investors will wish to continue to have exposure to the type of companies
that the Company invests in, namely closed-end investment funds;
* the performance of the Company will continue to be satisfactory;
* the threats to the Company’s solvency or liquidity incorporated in the
Principal Risks will be managed or mitigated as outlined above; and
* following the next realisation opportunity in 2021, the net asset value of
the Ordinary shares will again be more than £30 million, allowing the Company
to continue in operation.
Based on the results of this review, 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 financial years.
Securities Carrying Voting Rights
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 under Listing Rule 9.8.4.
Annual General Meeting
The Notice of the Annual General Meeting is set out below. 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 £93,849 representing approximately
one-third of the Company’s issued share capital at the date of this report,
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 £28,154,
which is equivalent to approximately 10% of the Company’s issued share
capital at the date of this report, 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 2020, 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 2020, 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 expediently.
Recommendation
Full details of the above resolutions are contained in the Notice of Annual
General Meeting below. 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 AGM are
in the best interests of the Company and its members as a whole. The Directors
unanimously recommend that shareholders vote in favour of all the resolutions,
as they intend to do in respect of their own beneficial holdings, details of
which are set out above.
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 Auditors are unaware and each Director has taken all the steps
that he/she ought to have taken as a Director to make himself/herself aware of
any relevant audit information and to establish that the Company’s Auditors
are 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
Richard Davidson
Chairman
4 July 2019
Audit Committee Report
I am pleased to present the Audit Committee (the “Committee”) Report for
the year ended 30 April 2019. The Committee met three times during the year
under review.
Composition
The Committee currently comprises all the Directors whose biographies are set
out above. The Committee considers that at least one member has recent and
relevant experience in accounting or auditing and that the Committee as a
whole has experience relevant to the investment trust industry.
Role of 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 review the Company’s half year and annual reports;
* 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 and AIFM;
* to consider the accounting policies of the Company;
* to monitor adherence to best practice in corporate governance;
* to make recommendations to the Board in relation to the re-appointment of
the Auditors;
* to approve the Auditors’ remuneration and terms of engagement; and
* to review and monitor the Auditors’ independence and objectivity and the
effectiveness of the audit process.
Matters Considered in the Year
The Committee met three times during the financial year. It has:
* reviewed the internal controls and risk management systems of the Company
and its third party service providers;
* received and discussed with PricewaterhouseCoopers LLP their report on the
results of the 2018 audit;
* agreed the audit plan and fee for the 2019 audit with PricewaterhouseCoopers
LLP, 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
PricewaterhouseCoopers LLP their report on the results of the 2019 audit.
The significant reporting matters considered by the Committee during the year
were:
1. Verification of ownership and valuation of the Company’s holdings. The
valuation of investments is undertaken in accordance with the accounting
policies in note 1 to the financial statements. Controls are in place to
ensure that valuations are appropriate and existence is verified through
reconciliations with the Custodian. The Committee discussed the controls and
process with Frostrow and the AIFM. Having reviewed the process controls, the
Committee confirmed that they were satisfied that the investments had been
valued correctly and the Company’s ownership was appropriately documented.
The portfolio contains a significant number of holdings where the investee
company is in a process of realisation/liquidation. As at 30 April 2019, 10
out of 41 holdings were in a process of realisation, representing 12.4% of the
portfolio. The Investment Manager provides comprehensive updates on investee
companies at each Board meeting and the Directors have regular discussions
with the Investment Manager about the impact of this ‘tail’ on the Company
and its performance.
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 financial statements can
be found below.
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 new risk matrix has been developed during the year
which covers key risks that the Company faces, the likelihood of their
occurrence and their potential impact, how these risks are monitored and the
mitigating controls put in place. The Board has delegated to the Committee the
responsibility for the review and maintenance of the risk matrix. 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 from, 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.
The Committee members 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.
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 Auditors
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 Auditors.
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.
PricewaterhouseCoopers LLP (“PwC”) 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 2019 was £23,650 (2018: £22,800).
Non-Audit Services
The Company operates on the basis whereby the provision of non-audit services
by the Auditors is permissible where no conflicts of interest arises, the
service is not expressly prohibited by audit legislation, the independence of
the Auditors is not likely to be impinged by undertaking the work and the
quality and the objectivity of both the non-audit work and audit work will not
be compromised. In particular, non-audit services may only be provided by the
Auditors if they are inconsequential or would have no direct effect on the
Company’s financial statements and the audit firm would not place
significant reliance on the work for the purposes of statutory audit.
PwC did not provide any non-audit services to the Company during the year.
Katya Thomson
Audit Committee Chairman
4 July 2019
Directors’ Remuneration Report
for the year ended 30 April 2019
Statement from the Chairman
I am pleased to present the Directors’ Remuneration Report for the year
ended 30 April 2019. An ordinary resolution for the approval of this report
will be put to shareholders at the forthcoming Annual General Meeting. The law
requires the Company’s Auditor, PwC, to audit certain of the disclosures
provided. Where disclosures have been audited, they are indicated as such. The
Auditors’ opinion is included in the Independent Auditors’ Report.
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 2019, 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.
The Directors’ fees were last increased with effect from 1 May 2015 to bring
them more in line with the market. At the most recent review, held on 21
February 2019, it was agreed that the Directors’ fees would remain
unchanged. 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 Year to Year to Year to Year to Year to
30 April 30 April 30 April 30 April 30 April 30 April
2019 2018 2019 2018 2019 2018
£ £ £ £ £ £
Richard Davidson (Chairman) (^) 24,231 7,436 – – 24,231 7,436
Michael Phillips 20,000 20,000 892 1,417 20,892 21,417
Katya Thomson
(Audit Committee Chairman)^ 22,256 7,436 – – 22,256 7,436
Hugh van Cutsem 20,000 20,000 – – 20,000 20,000
James Fox (#) 10,462 24,000 411 744 10,873 24,744
Anthony Townsend (#) 11,987 27,500 – – 11,987 27,500
108,936 106,372 1,303 2,161 110,239 108,533
* travel expenses for attendance at Board meetings, which under
HMRC rules are treated as taxable expenses. The amounts shown in the table are
the expenses plus the associated tax liability.
^ Appointed on 18 December 2017.
# Retired after the AGM on 5 October 2018.
Performance
The graph below compares the total return (assuming all dividends are sterling
reinvested) to Ordinary shareholders, compared to the FTSE All-Share Index and
the Company’s Benchmark of 3-month SONIA plus 2%.
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 declared any dividends, there is
no such analysis to present.
Directors’ Beneficial Interests (audited)
The interests of the Directors and persons closely associated with them, in
the Ordinary shares of the Company are set out below:
At 30 April 2019 At 30 April 2018
Number of shares Number of shares
Richard Davidson (^) 27,025 27,025
Michael Phillips 107,795 107,795
Katya Thomson (^) 6,000 6,000
Hugh van Cutsem 12,348 6,234
James Fox (#) N/A 40,000
Anthony Townsend (#) N/A 25,000
^ Appointed on 18 December 2017.
# Retired after the AGM on 5 October 2018.
There have been no changes to any of the above holdings between 30 April 2019
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.
The interests of the Investment Manager in the Ordinary shares of the Company
are set out below:
At 30 April 2018 Number of shares At 30 April 2017 Number of shares
Nick Greenwood 162,000 162,000
Statement of Voting at Annual General Meeting
The Directors’ Remuneration Report for the year ended 30 April 2018 was
approved by shareholders at the Annual General Meeting held on 5 October 2018.
The votes cast by proxy were as follows:
Directors’ Remuneration Report
Number of votes % of votes cast
For* 3,977,324 99.95
Against 2,175 0.05
Total votes cast 3,979,499 100
Number of votes withheld 0 0
* 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
4 July 2019 and signed on its behalf by:
Richard Davidson
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 believe 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 expenses column of the
Directors’ remuneration table along with the associated tax liability.
Expected fees
for year to Fees for year to
30 April 2020 30 April 2019
£ £
Chairman 27,500 27,500
Audit Committee Chairman 24,000 24,000
Non-executive Director 20,000 20,000
Total aggregate annual fees that may be paid 150,000 150,000
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 last approved by shareholders at the Annual General Meeting
held in 2018. 3,977,324 (99.95%) of votes were received in favour, 2,175
(0.05%) were against and no votes were withheld.
No communications have been received from shareholders regarding Directors’
remuneration. The Board will consider any comments received from shareholders
on the Directors’ Remuneration Policy.
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 will next be put to shareholders at the AGM
in 2021.
Corporate Governance Report
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 Code of Corporate Governance published by the
Association of Investment Companies in July 2016 (“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 all the
applicable 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 the Company.
Copies of the AIC Code, the AIC Guide and the UK Code can be found on the
respective organisations’ websites: www.theaic.co.uk and www.frc.org.uk.
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), will provide better information to shareholders.
During 2018, a new UK Corporate Governance Code was published by the Financial
Reporting Council, which applies to companies with financial years beginning
on or after 1 January 2019. A corresponding AIC Code of Corporate Governance
was published at the beginning of February 2019, also applying to companies
with financial years beginning on or after 1 January 2019. The Company will
report against the principles and recommendations of the new AIC Code in its
next annual report.
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 not relevant to the position of the Company
as it is 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. Therefore the Company has 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
2019, the number of scheduled Board and Committee meetings attended by each
Director was as below. There were also a number of ad hoc Board meetings in
respect of the Realisation Opportunity and one Strategy meeting.
Management
Audit Engagement
Board Committee Committee
meetings meetings meetings
Richard Davidson 4 (4) 3 (3) 1 (1)
Michael Phillips 4 (4) 3 (3) 1 (1)
Katya Thomson 4 (4) 3 (3) 1 (1)
Hugh van Cutsem 4 (4) 3 (3) 1 (1)
James Fox (#) 2( 2) 1 (1) 1 (1)
Anthony Townsend (#) 2 (2) 1 (1) 1 (1)
Figures in brackets indicate maximum number of meetings held in the year in
respect of which the individual was a Board/Committee member.
# Retired after the AGM on 5 October 2018.
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
above. 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 Evaluation
The Board has an established formal process, led by the Chairman, for the
annual evaluation of the performance of the Board, its Committees and the
individual Directors (including each Director’s independence and ability to
devote sufficient time to their role). Based on detailed questionnaires, the
results of which were compiled by the Company Secretary, appraisals were
conducted by one-to-one discussions between the Chairman and each of the
Directors.
The Chairman and the Directors are satisfied that the structure and operation
of the Board continues to be effective and relevant and that there is a
satisfactory mix of skills, experience, length of service and knowledge of the
Company.
Following the evaluation process, the Board recommends that shareholders vote
in favour of their re-election at the Annual General Meeting.
Chairman and Senior Independent Director
The current Chairman, Mr Davidson, is deemed by his fellow independent Board
members to be independent and to have no conflicting relationships. He is
Chair of the University of Edinburgh’s Investment Committee, and a Trustee
of their staff pension scheme as well as the Chairman of Aberforth Smaller
Companies Trust plc and 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.
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 Phillips has held office for 15 years, since the launch of the Company in
2004, and Mr van Cutsem has held office for over nine years, since 31 March
2010. However, the Board considers 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.
Conflicts of Interest
In line with the Companies Act 2006, the Board has the power to authorise any
potential conflicts of interest that may arise and impose such limits or
conditions as it thinks fit. A register of interests and potential conflicts
is maintained and is reviewed at every Board meeting to ensure all details are
kept up to date. It was resolved at each Board meeting during the year that
there were no direct or indirect interests of a Director that conflicted with
the interests of the Company, with the exception of the appointment of Kepler
Partners LLP (“Kepler”) as a service provider to the Company when Mr van
Cutsem, a founding partner of Kepler, abstained from the decision made by the
Board. More information about Kepler as a related party can be found in note
16 to the Financial Statements. Appropriate authorisation will be sought
prior to the appointment of any new director or if any new conflicts or
potential conflicts arise.
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 set 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/private/fund/miton-global-opportunities-plc.
At each Board meeting, representatives from the AIFM and Investment Manager
are in attendance to present verbal and written reports covering their
activity, portfolio and investment performance over the preceding period, and
compliance with the applicable rules and guidance of the FCA 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 Stewardship and engagement responsibilities 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/private/fund/miton-global-opportunities-plc.
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 Ms Thomson. 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.
The Audit Committee Report is set out above.
Management Engagement Committee
The Management Engagement Committee comprises all of the Directors and is
chaired by Mr Davidson. 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 also arranged Directors’ and Officers’ Liability Insurance
which provides cover for legal expenses under certain circumstances. This was
in force for the entire year 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 the Company complies with
applicable regulations. The Company Secretary is also responsible to the Board
for ensuring timely delivery of information and reports and that statutory
obligations of the Company are met.
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 at the address below. The Company
always responds to communications from 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 of the Annual Report are dispatched to
shareholders by mail and are also available from Frostrow or by downloading
from the Company’s website:
www.mitongroup.com/private/fund/miton-global-opportunities-plc.
Nominee Share Code
Where the Company’s shares are held via a nominee company name, the Company
undertakes:
? to provide the nominee company with multiple copies of shareholder
communications, so long as an indication of quantities has been provided in
advance; and
? to allow investors holding shares through a nominee company to attend
general meetings, provided the correct authority from the nominee company is
available.
Nominee companies are encouraged to provide the necessary authority to
underlying shareholders to attend the Company’s general meeting.
By order of the Board
Frostrow Capital LLP
Company Secretary
4 July 2019
Statement of Directors’ Responsibilities in respect of the Financial
Statements
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 102 “The
Financial Reporting Standard applicable in the UK and Republic of Ireland”,
and applicable law). Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or loss of the
Company for that period. In preparing the financial statements, the Directors
are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable United Kingdom Accounting
Standards, comprising FRS 102, have been followed, subject to any material
departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act 2006.
Miton Trust Managers Limited are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors' Confirmations
The Directors consider that the annual report and accounts for the year ended
30 April 2019, taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the Report of
the Directors confirm that, to the best of their knowledge:
• the Company’s financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting
Standard applicable in the UK and Republic of Ireland”, and applicable law),
give a true and fair view of the assets, liabilities, financial position and
loss of the Company; and
• the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
On behalf of the Board
Richard Davidson
Chairman
4 July 2019
Independent Auditors’ Report to the Members of
Miton Global Opportunities plc
Report on the audit of the financial statements
Opinion
In our opinion, Miton Global Opportunities plc’s financial statements:
? give a true and fair view of the state of the Company’s affairs as
at 30 April 2019 and of its loss and cash flows for the year then ended;
? have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 102 “The Financial Reporting Standard applicable in the UK
and Republic of Ireland”, and applicable law); and
? have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements, included within the Annual Report,
which comprise: the Statement of Financial Position as at 30 April 2019; the
Income Statement, the Statement of Cash Flow, the Statement of Changes in
Equity for the year then ended; and the notes to the financial statements,
which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs
(UK) are further described in the Auditors’ responsibilities for the audit
of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the
UK, which includes the FRC’s Ethical Standard, as applicable to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services
prohibited by the FRC’s Ethical Standard were not provided to the Company.
We have provided no non-audit services to the company in the period from 1 May
2018 to 30 April 2019.
Our audit approach
Overview
Materiality
? Overall materiality: £771,710 (2018: £751,000), based on 1% of net
assets.
Audit Scope
? The Company is a standalone Investment Trust company and engages Miton
Asset Management Limited (the “Investment Manager”) via Miton Trust
Managers Limited (the “AIFM”) to manage its assets.
? We conducted our audit of the financial statements using information
from the Investment Manager and Frostrow Capital LLP, whom the Company has
engaged to provide certain administrative functions.
? We tailored the scope of our audit taking into account the types of
investments within the Company, the involvement of the third parties referred
to above, the accounting processes and controls and the industry in which the
Company operates.
Key Audit Matters
? Valuation of level 3 investments.
The scope of our audit
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the Company and industry, we identified that the
principal risks of non-compliance with laws and regulations related to the
Listing Rules, and we considered the extent to which non-compliance might have
a material effect on the financial statements. We also considered those laws
and regulations that have a direct impact on the preparation of the financial
statements such as the Companies Act 2006, and the Association of Investment
Companies’ Statement of Recommended Practice (the “AIC SORP”). We
evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of
controls), and determined that the principal risks were related to posting
inappropriate journal entries to increase revenue or reduce expenditure, and
management bias in accounting estimates. Audit procedures performed by the
engagement team included:
* Discussions with management, including consideration of known or suspected
instances of non-compliance with laws and regulation and fraud;
* Challenging assumptions and judgements made by management in their
significant accounting estimates, in particular in relation to the valuation
of level 3 investments (see related key audit matter below); and
* Identifying and testing journal entries, in particular any journal entries
posed on the final day of the financial year.
There are inherent limitations in the audit procedures described above and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we
would become aware of it. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional
judgement, were of most significance in the audit of the financial statements
of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. This is not a complete list
of all risks identified by our audit.
Key audit matter How our audit addressed the key audit matter
Valuation of level 3 investments
Non-current investment assets at 30 April 2019 included £1,125,000 of equities classified within level 3 of the IFRS fair value hierarchy (see note 8). We focused on the valuation of these level 3 assets as they are calculated using unobservable inputs and thus are subjective in nature. In order to address the key audit matter, we: No material misstatements were identified which required reporting to those charged with governance.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to
be able to give an opinion on the financial statements as a whole, taking into
account the structure of the Company, the accounting processes and controls,
and the industry in which it operates. The Company is a standalone Investment
Trust Company and engages Miton Asset Management Limited (the “Investment
Manager”) via Miton Trust Managers Limited (the “AIFM”) to manage its
assets. We conducted our audit of the financial statements using information
from the Investment Manager and Frostrow Capital LLP, whom the Company has
engaged to provide certain administrative functions. We tailored the scope of
our audit taking into account the types of investments within the Company, the
involvement of the third parties referred to above, the accounting processes
and controls and the industry in which the Company operates.
Materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements
as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
Overall materiality £771,710 (2018: £751,000).
How we determined it 1% of net assets.
Rationale for benchmark applied We believe that net assets per ordinary share is the primary measure used by the shareholders in assessing the performance of the entity, which is driven by the net assets of the Company. Net assets is a generally accepted auditing benchmark.
We agreed with the Audit Committee that we would report to them misstatements
identified during our audit above £38,586 (2018: £37,000) as well as
misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation Outcome
We are required to report if we have anything material to add or draw attention to in respect of the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting in We have nothing material to add or to draw attention to. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company’s ability to continue as a going concern. For example, the terms on which the United Kingdom may withdraw from the European Union are not clear, and it is difficult to evaluate all of the potential implications on the Company’s trade, customers, suppliers and the wider economy. We have nothing to report.
preparing the financial statements and the directors’ identification of any material uncertainties to the Company’s ability to continue as a going concern over a period of at least twelve months from the date of approval of the financial statements. We are
required to report if the directors’ statement relating to Going Concern in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit.
Reporting on other information
The other information comprises all of the information in the Annual Report
other than the financial statements and our auditors’ report thereon. The
directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except to the extent otherwise explicitly
stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there
is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and the Report of the Directors, we also
considered whether the disclosures required by the UK Companies Act 2006 have
been included.
Based on the responsibilities described above and our work undertaken in the
course of the audit, the Companies Act 2006 (CA06), ISAs (UK) and the Listing
Rules of the Financial Conduct Authority (FCA) require us also to report
certain opinions and matters as described below (required by ISAs (UK) unless
otherwise stated).
Strategic Report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the
information given in the Strategic Report and Report of the Directors’ for
the year ended 30 April 2019 is consistent with the financial statements and
has been prepared in accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the company and its environment
obtained in the course of the audit, we did not identify any material
misstatements in the Strategic Report and Report of the Directors’. (CA06)
The directors’ assessment of the prospects of the Company and of the
principal risks that would threaten the solvency or liquidity of the Company
We have nothing material to add or draw attention to regarding:
? 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’ 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.
We have nothing to report having performed a review of the directors’
statement that they have carried out a robust assessment of the principal
risks facing the Company and statement in relation to the longer-term
viability of the Company. Our review was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors’
process supporting their statements; checking that the statements are in
alignment with the relevant provisions of the UK Corporate Governance Code
(the “Code”); and considering whether the statements are consistent with
the knowledge and understanding of the Company and its environment obtained in
the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
? The statement given by the directors, that they consider the Annual
Report taken as a whole to be fair, balanced and understandable, and provides
the information necessary for the members to assess the Company’s position
and performance, business model and strategy is materially inconsistent with
our knowledge of the Company obtained in the course of performing our audit.
? The section of the Annual Report describing the work of the Audit
Committee does not appropriately address matters communicated by us to the
Audit Committee.
? The directors’ statement relating to the Company’s compliance with
the Code does not properly disclose a departure from a relevant provision of
the Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act 2006. (CA06)
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the
directors are responsible for the preparation of the financial statements in
accordance with the applicable framework and for being satisfied that they
give a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company’s ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the
Company’s members as a body in accordance with Chapter 3 of Part 16 of the
Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
? we have not received all the information and explanations we require
for our audit; or
? adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches not
visited by us; or
? certain disclosures of directors’ remuneration specified by law are
not made; or
? the financial statements and the part of the Directors’ Remuneration
Report to be audited are not in agreement with the accounting records and
returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the audit committee, we were appointed by the
members on 30 September 2016 to audit the financial statements for the year
ended 30 April 2017 and subsequent financial periods. The period of total
uninterrupted engagement is 3 years, covering the years ended 30 April 2017 to
30 April 2019.
Felicity Rees (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors Bristol
4 July 2019
Financial Statements
Income Statement
for the year ended 30 April 2019
Year ended 30 April 2019 Year ended 30 April 2018
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on investments 8 – (140) (140) – 6,923 6,923
Exchange losses on capital items – (8) (8) – (41) (41)
Income 2 1,237 – 1,237 1,146 – 1,146
Investment management fee 3 (493) – (493) (454) – (454)
Other expenses 4 (789) – (789) (610) – (610)
(Loss)/return before finance costs and taxation (45) (148) (193) 82 6,882 6,964
Finance costs 5 (95) – (95) (77) – (77)
(Loss)/return before taxation (140) (148) (288) 5 6,882 6,887
Taxation 6 12 – 12 (12) – (12)
(Loss)/return after taxation (128) (148) (276) (7) 6,882 6,875
pence pence pence pence pence pence
(Loss)/return per Ordinary share 7 (0.5) (0.5) (1.0) 0.0 26.4 26.4
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 is no other comprehensive income other than that 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 2019
Share capital Capital redemption reserve Share premium account Special reserve Capital reserve Revenue reserve Total Shareholders’ funds
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 May 2017 252 60 16,727 10,008 36,484 (654) 62,877
Movement for the year
New issue of shares 20 – 5,412 – – – 5,432
Return/(loss) for the year – – – – 6,882 (7) 6,875
Balance at 30 April 2018 272 60 22,139 10,008 43,366 (661) 75,184
Movement for the year
New issue of shares 12 8 – 2,255 – – – 2,263
Loss for the year – – – – (148) (128) (276)
Balance at 30 April 2019 280 60 24,394 10,008 43,218 (789) 77,171
Statement of Financial Position
as at 30 April 2019
30 April 2019 30 April 2018
Note £’000 £’000
Fixed assets
Investments 8 72,278 70,756
Current assets
Debtors 10 117 203
Cash 5,113 9,591
5,230 9,794
Creditors: amounts falling due within one year
Bank borrowings 11 – (5,000)
Other creditors 11 (337) (366)
(337) (5,366)
Net current assets 4,893 4,428
Net assets 77,171 75,184
Capital and reserves
Called up share capital 12 280 272
Capital redemption reserve 60 60
Share premium account 24,394 22,139
Special reserve 10,008 10,008
Capital reserve 43,218 43,366
Revenue reserve (789) (661)
Total shareholders’ funds 77,171 75,184
pence pence
Net asset value per Ordinary share 13 275.6 276.4
30 April 2019 30 April 2018
Number of shares in issue 28,004,985 27,204,985
These financial statements were approved by the Board of Directors and
authorised for issue on 4 July 2019, and signed on its behalf by:
Richard Davidson
Chairman
Company No. 5020752
Statement of Cash Flow
for the year ended 30 April 2019
Year ended Year ended
30 April 2019 30 April 2018
Note £ ’000 £’000
Net cash inflow/(outflow) from operating activities 14 146 (67)
Investing activities
Purchases of investments (18,651) (24,151)
Sales of investments 16,847 24,663
Net cash (outflow)/inflow from investing activities (1,804) 512
Financing activities
New issue of shares 2,263 5,432
Revolving credit facility repaid (5,000) –
Finance costs paid (83) (92)
Net cash (outflow)/inflow from financing activities (2,820) 5,340
(Decrease)/increase in cash (4,478) 5,785
Reconciliation of net cash flow movement in funds
Cash at beginning of year 9,591 3,806
(Decrease)/increase in net cash (4,478) 5,785
Cash at end of year 5,113 9,591
Notes to the Financial Statements
for the year ended 30 April 2019
1 Accounting policies
The Company is a public limited company (PLC), limited by shares, incorporated
in England and Wales, with its registered office at 6th Floor, Paternoster
House, 65 St Paul’s Churchyard, London, EC4M 8AB.
The principal accounting policies, all of which have been applied consistently
throughout the year and in the preparation of the Financial Statements, are
set out below:
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, FRS102 ‘The Financial
Reporting Standard applicable in the UK and Ireland’ and the Statement of
Recommended Practice regarding the Financial Statements of Investment Trust
Companies and Venture Capital Trusts (“SORP”) updated in February 2018.
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.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
Critical accounting judgements and key sources of estimation uncertainty used
in preparing the financial information are continually evaluated and are based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable. The resulting estimates will, by
definition, seldom equal the related actual results. There are no critical
accounting judgements made in preparing the financial statements.
The key sources of estimation and uncertainty, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities relate to the valuation of the Company’s unquoted (Level 3)
investments. 1.5% (2018: 2.6%) of the Company’s portfolio is comprised of
unquoted investments. These are all valued in line with accounting policy for
investments starting on the following page.
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 borrowing facility 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.
Special dividends of a revenue nature are recognised through the revenue
column of the Income Statement. Special dividends of a capital nature are
recognised through the capital column of the Income Statement.
Expenses
All expenses are accounted for on an accruals basis. Expenses are charged
through the revenue column of the Income Statement except for transaction
costs which are incidental to the acquisition or disposal of an investment,
which are included within gains/ (losses) on investments and disclosed in note
8.
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 the closing price
where the security is primarily traded via a trading service that provides an
end of day closing auction with guaranteed liquidity to investors.
The valuation of unquoted securities is carried out in accordance with the
International Private Equity and Venture Capital Association valuation
guidelines. Unquoted securities are valued using either:
? the last published net asset value of the security 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; or
? the estimated, discounted cash distribution based on information
provided by the management, or liquidators of the security. The discount
applied will take account of various factors, including expected timings of
the cash flow and the level of certainty on the estimate.
Changes in fair value and gains or losses on disposal are included in the
Income Statement as a capital item.
Cash
Cash comprises solely of cash at bank.
Bank Borrowing and Finance Costs
Bank borrowings are initially recognised at cost, being the fair value of the
consideration received less issue costs where applicable. After initial
recognition, bank borrowings are recognised at amortised cost using the
effective interest rate method, with the interest expense recognised on an
effective yield basis.
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. The amounts within the Capital
Reserve less unrealised gains (those on investments not readily convertible to
cash) are available for distribution.
Revenue Reserve
The revenue reserve is distributable by way of dividends, when positive. While
the reserve is negative no dividends can be distributed by way of dividend
from this reserve.
Special Reserve
The special reserve arose following court approval in 2004 to cancel the share
premium account. This reserve is distributable and was historically 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. This reserve is not
distributable.
Financial Assets and Liabilities
The only financial assets measured at fair value through profit or loss are
the investments held by the Company, refer to note 8. All other financial
assets (being Debtors and Cash) are measured at amortised cost. All financial
liabilities (being Borrowings and Creditors) are measured at amortised cost.
2 Income
Year ended Year ended
30 April 2019 30 April 2018
£’000 £’000
Income from investments
UK dividends 746 579
Unfranked dividend income 371 480
Property dividend income 120 87
Total income 1,237 1,146
3 Investment management fee
Year ended Year ended
30 April 2019 30 April 2018
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 493 – 493 454 – 454
Further details on the investment management fee arrangements can be found in
the Strategic Report.
4 Other expenses
Year ended Year ended
30 April 2019 30 April 2018
£’000 £’000
Management services 189 180
Auditors’ remuneration for:
Audit services (exclusive of VAT) 24 23
Directors’ remuneration* 110 109
Employers NIC on directors’ remuneration 6 8
Legal and professional fees 191 60
Broker fees 42 42
Other expenses 227 191
789 610
* See Directors’ Remuneration Report for analysis.
5 Finance costs
Year ended Year ended
30 April 2019 30 April 2018
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Finance costs payable 95 – 95 77 – 77
Relates to interest charged, commitment fees and arrangement fees on the
revolving loan facility, details of which are disclosed in note 11.
6 Taxation
Year ended Year ended
30 April 2019 30 April 2018
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Corporation tax at 19.0% (2018: 19.0%) – – – – – –
Overseas taxation (12) – (12) 12 – 12
The total tax charge for the year is lower (2018: lower) than the rate of
corporation tax in the UK. The differences are explained below:
Year ended Year ended
30 April 2019 30 April 2018
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
(Loss)/return on ordinary activities before taxation (140) (148) (288) 5 6,882 6,887
Theoretical tax at UK corporation tax rate of 19.0% (2018: 19.0%) (27) (28) (55) 1 1,308 1,309
Effects of:
– Non taxable dividends (212) – (212) (202) – (202)
– Overseas taxation (12) – (12) 12 – 12
– Losses/(gains) on investment and exchange losses on capital items – 28 28 – (1,308) (1,308)
– Expenses not deductible for tax purposes 35 – 35 – – –
– Unrelieved expenses 204 – 204 201 – 201
Total tax (credit)/charge for the year (12) – (12) 12 – 12
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 £8,859,000 (2018: £7,870,000)
that are available to offset future taxable revenue. A deferred tax asset 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 Ordinary 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
Ordinary shares in issue 27,776,150 (2018: 26,018,987).
8 Investments
Year ended Year ended
30 April 2019 30 April 2018
£’000 £’000
Investment portfolio summary
Opening book cost 58,435 48,952
Opening investment holding gains 12,321 15,203
70,756 64,155
Analysis of investment portfolio movements
Opening valuation 70,756 64,155
Movements in the year:
Purchases at cost 18,555 24,359
Sales – proceeds (16,893) (24,681)
– gains on disposal 2,919 9,805
Decrease in investment holding gains (3,059) (2,882)
Valuation at 30 April 72,278 70,756
Cost at 30 April 63,016 58,435
Investment holding gains at 30 April 9,262 12,321
72,278 70,756
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
£79,000 (2018: £96,000) and disposals of investments totalled £16,000
(2018: £21,000) for the year. These are included in gains on investments in
the Income Statement.
Year ended Year ended
30 April 2019 30 April 2018
£’000 £’000
Gains on disposal 2,919 9,805
Movement in investment holding gains (3,059) (2,882)
(Losses)/gains on investments (140) 6,923
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.
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 2019 and 30 April 2018.
30 April 2019 30 April 2018
£’000 £’000
Level 1
Quoted equities 71,053 67,149
Preference shares 100 591
Total Level 1 71,153 67,740
Level 2
OEICs* – 1,159
Level 3
Equities 1,125 1,857
Total 72,278 70,756
* Open-ended investment companies
Level 2 financial assets - £nil as at 30 April 2019 - included Invesco
Perpetual Japan Fund as at 30 April 2018.
Level 3 financial assets include RENN Universal and Terra Catalyst (2018:
Eredene Capital, New City Energy, RENN Universal Growth and the Terra Catalyst
Fund). In addition to the above level 3 investments shown in the portfolio,
the Company holds a number of other investments that are valued at nil.
Analysis of movements in Level 3 investments
Year ended Year ended
30 April 2019 30 April 2018
Level 3 Level 3
£’000 £’000
Opening fair value of investments 1,857 1,012
Sale proceeds (845) (142)
Realised gain/(loss) on sales (188) 142
Transfer from Level 1 – 274
Movement in investment holding gains 301 571
Closing fair value of investments 1,125 1,857
Level 3 holdings(with value)
30 April 2019 30 April 2018
£’000 £’000
Eredene Capital – 774
New City Energy – 31
RENN Universal 809 768
Terra Catalyst 316 284
Closing fair value of investments 1,125 1,857
9 Significant interests
The Company had holdings of 3% or more of the voting rights attached to shares
that are material in the context of the financial statements in the following
investments:
30 April 2019
% of voting rights
Security
Geiger Counter Subscription Shares 11.4%
Chelverton Growth 11.0%
Geiger Counter Ordinary Shares 10.1%
Baker Steel Resources 6.7%
Establishment 6.3%
Origo Partners Preference Shares 5.7%
EPE Special Opportunities 5.0%
Auctus Growth 4.9%
Dunedin Enterprise 4.7%
India Capital Growth 4.6%
Cambium Global Timberland 4.4%
Alpha Real 4.2%
Henderson Opportunities 3.9%
Real Estate Investors 3.3%
CQS Natural Resources Growth and Income 3.3%
New Star Investment 3.2%
Macau Property Opportunities 3.1%
Artemis Alpha 3.1%
10 Debtors
30 April 2019 30 April 2018
£’000 £’000
Amounts due from brokers 38 –
Dividends and interest receivable 47 155
Prepayments and other debtors 32 48
117 203
11 Creditors: amounts falling due within one year
30 April 2019 30 April 2018
£’000 £’000
Bank borrowings – 5,000
Amounts due to brokers 134 230
Other creditors 203 136
337 5,366
The bank loan with The Royal Bank of Scotland International Limited, London
Branch (the “Bank”) is a £9,000,000 revolving credit facility and bears
interest at the rate of 0.9% over LIBOR on any drawn balance and 0.45% 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 £25,000,000. 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 2019, the Company had £nil drawn (2018: £5,000,000) under the
facility. The facility is due for renewal on 31 January 2020.
12 Called up share capital
30 April 2019 30 April 2018
£’000 £’000
Allotted, called-up and fully paid: 28,004,985 (2018: 27,204,985) Ordinary shares of 1p each 280 272
No shares were bought back in the year and no shares were held in Treasury
during the year or at the year end (2018: same). During the year the Company
issued 800,000 (2018: 1,925,000) shares, raising £2,263,000 (2018:
£5,432,000).
13 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 of £77,171,000 (2018:
£75,184,000) and 28,004,985 (2018: 27,204,985) Ordinary shares, being the
number of Ordinary shares in issue at the year end.
14 Reconciliation of net return before finance costs and taxation to net cash
inflow/(outflow) from operating activities
Year ended Year ended
30 April 2019 30 April 2018
£’000 £’000
(Loss)/return before finance costs and taxation (193) 6,964
Adjustments for:
Losses/(gains) on investments 140 (6,923)
Exchange losses on capital items 8 41
Increase/(decrease) in creditors 67 (36)
Decrease/(increase) in debtors 124 (113)
Net cash inflow/(outflow) from operating activities 146 (67)
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: other price risk,
currency risk and interest rate risk:
? Other price risk – arising from fluctuations in the fair value of
investments due to changes in market prices;
? 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; and
? Interest rate risk – arising from fluctuations in the fair value or
future cash flows of a financial instrument because of changes in interest
rates.
? 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 quarterly 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:
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 Investment 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’s performance may well diverge significantly from
the benchmark.
A list of the investments held by the Company at 30 April 2019 is shown in the
Portfolio Valuation.
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 the 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 2019, it would have the effect, with
all other variables held constant, of reducing the net capital return before
taxation by £7,228,000 (2018: £7,076,000). 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 three (2018: four) US dollar denominated investments with the sterling
equivalent of £2,263,000 (2018: £3,828,000). The Company also held one
(2018: three) investment with the sterling equivalent of £203,000 denominated
in other currencies (2018: £2,980,000).
An analysis of the indirect geographical exposure is shown above.
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
£9,000,000 with The Royal Bank of Scotland International (London Branch) plc.
The facility matured and was renewed in January 2018 at an interest rate of
0.9% over LIBOR on any drawn down balance and 0.45% on any undrawn
balance. At 30 April 2019, the facility was not drawn (2018: £5,000,000
drawn down). 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 £nil (2018: £50,000). The amount of such borrowings and the approved
levels are monitored and reviewed regularly by the Board.
The Company’s cash earns interest at a variable rate which is subject to
fluctuations in interest rates. At the year end, the Company’s cash balances
were £5,113,000 (2018: £9,591,000). The interest received in the year
amounted to nil (2018: nil).
Liquidity Risk
Liquidity risk 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 unquoted securities on behalf of the Company. However, the
investments held by the Company includes UK AIM quoted and NEX quoted
companies which can have limited liquidity. Short-term flexibility is achieved
through the use of bank borrowings. Liquidity risk is mitigated by the fact
that the Company has £5,113,000 (2018: £9,591,000) 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.
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.
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 £25,000,000.
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 2019 30 April 2018
£’000 £’000
The Company’s capital at 30 April comprised:
Debt
Revolving bank credit facility drawn down – 5,000
Equity
Equity share capital 280 272
Retained earnings and other reserves 76,891 74,912
77,171 75,184
Debt as a percentage of net assets 0.0% 6.6%
Gearing
Gearing amplifies the impact of gains or losses 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.
Hugh van Cutsem is a founding partner of Kepler Partners LLP, a firm that
issues research on Miton Global Opportunities plc for a fee of £12,500 per
annum. No amounts were due to Kepler Partners LLP at the year-end (2018: nil).
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.
Further Information - unaudited
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 Link 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 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: enquiries@linkgroup.co.uk. Changes of
name and/or address must be notified in writing to the Registrar: Shareholder
Services, Link Asset Services, The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU of via the shareholder portal at www.signalshares.com.
Share Capital and Net Asset Value Information
Ordinary 1p shares 28,004,985 at 30 April 2019
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 June/July Half-Yearly results announced December
Annual General Meeting September
Annual and Half-Yearly Reports
Copies of the Annual Reports are available from the Company Secretary on 0203
008 4910 and are available on the Company’s website,
www.mitongroup.com/private/fund/miton-global-opportunities-plc. Copies of the
Half-Yearly Reports are only available on the Company’s Website.
AIFM: Miton Trust Managers Limited
The Company’s AIFM is Miton Trust Managers Limited, a wholly owned
subsidiary of Miton Group plc. Miton Group plc 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/private/fund/miton-global-opportunities-plc.
Association of Investment Companies
The Company is a member of the Association of Investment Companies.
Legal Entity Identifier
21380075RRMI7D4NQS20.
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/private/fund/miton-global-opportunities-plc.
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 2018 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 2018 is £282,121. This figure is comprised
of fixed remuneration of £140,793 and variable remuneration of £141,328.
There were a total of five 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 2018 was £282,121. 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. Under
both methods, 100% would equate to no leverage.
The Company is required to state its maximum and actual leverage levels,
calculated as prescribed by the AIFMD as at 30 April 2019. This gives the
following figures:
Leverage exposure Gross Method Commitment Method
Maximum limit 200% 200%
Actual level 100% 100%
Source: Miton Trust Managers Limited
Glossary
Adjusted Market Capitalisation
The average of the mid market prices for an Ordinary Share as derived from the
Daily Official List of the London Stock Exchange on each business day in the
relevant calendar month multiplied by the number of Ordinary Shares in issue
on the last business day of the relevant calendar month, adjusted by adding
the amount per Ordinary Share of all dividends declared in respect of which
Ordinary Shares have gone “ex div” in the relevant calendar month,
excluding any Ordinary Shares held in treasury.
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. If the share price is higher than
the NAV per share, the shares are said to be trading at a premium. The size of
the discount or premium is calculated by subtracting the share price from the
NAV per share and then dividing by the NAV per share.
Gearing
Gearing amplifies the impact of gains or losses 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 when underlying assets fall in value. It
is the Company’s policy to determine the adequate level of gearing
appropriate to its own risk profile.
Gearing is calculated in accordance with guidance from the AIC as follows:
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.
Year ended Year ended
30 April 2019 30 April 2018
£’000 £’000
Total expenses from note 3 and note 4 1,282 1,064
Less non recurring expenses (185) (49)
Total ongoing charges 1,097 1,015
Average net assets 75,800 70,107
Ongoing charges 1.4% 1.4%
The ongoing charges percentage 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 percentage
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 they form part of the Company’s investment
return, and it is not practical to calculate an ongoing charges percentage
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). As the Company does not currently
pay dividends the NAV and share price total return are calculated by taking
the increase in the NAV or share price during the relevant period and dividing
by the opening NAV or share price.
Volatility
Volatility is related to the degree to which NAV or prices differ from their
mean (the standard deviation). Volatility is calculated by taking the daily
NAV or closing prices over the relevant year and calculating the standard
deviation of those prices. The daily standard deviation is then multiplied by
an annualisation factor being the square root of the number of the trading
days in the year.
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the fifteenth ANNUAL GENERAL MEETING of Miton
Global Opportunities plc will be held on Thursday, 12 September 2019 at 12.00
noon at the offices of Eversheds Sutherland (International) LLP, 1 Wood
Street, London EC2V 7WS 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.
Resolution on
Form of Proxy
Ordinary business
1 To receive and accept the Strategic Report, Report of the Directors and Auditor’s Report and the audited financial statements Resolution 1
for the year ended 30 April 2019.
2 To receive and approve the Directors’ Remuneration Report for the year ended 30 April 2019. Resolution 2
3 To re-elect Mr Davidson as a Director of the Company. Resolution 3
4 To re-elect Mr Phillips as a Director of the Company. Resolution 4
5 To re-elect Ms Thomson as a Director of the Company. Resolution 5
6 To re-elect Mr van Cutsem as a Director of the Company. Resolution 6
7 To re-appoint PricewaterhouseCoopers LLP as Auditor of the Company. Resolution 7
8 To authorise the Audit Committee to determine the Auditor’s remuneration. Resolution 8
Special business
9 THAT the Directors of the Company be and are hereby generally and unconditionally authorised (in substitution for any Resolution 9
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 £93,849 (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 2020 (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 Resolution 10
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 £28,154, 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 2020, 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 Resolution 11
(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: (a) the maximum number of Ordinary
shares authorised to be acquired shall be 4,220,432 (or, if less, 14.99% of the Ordinary shares in issue immediately following
the passing of this Resolution); (b) the minimum price (exclusive of expenses) which may be paid for each Ordinary share is 1p;
(c) 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 the higher of the price of the last independent trade in the Ordinary shares and (ii) the highest then current bid for the
Ordinary shares on the London Stock Exchange’s market for larger established companies; (d) 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; (e) 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 (f) 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 an annual general meeting may be called on not less than 14 clear days’ notice. Resolution 12
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
4 July 2019
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 the close of business on 10 September 2019 (or
in the event that the meeting is adjourned, only those shareholders registered on the Register of Members of the Company as at the close of business 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. Each proxy appointment 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. This year, hard copy Forms of Proxy have not been included with this notice. Members can vote by: ? logging onto the Share Portal Service at www.signalshares.com and following
instructions; ? requesting a hard copy form of proxy directly from the registrars, Link Asset Services at enquiries@linkgroup.co.uk or on 0871 664 0391 (or +44 (0) 371 664 0391 if calling from outside the UK); or ? in the case of CREST members, utilising
the CREST electronic proxy appointment service in accordance with the procedures set out below. If you wish to vote using the Share Portal Service at www.signalshares.com and you have not already registered for Signal Shares, you will need your investor
code which you can find on your share certificate (or obtain from Link Asset Services if you have difficulties locating your share certificate). Once registered, you will immediately be able to vote. Your vote should be submitted no later than 12 noon on
10 September 2019. To be valid, any appointment of a proxy must be completed, signed and received at Link Asset Services, PSX1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF no later than 48 hours before the time of the meeting or 12 noon on 10 September
2019. 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 vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolutions. If no voting indication is given, a proxy may vote or abstain from voting at his/her discretion. A proxy may
vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.
Note 4: 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 5: The statements of the rights of members in relation to the appointment of proxies in Notes 1 and 2 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 6: As at 2 July 2019 (being the last business day prior to the publication of this notice) the Company’s issued share capital and total voting rights amounted to 28,154,985 Ordinary shares carrying one vote each.
Note 7: 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: a) if they purport to exercise the power in the
same way as each other, the power is treated as exercised in that way; b) if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised.
Note 8: 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 financial statements (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 financial statements 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 9: 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: a) to do so
would: (i) interfere unduly with the preparation for the meeting, or (ii) involve the disclosure of confidential information; b) the answer has already been given on a website in the form of an answer to a question; or c) it is undesirable in the interests
of the Company or the good order of the meeting that the question be answered.
Note 10: 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 11: 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/private/fund/miton-global-opportunities-plc .
Note 12: 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
4 July 2019
ANNOUNCEMENT ENDS
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