Miton Global Opportunities : Final Results (28/06/17)

(the "Company")

LEI: 21380075RRMI7D4NQS20

Audited Results for the Year Ended 30 April 2017

The Company's annual report for the year ended 30 April 2017 (the "Annual Report") will be posted to shareholders on 7 July 2017. 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/migo

A copy of the Annual Report has been submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM):

www.morningstar.co.uk/uk/nsm

Frostrow Capital LLP, Company Secretary - 0203 709 8734

28 June 2017

* 6 April 2004.

• Three-pronged strategy incorporating new capital structure plus broking and marketing arrangements has been in place for more than a year and has been reaping rewards

• Strong progress in net asset value

• Discount narrowed sharply

• Sterling's devaluation in response to Brexit positive for a global portfolio

• 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 and increasingly illiquid 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 be patient

  Why invest now?

• Consolidation of the traditional private client brokers into the major wealth management chains has triggered significant change for the closed-end fund sector. Demand from this traditional source has rapidly declined. Given that the share prices of closed-end funds are decided by the balance of supply and demand, many perfectly competent trusts can be acquired at deep discounts

• New launches in the sector are increasingly by funds specialising in alternative asset classes such as property, infrastructure, forestry and peer to peer lending. The methodology for calculating stated net asset values in alternatives is more subjective than that for equities. Therefore pricing anomalies are more prevalent

• Reduced capital behind market making in investment trusts may mean greater volatility and opportunity at times of market stress

  Investment outlook

• President Trump's inability to deliver on election promises likely to lead to a return to an environment where low interest rates continue to squeeze asset prices higher through lack of alternatives

• Three long-standing macro themes; Private Equity, India and residential property in Berlin, continue to make progress

This is the thirteenth annual report for Miton Global Opportunities plc and covers the year ended 30 April 2017.

I am delighted to report that during the year under review, your Company's net asset value per share rose to 248.7p (2016: 182.4p), a total return of 36.3% (2016: 0.4%). The share price ended on an all-time high of 242.3p (2016: 164.3p), a total return of 47.5% (2016: 0.9%).

The Company does not have a formal equity benchmark against which the Board reviews long-term performance and our Investment Manager does not invest by reference to an index. However, your Board has noted that your portfolio has outperformed a number of other comparators such as the FTSE All-Share Index, measured on a total return basis, which rose by 15.4% over the same period (2016: -5.7%), the MSCI World Index, which rose by 27.0% and the FTSE Investment Companies Index, which rose by 26.8% (2016:

-0.5%). Our formal cash benchmark, sterling 3 Month LIBOR +2%, rose by 2.4% (2016: +2.6%).

Our portfolio manager provides a comprehensive review of the performance of and developments within your portfolio during the year under review in his report later in this announcement. His report also includes an analysis of the macro-economic conditions affecting the portfolio, recent developments in the investment trust sector and the outlook for the year ahead.

I am very pleased to report that the discount to net asset value per share at which the Company's shares trade, having remained around 10% for the last three years, narrowed to 2.6% as at the year-end. As at the date of this report, the discount stands at 4.0%. This improvement is thanks to both the excellent performance of the portfolio over the course of the year, and the steps taken by the Board last year to improve the liquidity of, and increase demand for, the Company's shares which included the appointment of Frostrow Capital LLP ("Frostrow") to provide a range of operational services, including marketing, and Numis Securities Limited ("Numis") as the Company's corporate stockbroker. Shareholders also approved the removal of the requirement to hold continuation votes every three years and replace it with an unconditional realisation opportunity, the first of which will be provided at the Annual General Meeting to be held in 2018. A full description of this opportunity is set out in the Report of the Directors.

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

There have been no changes to the composition of the Board during the year and in accordance with our policy of all Directors standing for re-election annually, you will find the appropriate resolutions in the Notice of the Annual General Meeting. The Board is conscious that three of the Directors have served since the Company was launched and that some refreshment is probably due. They will be addressing this over the next few months with a view to having news for shareholders by the time of the AGM.

The Company's level of borrowing remained unchanged during the year under review, with £5.0 million drawn down from the £7.0 million loan facility with the Royal Bank of Scotland.

Against a backdrop of uncertainty as a weakened UK government begins Brexit negotiations and President Trump struggles to deliver on his election promises, our Investment Manager believes we can expect a period of increased volatility in the investment company sector. This volatility should create opportunities for the Company as inefficiencies across the market may become more pronounced. Accordingly, the Board believes that the investment thesis of the Company remains valid and strongly supports our Investment Manager's strategy, which is summarised above.

The Annual General Meeting of the Company will this year be held at the offices of our legal advisers Eversheds Sutherland LLP, One Wood St, London EC2V 7WS on Tuesday, 19 September 2017 at 12 noon. This will be an opportunity to meet the Board and to receive a presentation from our Investment Manager, and we hope as many shareholders as possible will attend.

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

Anthony Townsend

Chairman

28 June 2017

The past 12 months have marked a period of transition for Miton Global Opportunities plc. The changes to the capital structure, marketing and the trust's brokership have all been in place for more than a year and are already reaping rewards. There has been a significant refreshing of the share register with self-directed investors appearing more prominently via platforms such as AJ Bell, Hargreaves Lansdowne and Alliance Trust Savings. This type of buyer may well prove to be the natural owner of investment trusts going forward.

During the year under review, the net asset value rose from 182.4p to 248.7p, this represents a gain of 36.3%. In comparison, the FTSE 100 index appreciated 15.4% and the MSCI World (in sterling) rose 27.0% in capital terms. This performance was encouraging as our investment style has traditionally lagged rapidly rising markets. Our discount narrowed during the year allowing our shares to generate a total return of 47.5%.

The closed-end fund industry continues to undergo significant structural change. Private client stockbrokers who were for many decades the major user of trusts have largely been subsumed into the major wealth management chains. Commercial and regulatory demands have led these organisations to aggressively standardise their client portfolios. Given the vast funds under management now concentrated into relatively few houses, they cannot be confident that they can buy enough shares in most trusts in a short period of time to allocate across their client accounts. Therefore they have largely ceased to increase their holdings in all but the most sizeable investment trusts.

This structural change continues to throw up opportunities for the Company. Once there are few natural buyers for a closed-end fund, it then needs only modest selling to leave its shares languishing at a significant discount. This can happen irrespective of the quality of the trust's underlying portfolio and management. The Company being a closed-end fund itself has a competitive advantage when accessing trusts that have limited trading in their shares. Not having to cope with daily inflows and outflows means that we can wait until a natural exit point before disposing of a holding. This may come when a fund attracts a new audience however often it coincides with an orderly wind down of that trust's affairs. This year departures of this type from our portfolio have included; Alternative Asset Opportunities, New City Energy, Juridica, Tau and Private Equity Investor.

Whilst the bulk of the portfolio remained focussed on individual opportunities there were three global trends to which we maintained a significant exposure. These were Private Equity, India and residential property in Berlin.

Private Equity

There remains a substantial amount of cash which has been committed globally to private equity funds which has yet to be invested in unlisted companies. This has created a competitive environment for transactions. Investment trusts which specialise in this sector find themselves in a sweet spot. They own the very companies which are in demand and in such conditions should be able to sell swathes of their portfolios at premiums to carrying value. Our longer term concern is that these trusts will struggle to reinvest the proceeds profitably given where we are in the cycle. Therefore our exposure is focussed on trusts such as Better Capital and Dunedin Enterprise which have already moved into orderly wind down and will not be forced to reinvest paying demanding multiples. Pride of place goes to EPE Special Opportunities which gained over 137% during the year. The principal driver behind this success was Luceco, a LED lighting manufacturer and distributer which was controlled by EPE and floated on the London Stock Exchange in October. Luceco shares have appreciated further since their float.

India

In India, Prime Minister Modi has continued with his reforms. The recent election result in Uttar Pradesh highlights that voters are buying into these reforms despite the associated short term hardships they can bring. The withdrawal of the majority of bank notes overnight last November left many with limited legal tender

within a predominantly cash based society. The move to a national goods and services tax is another reform aimed at making the existing framework more efficient by removing layers of bureaucracy and removing opportunities for corruption.

Our principal holding, India Capital Growth, significantly outperformed the Sensex index. Unlike many emerging markets, genuine stockpicking funds such as India Capital Growth prosper as the local market offers a vast array of companies in which to invest. The Bombay Stock Exchange was founded in 1875. Many emerging markets offer limited opportunities often confined to sectors such as banking, utilities and telecommunications. Donald Trump's election to the White House after a protectionist election campaign triggered a general sell-off across emerging markets. This provided us with the opportunity to acquire a position in Vietnam Opportunities which proved to be a timely decision. The subsequent recovery in these markets also helped Asian specialist Establishment Trust to post a healthy gain.

Berlin Property

We retain significant exposure to residential property in Berlin via our holdings in Taliesin and Phoenix Spree. The city is reverting to its previous role as a major European capital. Apartment prices continue to recover from a very low base. There has been a backlash against the gentrification of Berlin which has counter-intuitively boosted the value of our holdings. This is because they have permission to convert properties from rental in order to sell into the private market. Such permissions would be difficult to obtain in the current environment. Therefore we indirectly own what have become scarce assets which if sold would achieve a premium to carrying value.

Encouragingly there are signs that other investors are beginning to seek value opportunities within deeply overlooked closed-end funds. This has helped reverse the recent trend of widening discounts in this area. Until recently this proved to be a major headwind for the Company. An example is the property specialist Alpha Real. Whilst the trust's net asset value posted a respectable gain rising from 137.9p to 151.9p, the shares generated a return of over 32% largely due to the powerful combination of a narrowing discount and a higher net asset value. The catalyst was a recommendation in the Investors Chronicle, a magazine popular with private investors. Despite this attention and a positive outlook, Alpha shares remain on a discount approaching 20%.

Artemis Alpha remains on course to turn its fortunes around. This is another example where modest progress at portfolio level and some discount narrowing combined to generate a useful return for the Company during the year. Artemis Alpha historically suffered problems with a number of unlisted investments and as a result the board directed the managers to reduce involvement in this area. The fund is becoming more mainstream in its approach however the wide discount suggests that the perception of it in the market remains behind the times.

Shares in Macau Property Opportunities posted a gain approaching 50% during the year. The extremely wide discount at the start of the year reflected concerns over the Chinese crackdown on corruption. The former Portuguese colony's heritage was as a gambling and money laundering den. In practice Macau's business model has evolved along the lines of Las Vegas. A new generation of casinos are focussed on tourism, conventions and entertainment. These new properties will require tens of thousands of staff to operate whereas the working population of the province is a mere 360,000. This will put the local housing market under pressure as Macau is already one of the most densely populated places on the planet. Furthermore property values will benefit further when the road and rail bridge to Hong Kong is opened next year.

Phaunos Timber generated a return only slightly lower than that of Macau Property Opportunities. Historically this trust suffered from both poor governance and management at the portfolio level. A new chairman brought in Stafford Timber to run the assets with encouraging results. The plantations are largely mature and Phaunos has now reached the stage where it is generating cash and as a result has started paying dividends. The rerating of the shares is the result of the markets belated recognition that Phaunos would have been a high yielder distributing to shareholders from genuine cash flow in a world where income remains scarce. Unfortunately this trust failed to win its recent continuation vote and will now be wound down. This is an example of what happens if a closed end fund allows its shares to trade on a wide discount. The share register fills with short-term speculative activists and at that point survival is far from assured, irrespective of how good performance is. Within our portfolio, the end of the trust remains the most common

type of exit.

Rights and Issues generated a 50% return during the year. For some time this UK smaller companies specialist was overlooked by virtue of its opaque split capital structure. Despite excellent performance the shares often traded at discounts approaching 30%. The simplification of the capital structure combined with the introduction of a buyback programme led to a rapid narrowing of the discount during a period of continued strong performance at portfolio level. The track record of this vehicle can now easily be compared with its peer group and Rights and Issues has comfortably been the best performer over many periods.

The unexpected decision by the UK electorate to depart the European Union proved to be a major boost to our net asset value. We invest on a global basis and report in sterling. Therefore, the pound's decline against the dollar, euro and yen of between 12% and 16% proved material. We have subsequently reduced our exposure to both the yen and the US dollar given the very attractive sterling prices at which we could dispose of those assets.

A disappointment has been Sanditon Investment Trust. It owns a significant stake in the eponymous fund management group which employs a number of high profile fund managers who previously worked together at Cazenove. Unfortunately their cautious management style has proved out of step with current market conditions. As a result they have not been able to attract business and therefore we exited the position.

Looking forward there is a sense of déjà vu. Markets enjoyed a rally in the aftermath of the US election however more recently the Trump administration has struggled to deliver on its election promises. Bond yields have fallen as investors have lost belief in the Trump trade. Therefore we have returned to an environment which has existed since the global financial crisis. We should expect that very low interest rates will continue to squeeze asset prices higher through a lack of alternatives. Nevertheless, the closed-ended industry faces some challenges which will provide opportunities for the portfolio. A reduction in the capital committed to making markets in investment trusts is likely to increase volatility at times of stress. Further into the future any normalisation of interest rates will undermine the demand structure for alternative income funds which currently command substantial premiums to stated asset value. More imminently the negotiations over Brexit may bring some unexpected surprises. Investors seem complacent about the continental reality that the political imperative for a united Europe outweighs economic and financial concerns.

Nick Greenwood

Miton Asset Management Limited 28 June 2017

as at 30 April 2017

* AIM/NEX listed.

† In liquidation or in a process of realisation.

as at 30 April 2017

Portfolio geographical exposure*

• Global 19.9%

• India 10.9%

• Continental Europe 16.1%

• Japan 4.1%

  * UK 24.3%

• Emerging Markets 0.6%

• Asia Pacific (ex-Japan) 11.3%

• Fixed Interest 1.1%

• North America 6.2%

• Cash 5.5%

  Portfolio by asset type*

• Equity 35.6%

• Hedge Funds 1.8%

• Property 23.9%

• Fixed Interest 1.1%

• Private Equity 21.4%

• Other 0.8%

• Mining 5.7%

• Cash 5.5%

• Forestry 4.2%

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

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

  Investment policy

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

  The Company is unrestricted in the number of funds it holds. However, at the time of acquisition, no investment will have an aggregated value 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 key performance indicators ("KPIs") used to measure the progress of the Company during the year under review are as follows:

  NAV and the movement of the NAV compared to the notional returns available for cash - defined as sterling 3 month LIBOR plus 2%, the Company's Benchmark	The NAV total return per Ordinary share for the year was 36.3%, compared to the Benchmark return of 2.4%.
  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 2017, the Company's NAV had a volatility of 5.9% (2016: 6.4%)*, compared to the volatility of the FTSE All Share of 12.8% (2016: 18.1%)*.
  The movement in the Company's share price	The Ordinary share price has increased by 47.5% over the year.
  Discount of the share price in relation to the NAV per share	Over the year, the discount of the Ordinary share price in relation to the NAV per share has ranged from 2.6% to 11.3%. At the year end, it stood at 2.6% (2016: 10.0%).

  * Source: Frostrow Capital LLP.

  ^ See glossary for definition and calculation methodology.

  Principal Risks and Uncertainties

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

  The principal risks are categorised under the following broad headings:

  • investment risks (including borrowing risks);

  • strategic risks (including shareholder relations and share price performance risks); and

  • operational risks (including financial, corporate governance, accounting, legal and regulatory risks).