Annual Results for the year ended 31 December 2022

Global Opportunities Trust plc

Legal Entity Identifier: 2138005T5CT5ITZ7ZX58

Annual Results for the year-ended 31 December 2022

Financial Highlights

NET ASSET VALUE PER SHARE – cum inc. (pence)* +14.2%	NET ASSET VALUE TOTAL RETURN ( with dividends added back)* +15.8%
SHAREHOLDERS’ FUNDS £106.1 m	DISCOUNT TO NET ASSET VALUE* 13.5%

	31 December 2022	31 December 2021	% Change
Net assets/shareholders’ funds (£)	106,144,000	116,123,000	(8.6)
Shares in issue	29,222,180	36,527,725	(20.0)
Net asset value per share – cum inc. (pence)*	363.2	317.9	14.2
Net asset value total return (with dividends added back) (%)*	15.8	5.1
Share price (pence)	314.0	291.0	7.9
Dividend per share (pence)	5.0	5.0	–
Share price total return (with dividends added back) (%)*	9.8	4.6
Share price discount to net asset value (%)*	(13.5)	(8.5)
Ongoing charges ratio (%)*	0.9	1.1

* Alternative Performance Measure.

Cahal Dowds, Chairman - “This is the first full year of the Company operating under its expanded investment policy. As was articulated in the shareholder circular which preceded the changes, the Board felt strongly that such were the excessive conditions in asset markets, greater flexibility was required in order to protect shareholder capital. I am pleased to report that the results for 2022 have supported this view, with the NAV total return of the Company appreciating by 15.8% and the total return to shareholders of the share price, with dividends reinvested, rising by 9.8%. This was against a backdrop of synchronised declines in almost all asset classes. Shareholders should note that a substantial component of the positive return relates to the decline of sterling. However, even without the currency effect, the assets of the Company would have appreciated.

Whilst the Company’s NAV rose substantially over the period, the share price movement lagged and the discount to NAV widened as a consequence. The Board believes that the Company now represents a unique proposition for investors and the Company will be increasing its efforts to raise awareness, which we believe will attract new investors and help address the question of the discount. We would like to thank shareholders for their patience and support over the period and we look to the future with optimism.”

Dr Sandy Nairn, Executive Director – “The extended period of negative real interest rates that followed the financial crisis of 2008 resulted in a more extreme and generalised overvaluation of asset classes than I have seen in living memory. It extended from equities to bonds, property and alternatives and to both listed and unlisted markets. This is what I, and others, have referred to as the ‘Everything Bubble’ and we know now that it reached a climax and finally popped at the end of 2021.

We are moving into a world in which free money no longer drives all returns to unjustified heights. I believe that we are in a transition back to one where the traditional investing virtues will once again reign. This is not about value versus growth or other factors such as ‘quality’. It is simply about how much you are willing to pay for the characteristics and future of an asset. We look forward to the day where risk aversion rises to the levels that disregard for risk reached in the recent past. That will be the time that we again see an abundance of attractive investable opportunities.

In my judgement we are not there yet, but the time is coming. We will try to remain patient and prudent until that time. Our proposition to shareholders is that, as and when those opportunities present themselves, the Company will be willing and ready to use the flexibility that our investment policy creates to pursue them to the full. We are tactically, not permanently, bearish. We will seek to keep shareholders informed of our views as they evolve via the website and shareholders can also opt in there to receive these views electronically, should they wish to do so.”

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CHAIRMAN’S STATEMENT

I am pleased to present the Company’s Annual Report and Financial Statements for the year ended 31 December 2022.

Introduction

The year under review has been one of significant change for the Company. As you will read below, the Board has overseen the Company’s transition to a self-managed investment company at the same time as global economies quickly entered a downturn with many countries including the United Kingdom (‘UK’) facing recession. We all gave a sigh of relief when the world’s battle with the Covid pandemic appeared to have been won and looked forward to a positive future, however little did we know that markets were about to enter a roller coaster period battling inflation, rising interest rates, and the ongoing aftermath of Russia’s invasion of Ukraine. In the UK, we also witnessed a tumultuous political period, with the appointment of two Prime Ministers within a matter of weeks, the latter appointment following a disastrous budget statement endorsed by the then Prime Minister Liz Truss which caused market turmoil.

Transition to Self-Managed Investment Company

As previously detailed in the Half-Yearly Report for the six months ended 30 June 2022, the Company successfully transitioned to a self-managed investment company on 8 June 2022 and is registered as a Small Registered Alternative Investment Fund Manager by the Financial Conduct Authority (‘FCA’). The Board is now fully responsible for the management of the Company and all required reporting to the FCA in respect of the safeguarding of the Company’s assets.

Following receipt of approval from the FCA, several changes were made to the Company’s service providers. The agreement with Franklin Templeton Investment Trust Management Limited in respect of its appointment as Alternative Investment Fund Manager was terminated, as was the Depositary Agreement with Northern Trust Investor Services Limited. A new service agreement was entered into with our Executive Director, Dr Sandy Nairn, to manage the investment portfolio, with Franklin Templeton Investment Management Limited (‘Franklin Templeton’) appointed as Sub-Advisor to assist with the management of the Company’s direct equity holdings. In addition, J.P. Morgan Chase Bank N.A. was appointed as Custodian, with Juniper Partners Limited appointed as Administrator and Company Secretary to the Company.

I am delighted to report that the transition to a self-managed investment company ran smoothly with no disruption to the management of the investment portfolio. All the new service providers are now fully embedded in the Company’s operations and the new arrangements are functioning well.

Finally, you will have noted that with effect from 9 June 2022, the Company changed its name to Global Opportunities Trust plc.

Update on Management Arrangements

I am pleased to announce that Dr Nairn a full time executive of the Company, having resigned from his executive position with Franklin Templeton.

The Company will be serving notice to terminate its investment management agreement with Franklin Templeton and the global listed equities portion of the Company’s portfolio will be managed by Dr Nairn going forward. The Company thanks Franklin Templeton for its services to date and throughout the Company’s transition to a self-managed structure.

The Company has also entered into a strategic relationship with Goodhart Partners LLP (‘Goodhart’) through which Goodhart will introduce opportunities in the private markets to the Company. As part of this strategic relationship, Goodhart has also been appointed to provide investment sub-advisory services to the Company to assist Dr Nairn in managing the global listed equities mandate.

The Board believes that these arrangements provide a number of benefits for shareholders:

Dr Nairn’s appointment as a full time executive gives clear focus to the Company’s management structure.
The strategic relationship with Goodhart will help to develop significantly the opportunities available to the Company under the part of its portfolio investing in private capital markets and specialist funds.
It is anticipated that these arrangements will reduce the Company’s ongoing charges ratio from 0.9 per cent. to 0.8 per cent. (based on the Company’s net asset value as at 24 March 2023 and on the assumption that the Company becomes fully invested when valuations allow).

Investment Performance

As at 31 December 2022 the Company had net assets of £106.1 million, the net asset value (‘NAV’) per ordinary share (‘share’) was 363.2p and the middle market price per share on the London Stock Exchange was 314.0p, representing a 13.5% discount to NAV.

This is the first full year of the Company operating under its expanded investment policy. As was articulated in the shareholder circular which preceded the changes, the Board felt strongly that such were the excessive conditions in asset markets, greater flexibility was required in order to protect shareholder capital. I am pleased to report that the results for 2022 have supported this view, with the NAV total return of the Company appreciating by 15.8% and the share price total return, with dividends reinvested, rising by 9.8%. This was against a backdrop of synchronised declines in almost all asset classes. Shareholders should note that a substantial component of the positive return relates to the decline of sterling. However, even without the currency effect, the assets of the Company would have appreciated.

Further details on the investment performance of the Company can be found in the Executive Director’s Report.

Association of Investment Companies (‘AIC’) Peer Group

As a result of the changes to the Company’s investment policy, with effect from November 2022, the Company’s AIC peer group changed from the Global Sector to the Flexible Investment Sector.

Final Dividend

A resolution to declare a final dividend of 5.0p per share will be proposed at the Annual General Meeting (‘AGM’) on 26 April 2023. If approved by shareholders, the dividend will be payable on 31 May 2023 to shareholders on the register of members on 12 May 2023. The ex-dividend date is 11 May 2023. The cost of this dividend is covered by the Company’s distributable revenues during the financial year under review and exceeds the minimum that the Company is obliged to distribute under applicable law to maintain its status as an investment trust.

Succession Planning

David Ross recently advised the Board of his intention to retire as a Director of the Company. David has served as a Director of the Company since 1 June 2014 and will retire following the conclusion of this year’s AGM.

On behalf of the Board, I would like to thank David for his significant contribution to the Company during his tenure and wish him well for the future.

Following David informing the Board of his intention to retire, the Nomination Committee undertook a search for a replacement non-executive Director. Having considered several exceptional candidates, the Nomination Committee recommended that Katie Folwell-Davies be appointed as a non-executive Director of the Company.

The Board has approved Katie’s appointment in principle subject to shareholders electing her as a Director of the Company at the 2023 AGM.

Other than David, all remaining Directors are offering themselves for re-election at the forthcoming AGM.

Annual General Meeting

This year’s AGM will be held at The Bonham Hotel, 35 Drumsheugh Gardens, Edinburgh EH3 7RN on 26 April 2023 at 12 noon.

In addition to the formal business of the meeting, Dr Nairn will provide a short presentation to shareholders on the performance of the Company over the past year as well as an outlook for the future.

The AGM is a great opportunity for shareholders to ask questions of both the Board and of the Executive Director, and as always, the Board would welcome your attendance.

If you are unable to attend the AGM in person, I would encourage you to vote in favour of all resolutions by Form of Proxy and to appoint me as chair of the meeting to ensure your vote counts.

Outlook

Whilst it is highly likely that there will be significant rallies in asset prices as inflation falls in response to monetary policy, the world should continue to be viewed with caution. The probability of a prolonged recession appears much more likely than markets currently seem to be discounting, and as such the primary investment focus of the Company remains one of capital preservation. In times of economic stress, pessimism sets in and liquidity tends to evaporate. However, notwithstanding this, the new investment flexibility enjoyed by the Company will allow it to take any opportunities that may appear along this path.

Keep in Touch

Shareholders can keep up to date on the performance of the portfolio through the Company’s monthly factsheet which can be accessed via the website at www.globalopportunitiestrust.com. The Company’s website has recently been refreshed and updated and I would encourage shareholders to visit the new site.

As always, the Board welcomes communication from shareholders and I can be contacted directly through the Company Secretary at cosec@junipartners.com.

Cahal Dowds

Chairman

28 March 2023

EXECUTIVE DIRECTOR’S REPORT

Background

This is the first full year for the Company following receipt of shareholder approval to change the investment objectives and policy. The Company’s original investment objective and policy were set in 2003 and reflected investment conditions that prevailed at that time. The intention back in 2003 was explicitly to avoid constraints that could periodically undermine the performance of a portfolio when on valuation grounds it became difficult to identify attractively priced public equity securities. For this reason, the Company has always had the ability to own cash, bonds and make some limited investments in unlisted equity securities, where appropriate.

The extended period of negative real interest rates that followed the financial crisis of 2008 resulted in a more extreme and generalised overvaluation of asset classes than I have seen in living memory. It extended from equities to bonds, property and alternatives and to both listed and unlisted markets. This is what I, and others, have referred to as the ‘Everything Bubble’ and we know now that it reached a climax and finally popped at the end of 2021.

As a consequence of these extreme valuations the Company held significant levels of cash, cash being the only practical way to protect downside risk under the existing policy, but with the drawback that cash generated negative real returns. It was for this reason that I proposed, and the Board agreed, that more flexibility in the investment policy was both necessary and desirable if the Company was to simultaneously preserve shareholder capital and take advantage of opportunities that existed, or would emerge over time.

The additional degree of freedom that the new investment policy has given us since it was approved by shareholders in December 2021 has proved invaluable in enabling the Company to deliver a positive double digit NAV return in a year when both equities and bonds have witnessed declines of more than 10%. As previously mentioned in the Chairman’s Statement on page 4, at the AIC’s suggestion, the Company has changed its peer group from the Global to the Flexible Investment sector. However it may be worth emphasising that in normal market conditions we remain firm believers in the value of publicly listed equities as generators of portfolio wealth.

The Portfolio

Against this background, the portfolio has been structured to significantly reduce absolute downside risk as we wait for the ‘Everything Bubble’ to deflate or burst. Since the change of investment policy, the volatility of the portfolio has fallen to around half that of the broad global equity market. It now comprises four ‘levers’ that are carefully calibrated to try and create a coherent exposure for current market conditions:

The first is a direct equity portfolio that is positioned defensively. At the beginning of the year, the largest concentrations were in areas such as telecoms and health care where cash-flow and earnings were reasonably predictable and valuations were not excessive. Through the year, we added to energy and defence as tensions grew in eastern Europe. Despite the signals coming out of Russia, most market participants seemed to ignore the threat of the invasion of Ukraine. Whilst it was plausible that Russia could simply have been making heavy threats to gain a negotiated advantage, it was instructive that markets focussed on the most optimistic outcome. This was yet another sign of the prevailing complacency in asset markets. As a consequence, we felt it prudent to make some portfolio changes to mitigate the potential risks. We have avoided the temptation to invest in optically cheaper companies with lower long-term earnings visibility, more cyclicality, or balance sheet risks. The time to add this type of risk will come, but now is too early in our opinion.

The second lever is an investment in the Templeton European Long-Short Equity Fund (‘European Long-Short Fund’). The portfolio now has approximately 15% of its assets invested in this fund. At initial investment the proportion was around 10%, but appreciation has caused this to increase. The strategy deployed by this fund is unusual and distinctive. It primarily generates returns from the ‘spread’ between high and low quality European listed smaller companies, with very little overall market exposure. It operates with a relatively high gross exposure and is run by a portfolio manager with a strong track record as a short-seller. The strategy is volatile, but has the potential to produce outsized returns during adverse markets. This type of strategy became unfashionable after the 2008 financial crisis because low interest rates made it relatively easy for low quality businesses to refinance themselves. As interest rates normalise at higher levels, however, we believe the upside opportunity is very significant and it diversifies the market exposure embedded in the direct equity portfolio well.

The third lever is an exposure to private equity assets through the Volunteer Park Capital Fund (‘VPC Fund’). We are very wary about the valuation of private assets, so it is perhaps counter-intuitive that the Company should now have invested in a private equity fund. However, the VPC Fund is not a straight investment in private companies. Instead, it invests in the General Partner of private capital fund management businesses. These businesses benefit from very long term ‘contractual’ revenues on the private capital funds that they manage. The manager of the VPC Fund seeks to structure its investments to capture the upside of this long term and highly visible revenue with very little downside risk. The market opportunity here lies in the small deal size which means there is little competition to VPC from larger players for whom potential deals lie below their threshold of interest. In terms of risk/return the exposure fits neatly between the direct equity portfolio and the European Long-Short Fund. Its objective is to generate positive absolute returns regardless of market direction.

The final lever is cash. This exposure has grown progressively over recent years as the ever-rising level of asset valuations caused the opportunity set of undervalued assets to shrink. For most of the year cash has been held in currencies other than sterling, reflecting the difficult economic issues we believed faced the UK. Once the currency reacted to the ‘Truss government debacle’ and sterling fell sharply towards parity, the Company converted some of its US dollar exposure back to sterling. We expect to continue to hold a high cash position until we can clearly see value emerge in other assets.

The current risk in the portfolio is that if equity markets were to rise sharply, any gains in the portfolio would lag significantly, and in an extreme set of conditions could actually decline. However, we continue to see the risks in asset markets to be asymmetric to the downside and the portfolio is designed to preserve capital and hence allow the maximum ability to take advantage of the opportunities that will emerge once the markets have fully normalised again. Historical experience underlines the extraordinary extent of the asset price bubble which more than a decade of continued financial repression has produced, so it will most likely take more than one year of market falls to restore something like the traditional equilibrium.

Performance

The Company’s performance over the year was in line with its objectives. The portfolio tended to lag in weeks when markets were rising but still provided a positive absolute return. When markets were falling the portfolio reassuringly proved its defensive qualities, often not falling at all. In doing so the portfolio outperformed broad equity markets by a comfortable margin. It is notable that 2022 proved to be a very difficult year for bond markets as well, given the impact of rising interest rates. The positive correlation between bonds and equities undermined the ability of traditional balanced funds to diversify away any of their equity exposure, something that the portfolio was able to do as a result of the timely change in its investment policy. If we look at the ‘levers’ discussed above the performance of each was as follows:

Direct equities: returned just over 12%.

European Long-Short Fund: appreciated by over 60%.

Private Equity: since initial investment in the VPC Fund, which took place just prior to the end of 2021, the value of the holding has appreciated by 14% against the purchase price of December 2021.

Cash: the return was approximately 12%, the appreciation reflecting that the majority was held in US dollars over the period.

When considering these figures it is critical to remember that the underlying instruments/investments have been selected and blended to try and achieve a risk/reward profile appropriate to conditions as we see them. Putting this in simpler terms, as an example, when markets fall we expect to see the private capital exposure and cash remain stable, with the long-short holding appreciating. Under these circumstances we anticipate the equity holdings may also decline, but by significantly less than the market and for this to be offset by the other exposures. It also needs to be remembered that sterling was weak through much of 2022, which had a meaningfully positive impact on the returns.

The result of this, for calendar year 2022, was that the Company’s NAV total return, including dividends, was 15.8%. The comparable figure for the MSCI AC World index was -7.6%; for the Bloomberg Global Aggregate Bond index -5.9%. Over the period, the Barclays Sterling Overnight Cash index returned 1.4%.*

*Sources: Refinitiv Datastream, Bloomberg

Future Prospects

Given the undoubted economic difficulties facing the world, it may seem paradoxical that I find myself more excited about the investing future than for some considerable time. Sir John Templeton, whose wisdom and experience I was able to observe at first hand as an employee early in my career, was always adamant that high valuations were inimical to strong investment performance in anything but the short term. It has been dispiriting to have had to spend the last few years observing how governments and central banks have combined to create the conditions in which speculation, the antithesis of sound money management principles, has been able to run riot, creating a classic investment bubble not just in equities, but – almost uniquely in financial history – across virtually all asset classes at the same time.

My renewed sense of confidence rests on what feels like an inexorable trend back towards normality in valuations. Normality in valuation means an investing environment in which prices of assets are based on their fundamental qualities rather than on other extraneous factors. Whilst the trend may be inexorable, history suggests that the process of adjustment back to normality will contain powerful bear market rallies. These are likely to be fuelled by a hope that inflation can fall back to pre-bear market levels without any meaningful adverse economic consequences and that we can return to a world in which interest rates remain indefinitely at negligible levels.

Unfortunately, it stretches credibility to think that we can have a gentle glide path to normality after such an extended period in which almost the entire focus was on reward while scant attention was paid to risk. The new environment is more likely to see a reversal of this balance. The gilts market crisis in the autumn last year, the bankruptcy of FTX, the cryptocurrency exchange, and the more recent troubles at Silicon Valley Bank and Credit Suisse, should not be seen as isolated incidents but as symptoms of the profound if until now largely hidden risks embedded in the global financial system.

Against the backdrop of global economic weakness the excesses generated by a decade of easy money will continue to be revealed. Interim rallies of the kind we have seen in equity markets since the autumn can prove very dangerous for investors unless they are based on improvements in fundamental factors, such as profitability, earnings and balance sheet strength. There is as yet no evidence to support such a view.

In short, we are moving into a world in which free money no longer drives all returns to unjustified heights. I believe that we are in a transition back to one where the traditional investing virtues will once again reign. This is not about value versus growth or other factors such as ‘quality’. It is simply about how much you are willing to pay for the characteristics and future of an asset. We look forward to the day where risk aversion rises to the levels that disregard for risk reached in the recent past. That will be the time that we again see an abundance of attractive investable opportunities.

Dr Sandy Nairn

Executive Director

28 March 2023

PORTFOLIO OF INVESTMENTS

as at 31 December 2022

Company	Sector	Country	Valuation £000	% of Net assets
Templeton European Long-Short Equity SIF¹	Financials	Luxembourg	14,298	13.5
Volunteer Park Capital Fund SCSp²	Financials	Luxembourg	7,708	7.3
TotalEnergies	Energy	France	3,682	3.5
Unilever	Consumer Staples	United Kingdom	3,220	3.0
Sumitomo Mitsui Trust Holdings	Financials	Japan	2,685	2.5
ENI	Energy	Italy	2,528	2.4
Raytheon Technologies	Industrials	United States	2,503	2.4
Imperial Brands	Consumer Staples	United Kingdom	2,330	2.2
Nabtesco	Industrials	Japan	2,281	2.1
Novartis	Health Care	Switzerland	2,277	2.1
Samsung Electronics	Information Technology	South Korea	2,256	2.1
General Dynamics	Industrials	United States	2,256	2.1
Orange	Communication Services	France	2,187	2.1
Barrick Gold	Materials	Canada	2,036	1.9
Lloyds Banking	Financials	United Kingdom	1,958	1.8
Antofagasta	Materials	United Kingdom	1,932	1.8
Dassault Aviation	Industrials	France	1,902	1.8
Sanofi	Health Care	France	1,898	1.8
Panasonic	Consumer Discretionary	Japan	1,896	1.8
Murata Manufacturing	Information Technology	Japan	1,660	1.6
Tesco	Consumer Staples	United Kingdom	1,586	1.5
Daiwa House Industry	Real Estate	Japan	1,541	1.5
Verizon Communications	Communication Services	United States	1,509	1.4
Fresenius Medical Care	Health Care	Germany	1,154	1.1
Total investments			69,283	65.3
Cash and other net assets			36,861	34.7
Net assets			106,144	100.0

¹ Luxembourg Specialised Investment Fund

² Luxembourg Special Limited Partnership

STRATEGIC REVIEW

Introduction

The purpose of this report is to provide shareholders with details of the Company’s strategy, objectives and business model as well as the principal and emerging risks and challenges the Company has faced during the year under review. It should be read in conjunction with the Chairman’s Statement, the Executive Director’s Report and the portfolio information, which provide a review of the Company’s investment activity and outlook.

The Board is responsible for the stewardship of the Company, including overall strategy, investment policy, dividends, corporate governance procedures and risk management. The Board assesses the performance of the Company against its investment objective at each Board meeting by considering its key performance indicators.

Business and Status

The principal activity of the Company is to carry on business as an investment trust.

The Company is registered in Scotland as a public limited company and is an investment company within the meaning of section 833 of the Companies Act 2006. The Company has been approved by HM Revenue & Customs as an authorised investment trust under sections 1158 and 1159 of the Corporation Tax Act 2010 and the ongoing requirements for approved companies as detailed in Chapter 3 of Part 2 of the Investment Trust (Approved Company) (Tax) Regulations 2011. In the opinion of the Directors, the Company has conducted its affairs so as to enable it to continue to maintain its status as an investment trust.

The Company is a self-managed investment company run by its Board and is authorised by the FCA as a small registered alternative investment fund manager.

The Company’s shares are listed on the premium segment of the Official List of the FCA and traded on the main market of the London Stock Exchange.

The Company is a member of the AIC, a trade body which promotes investment companies and develops best practice for its members.

Investment Objective

The Company’s investment objective is to provide shareholders with an attractive real long-term total return by investing globally in undervalued asset classes. The portfolio is managed without reference to the composition of any stock market index.

Investment Policy

The Company invests in a range of assets across both public and private markets throughout the world. These assets include both listed and unquoted securities, investments and interests in other investment companies and investment funds (including limited partnerships and offshore funds) as well as bonds (including index linked securities) and cash as appropriate.

Any single investment in the Company’s portfolio may not exceed 15% of the Company’s total assets at the time of the relevant investment (the ‘Single Investment Limit’).

The Company may invest in other investment companies or funds and may appoint one or more sub-advisors to manage a portion of the portfolio if, in either case, the Board believes that doing so will provide access to specialist knowledge that is expected to enhance returns. The Company will gain exposure to private markets directly and indirectly through investments and interest in other investment companies and investment funds (including limited partnerships and offshore funds). The Company’s investment directly and indirectly in private markets (including through investment companies and investment funds) shall not, in aggregate, exceed 30% of the Company’s total assets, calculated at the time of the relevant investment.

The Company will invest no more than 15% of its total assets in other closed-ended listed investment companies (including investment trusts).

The Company may also invest up to 50% of its total assets in bonds, debt instruments, cash or cash equivalents when the Board believes extraordinary market or economic conditions make equity investment unattractive or while seeking appropriate investment opportunities for the portfolio or to maintain liquidity. The Single Investment Limit does not apply to cash or cash equivalents in such circumstances. In addition, the Company may purchase derivatives for the purposes of efficient portfolio management.

From time to time, when deemed appropriate and only where permitted in accordance with the UK Alternative Investment Fund Managers Regulations 2013, the Company may borrow for investment purposes up to the equivalent of 25% of its total assets. By contrast, the Company’s portfolio may from time to time have substantial holdings of debt instruments, cash or short-term deposits.

The investment objective and policy are intended to ensure that the Company has the flexibility to seek out value across asset classes rather than being constrained by a relatively narrow investment objective. The objective and policy allow the Company to be constrained in its investment selection only by valuation and to be pragmatic in portfolio construction by only investing in assets which the Executive Director considers to be undervalued on an absolute basis.

Investment Strategy

The Company’s portfolio is managed without reference to any stock market index. Investments are selected for the portfolio only after extensive research by the Executive Director. The Executive Director’s approach is long-term and focused on absolute valuation. Dr Nairn aims to identify and invest in undervalued asset classes, and to have the patience to hold them until they achieve their long-term earnings potential or valuation.

Dividend Policy

The Company does not have a stated dividend policy.

The rather than income growth. As a result, the level of revenue generated from the portfolio will vary from year to year, and any dividend paid to shareholders is likely to fluctuate.

The Board is mindful that in order for the Company to continue to qualify as an investment trust, the Company is not permitted to retain more than 15% of eligible investment income arising during any accounting period. Accordingly, the Board will ensure that any declared dividend is sufficient to enable the Company to maintain its investment trust status.

Management Arrangements

Following receipt of approval from the FCA on 8 June 2022, the Company successfully transitioned to become a self-managed investment company.

As a result of the transition, the management agreement with Franklin Templeton Investment Trust Management Limited was terminated. As a self-managed investment trust, the Board is now fully responsible for the management of the Company and all required reporting to the FCA in respect of the safeguarding of the Company’s assets. The Depositary Agreement between Northern Trust Global Services Limited and the Company was also terminated, and the Company’s custodian has been changed to JP Morgan Chase Bank, NA.

The Executive Director, Dr Nairn, has overall responsibility for the day-to-day management of the investment portfolio with Franklin Templeton Investment Management Limited (‘Sub-Advisor’) appointed to assist with the management of the Company’s direct equity holdings. As at 31 December 2022, the Sub- Advisor was responsible for managing 44.5% of the Company’s assets.

As part of the transition, the Board appointed Juniper Partners Limited (‘Juniper’) as the Company’s administrator and company secretary.

Update on Management Changes

Details of management changes which have taken place post year-end are provided in the Chairman’s Statement, and the Principal Decisions Taken During the Year section.

Change of Name

On 9 June 2022, the Company changed its name from EP Global Opportunities Trust plc to Global Opportunities Trust plc. The Company’s stock exchange ticker code was subsequently changed from EPG to GOT.

Change of Registered Office

Following the appointment of Juniper, the registered office of the Company has changed to 28 Walker Street, Edinburgh EH3 7HR.

Portfolio Performance

Full details on the Company’s activities during the year under review are contained in the Chairman’s Statement and Executive Director’s Report. The portfolio consisted of 24 investments, excluding cash and other net assets as at 31 December 2022, thus ensuring that the Company has a suitable spread of investment risk.

Key Performance Indicators

At each Board meeting, the Directors consider key performance indicators to assess whether the Company is meeting its investment objective.

The key performance indicators used to measure the performance of the Company over time are as follows:

Share price total return to 31 December 2022	1 year (%)	3 years (%)	5 years (%)
Global Opportunities Trust plc	9.8	8.5	9.1
AIC Flexible Investments peer group†	(6.2)	13.8	23.5
FTSE All-World Total Return Index*	(7.3)	25.7	48.4

Net asset value total return to 31 December 2022	1 year (%)	3 years (%)	5 years (%)
Global Opportunities Trust plc	15.8	21.5	19.2
AIC Flexible Investments peer group†	(3.5)	23.4	39.2
FTSE All-World Total Return Index*	(7.3)	25.7	48.4

Share price discount to net asset value as at 31 December	2022 (%)	2021 (%)	2020 (%)
Global Opportunities Trust plc	13.5	8.5	7.9
AIC Flexible Investments peer group†	14.4	7.0	11.0

Ongoing charges ratio to 31 December	2022 (%)	2021 (%)	2020 (%)
Global Opportunities Trust plc	0.9	1.1	1.0
AIC Flexible Investments peer group†	1.0	0.9	0.9

† Source: theaic.co.uk & Morningstar.

* The Company does not formally benchmark its performance against a specific index, the FTSE All-World Total Return Index (in sterling) has been shown for comparative purposes only.

Gearing

The Company did not have any borrowings and did not use derivative instruments for currency hedging during the year ended 31 December 2022. The Company has an investment in the Templeton European Long-Short Equity SIF which uses derivatives.

Principal and Emerging Risks

The Board, through delegation to the Audit and Management Engagement Committee, has undertaken a robust annual assessment and review of all the risks facing the Company, together with a review of any new and emerging risks which may have arisen during the year, including rising levels of inflation and heightened geopolitical events following the invasion of Ukraine. These risks are formalised within the Company’s risk assessment matrix which is formally reviewed on a regular basis.

The principal risks and uncertainties facing the Company, together with a summary of the mitigating actions and controls in place to manage these risks, and how these risks have changed over the period are set out below:

Risks	Mitigation and Controls
Investment and Strategy Risk There can be no guarantee that the investment objective of the Company, to provide shareholders with an attractive real long-term total return by investing globally in undervalued asset classes, will be achieved. No change to this risk	The Board meets regularly to discuss the portfolio performance and strategy and to receive investment updates from the Executive Director. The Board receives quarterly reports detailing all portfolio transactions and any other significant changes in the market or stock outlooks.
Key Person Risk The Company’s ability to deliver its investment strategy is dependent on the Executive Director, Dr Nairn. A change in key investment management personnel who are involved in the management of the Company’s portfolio could impact on future performance and the Company’s ability to deliver on its investment strategy. Increased risk due to the Company’s transition to a self managed investment company	The Board frequently considers succession planning. Dr Nairn, has day-to-day responsibility for the investment management of the Company. Dr Nairn is also in regular contact with the Sub-Advisor and underlying fund managers and would be informed of any proposed changes in their personnel.
Financial and Economic The Company’s investments are impacted by financial and economic factors including market prices, interest rates, foreign exchange rates, liquidity and inflation which could cause losses within the portfolio. Risk has been heightened by inflationary increases and geopolitical events, including the invasion of Ukraine	The Board receives regular updates on the composition of the Company’s investment portfolio and market developments from the Executive Director. Investment performance is continually monitored specifically in the light of emerging risks throughout the period. The Board regularly reviews and agrees policies for managing market price risk, interest rate risk, foreign currency risk, liquidity risk and credit risk.
Discount Volatility Risk The Board recognises that it is in the long-term interests of shareholders to reduce discount volatility and believes that the prime driver of discounts over the longer term is investment performance. An inappropriate or unattractive objective and strategy may have an adverse effect on shareholder returns or cause a reduction in demand for the Company’s shares, both of which could lead to a widening of the discount. No change to this risk	The Board actively monitors the discount at which the Company’s shares trade, and is committed to using its powers to allot or repurchase the Company’s shares. The Board may use share buybacks, when appropriate, to narrow the discount to NAV at which the shares trade. This will be done in conjunction with creating new demand and being aware of the liquidity of the shares. The Board’s commitment to allot or repurchase shares is subject to it being satisfied that any offer to allot or purchase shares is in the best interests of Shareholders of the Company as a whole, the Board having the requisite authority pursuant to the Articles of Association and relevant legislation to allot or purchase shares, and all other applicable legislative and regulatory provisions. The Board reviews changes to the shareholder register regularly and considers shareholder views and developments in the market place.
Regulatory Risk The Company operates in an evolving regulatory environment and faces a number of regulatory risks. Failure to qualify under the terms of sections 1158 and 1159 of the CTA may lead to the Company being subject to capital gains tax. A breach of the Listing Rules may result in censure by the FCA and/or the suspension of the Company’s shares from listing. The implementation of GDPR provides for greater data privacy. While the risk to the Company is deemed to be low, the impact of fines should they occur could be significant. If all price sensitive issues are not disclosed in a timely manner, this could create a misleading market in the Company’s shares. No change to this risk	Compliance with the Company’s regulatory obligations is monitored on an ongoing basis by the Company Secretary and other professional advisers as required who report to the Board regularly. The Directors note the corporate offence of failure to prevent tax evasion and believe all necessary steps have been taken to prevent facilitation of tax evasion. The Directors are satisfied that all necessary steps have been taken to prevent any breach of GDPR, including ensuring that all third party service providers have appropriate GDPR policies in place. The Directors are aware of their responsibilities relating to price sensitive information and would consult with their advisers if any potential issues arose. This includes ensuring compliance with the Market Abuse Regulation. The Company Secretary would notify the Board immediately if it became aware of any disclosure issues. The Sub-Advisor has a comprehensive market abuse policy and any potential breaches of this policy would be promptly reported to the Board. The Board has agreed service levels with the Company Secretary and Sub-Advisor which include active and regular review of compliance with these requirements.
Operational risk There are a number of operational risks associated with the fact that third parties undertake the Company’s administration and custody functions. The main risk is that third parties may fail to ensure that statutory requirements, such as compliance with the Companies Act 2006 and the FCA requirements, are met. No change to this risk	The Board regularly receives and reviews management information on third parties which the Company Secretary compiles. In addition, each of the third parties, where available, provides a copy of its report on internal controls to the Board each year. The Company employs the Administrator to prepare all financial statements of the Company and meets with the Auditor at least once a year to discuss all financial matters, including appropriate accounting policies. The Company is a member of the AIC, a trade body which promotes investment trusts and also develops best practice for its members. The Executive Director and the Company’s third party suppliers have contingency plans to ensure the continued operation of the business in the event of disruption.

Culture

The Chairman leads the Board and is responsible for its overall effectiveness in directing the Company. He demonstrates objective judgement, promotes a culture of openness and debate, and facilitates effective contributions by all Directors. In liaison with the Company Secretary, the Chairman ensures that the Directors receive accurate, timely and clear information. The Directors are required to act with integrity, lead by example and promote this culture within the Company.

The Board seeks to ensure the alignment of the Company’s purpose, values and strategy with the culture of openness, debate and integrity through ongoing dialogue, and engagement with shareholders, the Executive Director and the Company’s other service providers. The Company has adopted a number of policies, practices and behaviours to facilitate a culture of good governance and ensure that this is maintained.

The culture of the Board is considered as part of the annual performance evaluation process which is undertaken by each Director. The culture of the Company’s service providers is also considered by the Board during the annual review of their performance and while considering their continuing appointment. In the context of the Executive Director and Sub-Advisor, particular attention is paid to environmental, social and governance, engagement and proxy voting policies.

Directors and Gender Diversity

As at 31 December 2022, the Board of Directors of the Company comprised three male and one female Director. The appointment of any new Director is made in accordance with the Company’s diversity policy.

Employees and Human Rights

The Board recognises the requirement under the Companies Act 2006 to detail information about human rights, employees and community issues, including information about any policies it has in relation to these matters and the effectiveness of these policies. The Company has one employee, Executive Director Dr Nairn. All the remaining Directors are non-executive. The Company has outsourced all its functions to third party service providers. The Company has therefore not reported further in respect of these provisions.

Modern Slavery Statement

The Company is not within the scope of the Modern Slavery Act 2015 because it has not exceeded the turnover threshold and therefore no further disclosure is required in this regard.

Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emission-producing sources under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013.

Environmental, Social and Governance (‘ESG’)

The Company seeks to invest in companies that are well managed with high standards of corporate governance. The Board believes this creates the proper conditions to enhance long-term value for shareholders. The Company adopts a positive approach to corporate governance and engagement with companies in which it invests.

In pursuit of the above objective, the Board believes that proxy voting is an important part of the corporate governance process and considers seriously its obligation to manage the voting rights of companies in which it is invested. It is the policy of the Company to vote, as far as possible, at all shareholder meetings of investee companies. The Company follows the relevant applicable regulatory and legislative requirements in the UK, with the guiding principles being to make proxy voting decisions which favour proposals that will lead to maximising shareholder value while avoiding any conflicts of interest. Voting decisions are taken on a case-by-case basis by the Sub-Advisor on behalf of the Company. The Sub-Advisor makes use of an external agency, Institutional Shareholders Services, a recognised authority on proxy voting and corporate governance to assist on voting procedures. The key issues on which the Sub-Advisor focuses are corporate governance, including disclosure and transparency, board composition and independence, control structures, remuneration, and social and environmental issues.

The Executive Director and Sub-Advisor consider a wide range of factors when making investment decisions including an investee company’s ESG credentials.

In making fund investment decisions, the Executive Director’s assessment includes analysing the fund manager’s ESG cultural buy-in, its ESG process, procedures and reporting, its engagement with underlying portfolio companies and an operational due diligence review of the relevant manager and fund.

Duty to Promote the Success of the Company

Under section 172 of the Companies Act 2006, the Directors have a duty to act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

the likely consequences of any decision they make in the long term;
the need to foster the Company’s business relationships with its stakeholders, which includes the shareholders, the Executive Director and Sub-Advisor and other relevant parties as listed below;
the need to act independently by exercising reasonable skill and judgement;
the impact of the Company’s operations on the community and the environment;
the requirement to avoid a conflict of interests;
the desirability of the Company maintaining a reputation for high standards of business conduct;
the need to act fairly between members of the Company; and
the need to declare any interests in proposed transactions.

The Company has one employee, its Executive Director, Dr Nairn. As an investment trust, the Company has no customers or physical assets; the primary stakeholders are the shareholders, the Executive Director, Sub- Advisor, and other third-party service providers. The Company also engages with its investee companies where appropriate.

Stakeholder Engagement

Shareholders

Communication and regular engagement with shareholders are given a high priority by the Board. The Executive Director seeks to maintain regular contact with major shareholders and is always available to enter into dialogue with all shareholders. A regular dialogue is also maintained with the Company’s institutional shareholders and private client asset managers through the Executive Director, who regularly reports to the Board on significant contact, the views of shareholders and any changes to the composition of the share register.

All shareholders are encouraged, if possible, to attend and vote at the AGM and at any other general meetings of the Company (if any), during which the Board is available to discuss issues affecting the Company. Shareholders wishing to communicate directly with the Board should contact the Company Secretary. The Chairman is available throughout the year to respond to shareholders, including those who wish to speak with him in person. Copies of the Annual and Half-Yearly Reports are currently issued to shareholders and are also available, along with the monthly factsheets for downloading from the Company’s website at www.globalopportunitiestrust.com. The Company also releases portfolio updates to the market on a monthly basis.

Executive Director and Sub-Advisor

The non-executive Directors believe that maintaining a close and constructive working relationship with the Executive Director and Sub-Advisor is crucial to promoting the long-term success of the Company in an effective and responsible way. This ensures the interests of all current and potential stakeholders are properly taken into account when decisions are made. The Executive Director attends all Board meetings and provides reports on investments, performance, marketing, operational and administrative matters. The Sub-Advisor is available to attend Board meetings upon request. An open discussion regarding such matters is encouraged, both at Board meetings and by way of ongoing communication between the Board, the Executive Director and Sub-Advisor. Board members are encouraged to share their knowledge and experience with the Executive Director and Sub-Advisor, and where appropriate, the Board adopts a tone of constructive challenge. The Board keeps the ongoing performance of the Executive Director and Sub-Advisor under continual review and conducts an annual appraisal of both the parties.

Service Providers

The Company’s day-to-day operational functions are delegated to several third-party service providers, each engaged under separate contracts. In addition to the Sub-Advisor, the Company’s principal third-party service providers include the Administrator, Auditor, Company Secretary, Custodian and Registrar. The Board engages with its service providers to develop and maintain positive and productive relationships, and to ensure that they are well informed in respect of all relevant information about the Company’s business and activities. The Board, through its Audit and Management Engagement Committee, keeps the ongoing performance, fees and continuing appointment of these service providers under continual review and conducts an annual appraisal of all third-party service providers.

Investee Companies

The Sub-Advisor is responsible for the day-to-day management of the Company’s equity investment portfolio. As such, the Sub-Advisor has primary responsibility for engaging with investee companies on behalf of the Company. The Sub-Advisor does so in accordance with the United Nations Principles for Responsible Investment, and the UK Stewardship Code 2020, and is a signatory to both regimes.

The Board recognises the importance of engagement with investee companies. The Board is aware of evolving expectations in this regard and is committed to working with the Executive Director and Sub-Advisor, in relation to future engagement on behalf of the Company.

The above methods for engaging with stakeholders are kept under review by the Directors and discussed on a regular basis at Board meetings to ensure that they remain effective.

Principal Decisions Taken During the Year

The Board is mindful of its responsibilities to the Company’s stakeholders when making material decisions on behalf of the Company.

The principal decisions taken by the Board during the year under review (and post year-end) are as follows:

Transition to Self- Managed Investment Company

Following a review of the strategic direction of the Company, the Board informed shareholders that it intended to change the Company’s management arrangements by becoming a self-managed investment company. As part of this change Dr Nairn was appointed as an Executive Director of the Company and now has overall responsibility for investment management of the investment portfolio. The Board’s rationale for becoming a self-managed investment company, was that it believed that the Company would be able to access a wider range of investment management expertise, particularly in the private capital market, and that there would be greater flexibility to use specialist third party managers where appropriate.

At the general meeting held on 17 December 2021 shareholders approved the Board’s proposal for the Company to become a self-managed investment company. Following receipt of approval from the Financial Conduct Authority on 8 June 2022, the Company successfully transitioned to a self-managed investment company.

The Board is now fully responsible for the management of the Company and all required reporting to the FCA in respect of the safeguarding of the Company’s assets.

Post Year-End Management Changes

As previously detailed in the Chairman’s Statement, the Board have approved a number of changes to the management structure of the Company.

Following his resignation as an executive of Franklin Templeton, Dr Nairn is now a full time executive of the Company.

The Company will be serving notice to terminate its investment management agreement with Franklin Templeton Investment Management Limited and the global listed equities portion of the Company’s portfolio will be managed by Dr Nairn going forward.

In addition, the Company has entered into a strategic relationship with Goodhart Partners LLP (‘Goodhart’) through which Goodhart will introduce opportunities in the private markets to the Company. As part of this strategic relationship, Goodhart has also been appointed to provide investment sub-advisory services to the Company to assist Dr Nairn in managing the global listed equities mandate.

The Board believes that these arrangements will provide a number of benefits for shareholders going forward (as detailed in the Chairman’s Statement), including a reduction in the ongoing costs of the Company.

Tender Offer

Shareholder approval was granted for the Company to repurchase up to 20% of its issued share capital by way of a tender offer at the general meeting held on 17 December 2021.

On 28 February 2022, the Company announced that a total of 7,305,545 ordinary shares (20% of the Company’s issued share capital) were repurchased by the Company to be held in treasury. The ordinary shares were repurchased at 313.2501 pence per share which represented a discount of approximately 3.5% to the NAV per share as at 24 February 2022.

Change of Service Providers

As part of the transition to a self-managed investment company several changes were made to the Company’s third party service providers. Juniper Partners Limited was appointed as Company Secretary and Administrator and J.P. Morgan Chase Bank N.A. was appointed as Custodian to the Company.

The Board maintains a strong working relationship with its key third-party service providers. The regular interaction enables issues and requirements to be dealt with efficiently and collegiately. The Board conducted detailed due diligence on the proposed providers prior to their appointment to ensure they were appropriate for the Company in its new form. All new service providers are now well established in their new roles and they continue to operate in line with agreed service levels.

Succession Planning

Tom Walker retired as a non-executive Director of the Company following the conclusion of the Annual General Meeting held on 27 April 2022.

As previously noted in the ‘Transition to Self-Managed’ section, Dr Nairn was formally appointed as an Executive Director of the Company at the Annual General Meeting held on 27 April 2022.

David Ross informed the Board of his intention to retire as a Director of the Company following the conclusion of the 2023 AGM. As detailed in the Chairman’s Statement, having considered a number of exceptional candidates, the Nomination Committee recommended that Katie Folwell-Davies be appointed as a non-executive Director of the Company.

Katie qualified as a chartered accountant with Touche Ross gaining experience in both audit and forensic services before a twenty-year career in corporate finance advisory. She has international experience across financial and business services having operated in the private sector and for government. She became a member of the corporate finance advisory executive with responsibilities including chief talent officer and retired as a Deloitte senior partner in 2020 taking up the role of investment partner at Twenty 20 Capital, an internationally focussed private capital investment fund.

She has held a number of board positions as well as representing Deloitte as a CBI Council Member, chairing the City Women’s club in London and is currently chair of the annual international TALiNT industry awards recognising excellence across the recruitment industry.

As a result of Katie’s extensive accounting and audit experience, and subject to shareholders electing her to the Board, it is proposed that she be appointed as Chair of the Audit and Management Engagement Committee.

The Board has approved Katie’s appointment in principle subject to shareholders electing her as a non-executive Director of the Company at the 2023 AGM.

Final Dividend

Having considered income receipts and forecast revenue, the Board, on the recommendation of the Audit and Management Engagement Committee, have proposed that shareholders approve the payment of a final dividend of 5.0p per ordinary share for the financial year ended 31 December 2022. Although the Company’s investment objective is to provide real long-term total return, the Board is aware that certain investors also seek income from their portfolio of investments. In addition, the Board is mindful of the need to distribute any excess income to maintain the Company’s status as an investment trust.

For and on behalf of the Board

Cahal Dowds

Chairman

28 March 2023

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable UK law and regulations.

The Companies Act 2006 (the ‘Law’) requires the Directors to prepare Financial Statements for each financial period. Under that Law, they have elected to prepare the Financial Statements in accordance with UK Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.

Under the 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 these Financial Statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; 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 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 its Financial Statements comply with the Law and include the information required by the Listing Rules of the Financial Conduct Authority. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website, www.globalopportunitiestrust.com. The work carried out by the Auditor does not include consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the Financial Statements since they were initially presented on the website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, confirm to the best of their knowledge that:

the Financial Statements, prepared in accordance with the applicable set of UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
the Annual Report includes a fair view 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 the Company faces; and
in the opinion of the Board, the Annual Report and Financial Statements taken as a whole, is fair, balanced and understandable and provides the information necessary to assess the Company’s performance, business model and strategy.

On behalf of the Board

Cahal Dowds

Chairman

28 March 2023

INCOME STATEMENT

for the year ended 31 December 2022

	2022			2021
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Gains on investments at fair value through profit or loss	–	10,158	10,158	–	3,878	3,878
Foreign exchange gains/(losses) on capital items	–	3,149	3,149	–	(557)	(557)
Income	2,374	–	2,374	2,741	802	3,543
Investment management fee	(101)	(235)	(336)	(229)	(533)	(762)
Other expenses	(517)	–	(517)	(520)	–	(520)
Net return before finance costs and taxation	1,756	13,072	14,828	1,992	3,590	5,582
Finance costs
Interest payable and related charges	(51)	–	(51)	(77)	–	(77)
Net return before taxation	1,705	13,072	14,777	1,915	3,590	5,505
Taxation – overseas withholding tax	(94)	–	(94)	(270)	–	(270)
Net return after taxation	1,611	13,072	14,683	1,645	3,590	5,235
Return per ordinary share	5.3p	43.0p	48.3p	4.4p	9.7p	14.1p

All revenue and capital items in the above statement derive from continuing operations.

The total column of this statement is the profit and loss account of the Company.

The revenue and capital return columns are prepared under guidance issued by the Association of Investment Companies.

A separate Statement of Comprehensive Income has not been prepared as all gains and losses are included in the Income Statement.

BALANCE SHEET

as at 31 December 2022

	2022 £000	2021 £000
Fixed asset investments
Investments at fair value through profit or loss	69,283	83,922
Current assets
Debtors	412	493
Cash at bank and short-term deposits	36,629	32,017
	37,041	32,510
Current liabilities
Creditors	(180)	(309)
	(180)	(309)
Net current assets	36,861	32,201
Net assets	106,144	116,123
Capital and reserves
Called-up share capital	645	645
Share premium	1,597	1,597
Capital redemption reserve	14	14
Special reserve	9,760	32,961
Capital reserve	90,098	77,026
Revenue reserve	4,030	3,880
Total shareholders’ funds	106,144	116,123
Net asset value per ordinary share	363.2p	317.9p

The Financial Statements were approved by the Board of Directors on 28 March 2023 and signed on its behalf by:

Cahal Dowds

Chairman

Registered in Scotland No. 259207

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2022

Year ended 31 December 2022	Share capital £000	Share premium £000	Capital redemption reserve £000	Special reserve £000	Capital reserve £000	Revenue reserve £000	Total £000
At 31 December 2021	645	1,597	14	32,961	77,026	3,880	116,123
Net return after taxation	–	–	–	–	13,072	1,611	14,683
Dividends paid	–	–	–	–	–	(1,461)	(1,461)
Share purchases for treasury	–	–	–	(23,201)	–	–	(23,201)
At 31 December 2022	645	1,597	14	9,760	90,098	4,030	106,144

Year ended 31 December 2021	Share capital £000	Share premium £000	Capital redemption reserve £000	Special reserve £000	Capital reserve £000	Revenue reserve £000	Total £000
At 31 December 2020	645	1,597	14	38,945	73,436	4,458	119,095
Net return after taxation	–	–	–	–	3,590	1,645	5,235
Dividends paid	–	–	–	–	–	(2,223)	(2,223)
Share purchases for treasury	–	–	–	(5,984)	–	–	(5,984)
At 31 December 2021	645	1,597	14	32,961	77,026	3,880	116,123

NOTES TO THE FINANCIAL STATEMENTS

at 31 December 2022

1. Accounting policies

Statement of compliance

Global Opportunities Trust plc is a company incorporated in Scotland. The Company is registered as a public limited company and is an investment company within the terms of section 833 of the Act.

The Company’s Financial Statements have been prepared under FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and in accordance with the Act and with the Statement of Recommended Practice issued by the AIC (the “AIC SORP”). The Company meets the requirements of section 7.1A of FRS 102 and therefore has elected not to present the Statement of Cash Flows for the year ended 31 December 2022.

The comparative figures for the Financial Statements are for the year ended 31 December 2021.

Going concern

The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Company’s ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date when these financial statements were approved.

The Directors have noted that the Company, holding a portfolio consisting principally of liquid listed investments and cash balances, is able to meet the obligations of the Company as they fall due, any future funding requirements and finance future additional investments. The Company is a closed end fund, where assets are not required to be liquidated to meet day-to-day redemptions.

The Directors have completed stress tests assessing the impact of changes and scenario analysis to assist them in determination of going concern. In making this assessment, the Directors have considered plausible downside scenarios that have been financially modelled. These tests apply to any set of circumstances in which asset value and income are significantly impaired. The conclusion was that in a plausible downside scenario, the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience further reductions in income and/or market value, the opinion of the Directors is that this should not be to a level which would threaten the Company’s ability to continue as a going concern.

The Directors and other service providers have put in place contingency plans to minimise disruption. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt on the Company’s ability to continue as a going concern, having taken into account the liquidity of the Company’s investment portfolio and the Company’s financial position in respect of its cash flows and investment commitments. Therefore, the financial statements have been prepared on the going concern basis.

Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in listed companies.

Income recognition

Dividend and other investment income is included as revenue on the ex-dividend date, the date the Company’s right to receive payment is established. Dividends from overseas companies are shown gross of withholding tax. Where the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income. Any excess or shortfall compared to the cash dividend is recognised as capital. Special dividends are reviewed on an individual basis to determine whether they should be accounted for as revenue or capital. Income from private equity holdings is recognised upon notification of irrevocable income distribution by the general partner. Deposit and fixed income receivable is included on an accruals basis.

Expenses and finance costs

All management expenses and finance costs are accounted for on an accruals basis. From 1 January 2021 the Company charges 30% of management fees and finance costs related to borrowings to revenue in the Income Statement and 70% to capital in the Income Statement. All other operating expenses and finance costs are charged to revenue in the Income Statement, except costs that are incidental to the acquisition or disposal of investments, which are charged to capital in the Income Statement. Transaction costs are included within the gains and losses on investments, as disclosed in the Income Statement.

Investments

In accordance with FRS 102, Sections 11 and 12, all investments held by the Company are designated as held at fair value upon initial recognition and are measured at fair value through profit or loss in subsequent accounting periods. Investments are initially recognised at cost, being the fair value of the consideration given.

After initial recognition, investments are measured at fair value, with changes in the fair value of investments recognised in the Income Statement and allocated to capital. Realised gains and losses on investments sold are calculated as the difference between sales proceeds and cost.

For investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices at the close of business on the Balance Sheet date, without adjustment for transaction costs necessary to realise the asset. For the European Long-Short Fund, fair value is determined with reference to its daily NAV published on the London Stock Exchanges’ Electronic Trading Service (SETS). Unquoted investments are valued by the Directors at fair value, using the guidelines on valuation published by the International Private Equity and Venture Capital Association (“IPEV”).

This represents the Directors’ view of the amount for which an asset could be exchanged between knowledgeable willing parties in an arm’s length transaction.

Foreign currency

The Financial Statements have been prepared in sterling, rounded to the nearest £000, which is the functional and reporting currency of the Company. Sterling is the currency of the primary economic environment in which the Company operates.

Transactions denominated in foreign currencies are converted to sterling at the actual exchange rate as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are reported at the rate of exchange at the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the Income Statement, in the capital or the revenue column, depending on whether the gain or loss is of a capital or revenue nature.

Taxation

The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or accelerated because of timing differences between the treatment of certain items for accounting and taxation purposes. Full provision for deferred taxation is made under the liability method, without discounting, on all timing differences between taxable profits and total comprehensive income that have arisen but not been reversed by the Balance Sheet date, unless such provision is not permitted by FRS 102. Deferred tax assets are only 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 Financial Statements which are capable of reversal in one or more subsequent periods.

Cash at bank and short-term deposits

Cash at bank and short-term deposits comprise cash at bank and short-term deposits with an original maturity date of three months or less.

Short-term debtors and creditors

Debtors and creditors with no stated interest rate and receivable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the Income Statement in other operating expenses.

Dividends payable to Shareholders

Dividends payable are accounted for when they become a liability of the Company. Final dividends are recognised in the period in which they have been approved by Shareholders in a general meeting. Interim dividends are recognised in the period in which they have been declared and paid.

Own shares held in treasury

From time to time, the Company buys back shares and holds them in treasury for potential sale at a later date or for cancellation. The consideration paid and received for these shares is accounted for in Shareholders’ funds and, in accordance with the AIC SORP, the cost has been allocated to the Company’s special reserve. The cost of shares sold from treasury is calculated by taking the average cost of shares held in treasury at the time of sale. Any difference between the proceeds from shares sold from treasury and above average cost is taken to share premium.

Judgements and key sources of estimation uncertainty

The preparation of the Financial Statements requires the Company to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The areas requiring judgement and estimation in the preparation of the financial statements are: the valuation of unquoted investments; and recognising and classifying unusual or special dividends received as either revenue or capital in nature.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period if the revision affects both current and future periods.

Reserves

Share premium

The share premium account represents the accumulated premium paid for shares issued in previous periods above their nominal value less issue expenses.

This is a reserve forming part of the non-distributable reserves. The following items are taken to this reserve:

costs associated with the issue of equity; and
premium on the issue of shares.

Capital redemption reserve

The capital redemption reserve represents non-distributable reserves that arise from the purchase and cancellation of shares.

Special reserve

The Special Reserve was created by a reduction in the share premium account by order of the High Court. The costs of share buy backs, including shares acquired through the tender offer, and any related stamp duty and transaction costs, if applicable, are charged to the Special Reserve. The Special Reserve is distributable.

Capital reserve

The following are taken to the capital reserve through the capital column in the Income Statement:

Capital reserve – other, forming part of the distributable reserves:

gains and losses on the realisation of investments;
realised exchange differences of a capital nature;
70% of management fees and finance costs related to borrowings; and
expenses, together with related taxation effect, charged to this account in accordance with the above policies.

Capital reserve – investment holding gains, not distributable:

net movement arising from changes in the fair value of investments.

Revenue reserve

The revenue reserve represents the surplus of accumulated profits and is distributable.

2. Income

		2022			2021
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Income from investments
UK dividend income	522	–	522	622	802	1,424
Overseas dividend income	1,663	–	1,663	2,089	–	2,089
Fixed income	–	–	–	13	–	13
Income from investments	2,185	–	2,185	2,724	802	3,526
Total income comprises
Dividend income	2,185	–	2,185	2,711	802	3,513
Rebate income¹	68	–	68	17	–	17
Bank interest	121	–	121	–	–	–
Fixed income	–	–	–	13	–	13
	2,374	–	2,374	2,741	802	3,543

¹Rebate of management fee from managed investment fund held in the investment portfolio.

3. Management fee

		2022			2021
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Management fee	101	235	336	229	533	762
	101	235	336	229	533	762

With effect from 8 June 2022, the Company appointed Franklin Templeton Investment Management Limited (“FTIML”) as the Company’s Sub-Advisor. Under the Investment Management Agreement, the Sub-Advisor is entitled to a fee paid quarterly in arrears at the rate of 0.35% per annum of the market value of equity securities, 0.05% per annum of the market value of bonds and other debt instruments and 0.02% of the value of cash and cash equivalents. No performance fee will be paid.

In December 2021, the Company invested in the Templeton European Long-Short Equity SIF, a Luxembourg Specialised Investment Fund managed by an affiliate of the Sub-Advisor, Franklin Templeton International Services S.a r.l. (“FTIS”). The Company benefits from a management fee rebate payable by FTIS in respect of the Company’s investment in the SIF and to avoid any double charging in respect of the remaining management fees payable to FTIS, the value of the Company’s investment in the SIF is excluded from the market value of equity securities, prior to calculation of the management fees payable by the Company to the Sub-Advisor. The Company’s investment in the Volunteer Park Capital Fund SCSp is also excluded from the market value of equity securities, prior to calculation of the management fees payable by the Company to the Sub-Advisor.

Prior to the appointment of FTIML as Sub-Advisor, Franklin Templeton Investment Trust Management Limited was the Company’s AIFM and was entitled to a management fee paid monthly in arrears at the rate of 0.75% per annum of the equity market capitalisation of the Company to £100,000,000 and at a rate of 0.65% per annum of the equity market capitalisation which exceeded this amount. The equity market capitalisation was based on shares in circulation which excluded shares held in treasury. No performance fee was paid.

During the year ended 31 December 2022, the management fees payable totalled £336,000 (2021: £762,000). At 31 December 2022, there was £84,000 outstanding payable (2021: £124,000) in relation to management fees.

During the year ended 31 December 2022, the administration fees payable to the Administrator, £165,000 (2021: £144,000). At 31 December 2022, there was £14,000 outstanding payable to the Administrator (2021: £24,000) in relation to administration fees. Juniper Partners Limited succeeded Link Alternative Fund Administrators Limited as Administrator on 8 June 2022.

During the year ended 31 December 2022, the Company paid Edinburgh Partners £11,000 (2021: £25,000) for marketing-related services. At 31 December 2022, there was £nil outstanding to Edinburgh Partners (2021: £6,000) in relation to marketing-related services.

4. Dividends

	2022 £000	2021 £000
Declared and paid
Amounts recognised as distributions to Ordinary Shareholders in the year.
2021 final dividend of 5.0p per share paid on 25 May 2022 (2021: year ended 31 December 2020 final dividend of 6.0p paid on 28 May 2021).	1,461	2,223
	1,461	2,223

	2022 £000	2021 £000
Proposed
Detailed below is the proposed final dividend per share in respect of the year ended 31 December 2022, which is the basis on which the requirements of section 1159 of the Corporation Act 2010 are considered. 2022 final dividend of 5.0p per share (2021 final dividend of 5.0p per share paid on 25 May 2022).	1,461	1,461

The Directors recommend a final dividend of 5.0p per share for the year ended 31 December 2022 (2021: final dividend of 5.0p per share, paid on 25 May 2022). Subject to Shareholder approval at the Annual General Meeting to be held on 26 April 2023, the dividend will be payable on 31 May 2023 to Shareholders on the register at the close of business on 12 May 2023. The ex-dividend date will be 11 May 2023. Based on 29,222,180 shares, being the number of shares in issue (excluding shares held in treasury) at 24 March 2023, being the latest practical date prior to the publication of this report, the total dividend payment will amount to £1,461,000. The proposed dividend will be paid from the revenue reserve.

5. Return per share

		2022			2021
	Net return £000	Number of shares¹	Per share pence	Net return £000	Number of shares¹	Per share pence
Revenue return after taxation	1,611	30,383,061	5.3	1,645	37,096,274	4.4
Capital return after taxation	13,072	30,383,061	43.0	3,590	37,096,274	9.7
Total return after taxation	14,683	30,383,061	48.3	5,235	37,096,274	14.1

¹Weighted average number of ordinary shares, excluding shares held in treasury, in issue during the year.

6. Net asset value per share

The NAV, calculated in accordance with the Articles of Association, is as follows:

	2022 pence	2021 pence
Share	363.2	317.9

The NAV is based on net assets of £106,144,000 (2021: £116,123,000) and on 29,222,180 (2021: 36,527,725) shares, being the number of shares, excluding shares held in treasury, in issue at the year end.

7. Significant holdings

As at 31 December 2022, the Company owned 67.4% (2021: 67.4%) of the net assets of the Templeton European Long-Short Equity SIF, a Luxembourg Specialised Investment Fund, a sub-fund of Franklin Templeton Specialised Investment Funds, a Luxembourg investment company with variable capital – specialised investment fund. The registered office of Franklin Templeton Specialised Funds is 8A, rue Albert Borschette, L-1246 Luxembourg, Grand Duchy of Luxembourg.

As at 31 December 2022, the Company owned 25% (2021: 25%) of the net assets of the Volunteer Park Capital Fund SCSp, a Luxembourg Special Limited Partnership. The registered office of Volunteer Park Capital Fund SCSp is 412F, route d’Esch, L-1471 Luxembourg, Grand Duchy of Luxembourg.

The Company had no other holdings of 3.0% or more of the share capital of any portfolio companies.

8. Related party transactions

Under the AIC SORP, the Sub-Advisor is not considered to be a related party of the Company.

Dr Sandy Nairn is the lead Executive Director of the Company and is a substantial shareholder. The Company has invested in Volunteer Park Capital Fund SCSp (“VPC”). The Alternative Investment Fund Manager of VPC is Goodhart Partners LLP (“Goodhart”). Goodhart Partners S.a.r.l. is the general partner to VPC and is 100% owned by Goodhart. Dr Nairn is the sole controller of a company which holds a significant shareholding (25.83%) in Goodhart and will be a beneficiary of the management fees and carried interest payable to Goodhart related companies. Under the Class Tests Rules of the UK Listing Rules the transaction was a small transaction and was therefore not classified as a related party transaction requiring shareholder approval. Prior to the investment in VPC, the Directors undertook appropriate due diligence to confirm that they considered the investment to be in the best interests of shareholders.

9. Post Balance Sheet events

Management fees and ongoing costs

As previously noted in the Chairman’s Statement, Dr Nairn has been appointed as a full time executive of the Company, having resigned from his executive position with Franklin Templeton.

The Company has also entered into a strategic relationship with Goodhart through which Goodhart will introduce opportunities in the private markets to the Company. As part of this strategic relationship, Goodhart has also been appointed to provide investment sub-advisory services to the Company to assist Dr Nairn in managing the global listed equities mandate.

Following termination of the arrangements with Franklin Templeton, there will be no management fee on the funds previously managed by Franklin Templeton. In consideration for his services to the Company as a full time executive director, Dr Nairn (previously a salaried employee of Franklin Templeton) will receive a Salary of £75,000 per annum (the ‘Executive Salary’) in addition to a £25,000 annual fee (in line with the fee paid to the Company’s other directors).

Given Dr Nairn’s interests in Goodhart, it has been agreed with Dr Nairn that his Executive Salary will be reduced (such reduction equalling the entire Executive Salary if necessary) by his share (through his minority interest in Goodhart) of amounts credited in the same period in respect of (i) any carried interest on co-investments made by the Company alongside Goodhart and (ii) any partnership profit allocations attributable to Goodhart’s net profits on fees earned from the Company (including the Company’s existing investment in the Volunteer Park Capital Fund (“VPC”) and any carried interest attributable to VPC earned by Goodhart or any Goodhart-sponsored vehicle).

Goodhart will receive a 0.12 per cent. annual fee levied on the global listed equities portion of the Company’s portfolio for the provision of investment sub-advisory services. No fixed fee or base period compensation will be payable to Goodhart in respect of the wider strategic relationship, with any fees in respect of individual private market opportunities to be agreed with the Company on a case by case basis. The Company notes that the agreement of any such fee shall be subject to Board approval and that the total amount of fees payable to Goodhart in any 12 month period (including in respect of investment sub-advisory services) shall be capped at 1.0 per cent. of the Company’s net asset value.

The Company notes that these arrangements are expected to result in a reduction in costs for shareholders. Should the Company become fully invested, it is anticipated these arrangements will reduce the Company’s ongoing charges ratio from 0.9 per cent. to 0.8 per cent. (based on the Company’s net asset value as at 24 March 2023).

10. Availability of Annual Report and Financial Statements

The Annual Report and Financial Statements will shortly be available to view on the Company's website at www. globalopportunitiestrust.com. where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

A copy of the Annual Report and Financial Statements will shortly be submitted to the Financial Conduct Authority’s National Storage Mechanism and will be available for inspection at:

https://data.fca.org.uk/#/nsm/nationalstoragemechanism

For further information please contact:

Juniper Partners Limited

Company Secretary

e-mail: cosec@junipartners.com

28 March 2023

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