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EP Global Opportunities Trust Plc - Annual Financial Report

PR Newswire

London, March 14

EP GLOBAL OPPORTUNITIES TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2021

The full Annual Report and Financial Statements can be accessed via the Company’s website at www.epgot.com or by contacting the Company Secretary by telephone on 0131 270 3800.

HIGHLIGHTS

FINANCIAL SUMMARY

Past performance is not a guide to future performance.

PORTFOLIO OF INVESTMENTSas at 31 December 2021

1 Luxembourg Specialised Investment Fund

2 Luxembourg Special Limited Partnership

3 The investment is in non-voting shares

Of the ten largest portfolio investments as at 31 December 2021, the valuations at the previous year end, 31 December 2020, were Unilever £3,046,000, Tesco £3,644,000, ING £2,560,000, TotalEnergies £2,449,000, ENI £1,948,000, Orange £3,421,000, Vodafone £3,373,000 and US Treasury Inflation Protected Security 0.125% 15 July 2030 £5,414,000. Templeton European Long-Short Equity SIF and Volunteer Park Capital Fund SCSp were purchased during the year.

The figures detailed in the sector distribution table represent the Company’s exposure to those sectors.

The figures detailed in the geographical distribution table represent the Company’s exposure to these countries or regional areas.

The geographical distribution is based on each investment’s principal stock exchange listing or domicile, except in instances where this would not give a proper indication of where its activities predominate.

CHAIRMAN’S STATEMENT

Introduction

This is my first Annual Report as Chairman of the Company and I would like to start by saying how delighted I am to have taken on the role of Chairman during what has proven to be a period of significant change for the Company. In collaboration with my fellow Directors, one of the first tasks of my tenure has been to undertake a strategic review of the future direction of the Company, the outcome of which was announced to Shareholders in October 2021 and is further discussed later in this Chairman’s Statement. My fellow Directors and I believe that the strategic decisions we have taken will be of positive benefit to Shareholders and we look forward to implementing the changes proposed and embarking on the next phase of the Company’s journey.

Results

At 31 December 2021, our NAV was 317.9p, an increase of 3.1% in the year. With dividends re-invested, this resulted in a total return of 5.1% for the year.

The share price at the end of the year was 291.0p, an increase of 2.5% from the share price at the end of 2020 of 284.0p. With dividends re-invested, this resulted in a total return of 4.6% for the year. At 31 December 2021, the share price stood at a discount of 8.5% to the NAV, which compared to 7.9% at the prior year end.

As detailed below, there was a reduction in revenue per share in the year under review. As a result, your Board recommends a final dividend of 5.0p per share.

Since the launch of the Company on 15 December 2003 up to the end of 2021 the Company achieved a 7.7% annualised share price total return. The annualised UK Retail Price Inflation rate was 3.1% over the same period.

Stock market review and investment performance

Global equity markets were dominated by two themes in 2021, the first being the gradual acceptance that current high inflation rates may no longer be considered transitory and the second being the fluctuating impact of COVID-19 on economies and societies. Policy makers are responding to inflationary pressures by raising interest rates, the Bank of England becoming the first major central bank to do so by raising interest rates in December 2021 and subsequently in February 2022, with other policy makers expected to follow throughout 2022. This monetary tightening will have a divergent impact on different areas of the equity market. Bank earnings will improve as revenues rise while investors may reconsider the high valuation multiples of certain sectors such as Information Technology. With respect to the fluctuating impact of COVID-19, the year ended with the emergence of the Omicron variant and a renewed surge in global infections. Following a short period of volatility, markets ended the year with less concern regarding COVID-19 amid signs that the latest variant may mark the beginning of the shift of COVID-19 from pandemic to endemic.

Our Investment Manager started the year with a very cautious investment stance and became even more cautious as the year progressed. In the year under review cash balances increased from 13.0% to 27.7% of net assets. This cautious investment strategy suppressed returns. Geographically the most significant changes were the reduction in Asia Pacific ex Japan exposure from 15.0% of net assets to 4.3% and Japanese exposure from 22.3% to 12.8%. This was offset by an increase in the Company’s Europe ex UK exposure from 23.4% to 35.0%, which included the investment in the Templeton European Long-Short Equity SIF, which at 7.6% of net assets is now the Company’s largest investment. Following Shareholder approval of the change in the Company’s investment objective and investment policy, as detailed below, the Company also made a capital commitment to the Volunteer Park Capital Fund SCSp. a Luxembourg Special Limited Partnership, investing in boutique investment management companies. These investments exemplify the desire to access a broader range of asset classes, including private markets. It increased the exposure to the Financials sector from 8.6% to 19.5%, while in contrast the Information Technology exposure reduced from 13.5% to 2.2%, following the disposal of several stocks including Samsung Electronics, Taiwan Semiconductor ADR and Murata Manufacturing. The Investment Manager’s Report below contains detailed commentary on the portfolio and performance for the period.

Revenue account and dividend

The revenue per share for the year ended 31 December 2021 was 4.4p, which compared to the prior year figure of 4.9p. The principal reason for the reduction was due to the increased level of cash balances held following share disposals which were not reinvested and either earned very little interest on deposit or in some instances incurred a negative return.

The reduction in the revenue per share occurred despite the change in the allocation of the management fee and finance costs relating to borrowings from 1 January 2021, with 70% of these costs now charged to capital. This change, which was detailed in last year’s Annual Report was made to reflect more accurately the past and expected future returns from capital and income. For the year ended 31 December 2021 the change in allocation boosted the revenue return per share by 1.4p per share.

The Board therefore recommends a final dividend of 5.0p per share, subject to Shareholders’ approval at the Annual General Meeting to be held on 27 April 2022.

As has been stated in previous years’ annual and half-yearly reports, the level of revenue generated from the portfolio will vary from year to year. As a result, any dividend paid to Shareholders is likely to fluctuate from year to year. Our Investment Manager’s investment philosophy is long-term and focused on absolute valuation. It aims to identify and invest in undervalued asset classes, which may at times result in a focus on shares with lower dividend yields or in cash and bonds which generate a low return. Shareholders should note that the change in investment policy could potentially result in a further reduction in revenue from the portfolio, which it is anticipated will be more than offset by future capital gains.

Strategic Review

During the period, the Directors took the opportunity to discuss the positioning and outlook for the Company’s portfolio in detail with the Investment Manager. The newly constituted Board considered the strategic direction of the Company with the primary focus of what we considered to be in best interests of Shareholders. As Chairman of the Company, I consulted with several Shareholders and Shareholder feedback was taken into consideration by the Board as part of the strategic review. The Board met on several occasions to progress the strategic review. Details of the results of the strategic review are summarised in the sections below relating to management arrangements, investment objective and investment policy, tender offer and shares held in treasury and discount policy.

Management arrangements

As part of its strategic review, the Board considered the Company’s management arrangements and, as announced by the Company on 25 October 2021, the Board intends to change the Company’s management arrangements by becoming a self-managed investment trust. The Board will assume overall control over the Company’s investment policy and will have overall responsibility for the Company’s activities. It is proposed that the Company’s present portfolio manager, Dr Sandy Nairn will stand for election as a Director at the Annual General Meeting to be held on 27 April 2022 and will become a executive Director of the Company and will have day to day responsibility for investment management of the Company.

The Company entered into heads of terms with the Company’s AIFM, Franklin Templeton Investment Trust Management Limited (previously named, until 6 July 2021, Edinburgh Partners AIFM Limited) and Dr Nairn in respect of the new management arrangements. The arrangements are subject to finalisation of full legal documentation. Under the heads of terms, it has been agreed that Dr Nairn will continue to work for the Franklin Templeton group and as part of the new arrangements he will be responsible for a new sub-advisory arrangement which the Company will enter into with Franklin Templeton Investment Management Limited (“FTIML”). It is expected that the sub-advisory arrangement will initially be for 70% of the Company’s portfolio.

The change in management structure is subject to the Company being approved by the Financial Conduct Authority (“FCA”) as a small registered alternative investment fund manager. An application for registration has been submitted to the FCA and it is hoped that approval will be received in the next few months. Once the Company has been approved to act as its own AIFM, the current arrangement with the AIFM and Investment Manager will cease and the new sub-advisory agreement with FTIML will be entered into. As part of the interim arrangements to facilitate this change the Board has agreed that the Company’s investment management responsibilities be transferred from Edinburgh Partners Limited to Franklin Templeton Investment Management Limited in the second calendar quarter of 2022. When the Company becomes a self-managed investment trust new administration arrangements will be put in place. The Company will also, by resolution of the Board, change its name to Global Opportunities Trust plc.

Investment objective and investment policy

As part of its strategic review, the Board undertook a review of the Company’s objective and investment policy. Following approval by the FCA and subsequently by Shareholders in general meeting, the Company adopted a new investment objective and investment policy on and with effect from 17 December 2021.

The investment objective of providing Shareholders with an attractive real long-term total return by investing globally in undervalued securities was extended by enabling investment also in other financial assets. The investment policy was also amended to permit investment in a diversified portfolio of equity and equity-linked securities (both listed and unquoted), investments in other investment companies and funds which provide exposure to a wide range of financial asset classes and to allocate a portion of portfolio assets to be managed by one or more specialist investment sub-advisors. A comparison of both the previous and new investment objective and investment policy are detailed in the full Annual Report and Financial Statements. 

The new investment objective and investment policy provide the Company with the flexibility to seek out value across asset classes to accommodate a wider range of investments. In particular, the Board and the Investment Manager believe that there are profitable opportunities available in private capital investments. Following the change of investment objective and investment policy, the Company can now take advantage of suitable investment opportunities in private markets and, as a long-term capital vehicle with a closed ended structure, is ideally placed to do so.

The private capital opportunities would primarily be accessed through delegation to specialist third party managers, including through investments in investment funds, but it is expected that co-investment opportunities for direct investment may also be available. For these reasons it was considered important that some of the existing constraints on the Company’s investment objective and investment policy be lifted and allow the Company to invest up to 30% of its total assets in private investments. It is believed this strikes the correct balance between liquidity and opportunity and will allow the Company to adapt to the current investment conditions which are very different from those at launch.

The Board believes that the Company’s new investment objective and investment policy make the Company an attractive vehicle for a wider range of potential investors. In particular, the Company’s ability to invest in private markets will give individual investors, through a pooled investment, the opportunity to access the types of investments which tend to be reserved for institutional investors.

Tender offer

The Board was of the view that most Shareholders would wish to maintain their investments in the Company, but recognised that some may wish to realise part, or potentially all, of their shareholding. In order that such Shareholders had the opportunity to do so the Company put forward a tender offer for approval by Shareholders and this was approved by Shareholders on 17 December 2021, when the change to the investment objective and investment policy were also obtained.

A circular relating to the tender offer was issued to Shareholders on 26 January 2022 with details of the tender offer proposing to buy back up to 20% of the Company’s shares in circulation as at 24 February 2022. Following completion of the tender offer, the Company has bought back 7,305,545 shares into treasury at a 2% discount to NAV, with the total cost being £23,231,000. The Board is satisfied that, following the tender offer, the Company remains an attractive size with sufficient liquidity.

Shares held in treasury and discount policy

The Company continued to buy back shares and during the year, the Company purchased 2,095,000 shares at a total cost of £5,984,000. This represents 5.4% of the shares in circulation at the start of the year. Shares that have been bought back under the Company's buy back policy are retained by the Company as treasury shares rather than being cancelled, with the intention of re-issuing them when demand warrants doing so.

Following the change of investment policy, gaining new investors will be an important component in ongoing share price discount control, which cannot solely rely on share buybacks. 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. As detailed in the Circular to Shareholders, relating to the change of investment objective and investment policy and tender offer issued on 25 November 2021, the Company’s share buyback policy will no longer aim to keep the share price at close to NAV.

At the most recent Annual General Meeting of the Company, which was held on 21 April 2021, Shareholders passed a resolution permitting the Company to sell shares held in treasury at a weighted average discount of not more than 2.0% to the prevailing NAV and providing that any sale of treasury shares would not result in a dilution greater than 0.2% in aggregate in the period between annual general meetings. While no shares were sold from treasury during the year under review, the Board is recommending that Shareholders approve a similar resolution at this year’s Annual General Meeting. The Board believes that having the ability to sell shares from treasury at a small discount should help improve the liquidity in the Company’s shares when demand for our shares is once again sufficient for sales to be made.

The Board

There were a number of changes to the Board during the period. David Hough retired as a Director of the Company on 3 March 2021, having served on the Board since the launch of the Company in 2003. As noted in the 2020 Annual Report and 2021 Half-Yearly Report the Board acknowledged his wise counsel and commitment to the Company. His understanding of the investment trust market and in-depth knowledge of the wealth management industry had been of great benefit to the Board and Shareholders.

Teddy Tulloch, who had been Chairman of the Company, also since its launch, retired on 9 June 2021. On behalf of Shareholders and themselves, the Directors wish to thank Teddy Tulloch for his outstanding contribution and commitment to the Company. His many years of investment experience and understanding of investment trusts have been of immense value to the Board which has greatly valued his input and advice. I would also like to take this further opportunity to thank him for his advice and for passing on the benefit of his experience to me in taking on the role of Chairman of the Company.

I was appointed a Director on 18 May 2021 and became Chairman on 9 June 2021. Hazel Cameron was also appointed as a Director on 18 May 2021. The biographies of all four current Directors are detailed in the full Annual Report and Financial Statements.

Tom Walker has informed the Board that he will not be standing for re-election at the Annual General Meeting on 27 April 2022. Consequently, he will cease to be a Director immediately after the conclusion of that meeting. Tom Walker’s investment expertise and his experience within the investment trust industry has been of significant value to the Board and we have benefitted from his input during the time he has served as a Director of the Company.

As previously stated in the Chairman’s Statement above, Dr Sandy Nairn will become an executive Director of the Company and will have day to day responsibility for investment management of the Company. Accordingly, Dr Sandy Nairn will stand for election as a Director of the Company at the Annual General Meeting on 27 April 2022. His biography is detailed in the full Annual Report and Financial Statements.

Annual General Meeting

At the Annual General Meeting of the Company held on 21 April 2021 two resolutions were passed with a majority of less than 80% of the votes cast. In accordance with the provisions of the AIC Code of Corporate Governance, the Board was required to consult and engage with the relevant Shareholders to understand and discuss their concerns with respect to these resolutions. Details of the action taken are contained within the Directors’ Report in the full Annual Report and Financial Statements.

After two years in which Shareholders were unable to attend the Annual General Meeting owing to COVID-19 restrictions, this year’s Annual General Meeting has been scheduled be held at 12.00 noon at The Bonham Hotel, 35 Drumsheugh Gardens, Edinburgh EH3 7RN on Wednesday, 27 April 2022. The Board looks forward to meeting Shareholders who are able to attend. In the event that public health measures and government regulations prevent the meeting being held or restrict Shareholders attending any changes will be published on the Company’s website at www.epgot.com.

Outlook

Our Investment Manager continues to believe that equity markets remain fully valued, which is why cash balances increased throughout 2021. It continues to remain concerned that the COVID-19 economic rebound will not be sustained and that this will expose valuations. We have already seen signs of this occurring in the early months of 2022. The recent events in Ukraine, which will have a significant long-term human, political and economic impact, has caused further weakness in equity markets. There has been a substantial increase in inflation worldwide, initially from supply bottlenecks in 2021 and more recently from rising energy costs. Another potential concern for equity market valuations is the expectation that central banks will start to reduce market support and raise interest rates, the latter due in part to the recent substantial increase in inflation.

The portfolio continues to be defensively positioned with over one third of the Company’s assets invested in cash and fixed income securities at the year end, similar to the position at the half-year end. While this suppressed returns in 2021, the defensive stance has had a beneficial impact in the early part of 2022. The Investment Manager will reduce cash balances when investment opportunities arise.

The Company is currently going through a period of significant change. The process has already started with the change of investment objective and investment policy and the tender offer. Further changes are expected in the next few months with the Company becoming a self-managed investment trust. The Board considers that the various changes are in the best interests of all Shareholders and looks forward to the future with confidence as the Company embarks on a new era of its development.

Cahal Dowds

Chairman

 11 March 2022

Past performance is not a guide to future performance.

INVESTMENT MANAGER’S REPORT

In the Investment Manager’s report for 2020 we highlighted the incongruity of a world where valuations continued to expand against a backdrop of ever more fiscal and monetary stimulus. It was understandable that the response to new variants of COVID-19 and the associated economic dangers would be an extension of the policies of cheap money and further increases in government spending. One might think that is less understandable that markets would react to this in such a positive manner given the context of near record valuations and ever accumulating debt. However, such has been the duration of the support operation, markets simply now assume that the authorities have permanently removed the downside and will always ride to their support. This is not a view easily sustained by history. On the other hand, it is supported by the post Global Financial Crisis (“GFC”) experience which seems to be what markets have been assuming. However, we have now reached a position where the position is extremely precarious.

When the Company was first launched the investment policy was deliberately crafted to provide sufficient flexibility to contend with the periodic episodes where market sentiment had run too far ahead of reality creating significant pockets of over-valuation. This flexibility allowed the Company to navigate the GFC period. However, what we now face is unprecedented in terms of the breadth of asset classes displaying historic high levels of valuation. That there is a lack of concern for risk in asset markets is also amply displayed by price moves in areas such as non-fungible tokens and crypto currencies. The term which has been coined to describe all of this is the ‘Everything Bubble’, which seems entirely appropriate. Against this backdrop the existing investment flexibility would not have allowed the investment actions we felt necessary to protect capital and prepare the portfolio for what is coming. For this reason, the Company sought changes to the investment objective and investment policy. These were approved by Shareholders and the current portfolio reflects some of the benefits of these changes. These will be considered after a brief review of the investment outcome for calendar year 2021.

The Company has no stated benchmark which was a deliberate decision at inception to try to avoid the potential tyranny of constant comparisons to an index and the associated dangers of having investments unduly influenced by their importance or otherwise to index composition. Nevertheless, we have always included reference to the FTSE All-World Index for information purposes. During 2021 this index achieved a total return of 20.0% largely driven by a relatively narrow range of US technology stocks although there was a continued rise in stocks generally, if in a more subdued manner. Against this backdrop the Company had a net asset value return of 5.1% in the same period.

The positive contributors to returns came from a range of companies with the largest being Shanghai Fosun Pharmaceutical which rose sharply on various rumours of combinations with other pharmaceutical providers. Although we remained comfortable with the original underlying investment thesis, such was the level of share price advance that we sold the holding. Two other holdings that performed well and were sold were Antofagasta and Nokia. Antofagasta is a high-quality copper producer where future supply-demand characteristics are supportive for a company with low-cost production. However, such was the enthusiasm in the market for copper that the share price rose to a level where much of this positive outlook was discounted and the shares were sold. Should this enthusiasm wane then it is likely we would seek to reinvest. Nokia was a slightly different investment proposition having worked its way through difficulties in network product development and its share price had recovered accordingly. The other area where we saw good returns was in energy where the holdings of ENI and TotalEnergies which had been added when the market was unduly pessimistic on oil prices reacted to supply shortages and rising crude prices. On the negative side two of the worst performers were Fresenius Medical Care and Ubisoft Entertainment. In both cases we remain confident on the outlook and have maintained the positions.

There are two other holdings worth mentioning since they both fall into the category of being somewhat different from what the Company has invested in before, and with the second investment mentioned below becoming possible as a result of the changes in investment objective and investment policy. The first of the two is the Templeton European Long-Short Equity SIF. This fund invests in stocks on a traditional valuation basis but offsets this by taking short positions in companies where it is believed that there are fundamental issues in the underlying business model. In extended rising markets these flaws can often be ignored but when a more critical appraisal returns the results can be swift and damaging. Since we believe that the market will shift from ignoring risk to becoming much more attentive such a fund has the ability to rise even against the backdrop of serious negative equity market returns. The other investment worth noting is the Volunteer Park Capital Fund SCSp. This fund invests in established general partners of private capital funds focussing on high quality businesses able to provide strong collateral. The collateral element is important given the previous comments about excessive valuations in assets generally. The opportunity exists because the fund focusses on the small to low-mid segment of the market where other potential funders are put off by the level of due diligence required relative to the potential investment that can be made. This investment was made just prior to the end of the year before the fund closed on our assessment that the fund’s existing investment portfolio gave a high degree of confidence about the future returns. These two holdings are expected to provide strong diversification to the portfolio with reasonable prospects of achieving positive returns even against the backdrop of significant declines in asset markets generally. The Company also held US Treasury Inflation Protected Securities (TIPS) in anticipation of a rising inflation trend. These positions were reduced prior to the year end and exited fully post year end. These sales were not prompted by confidence on the inflation outlook, but rather the potential returns given the lack of an embedded positive real interest rate. The changes to the portfolio, in particular the addition of the Templeton European Long-Short Equity SIF and the Volunteer Park Capital Fund SCSp provided a potentially superior offset.

Given the concerns over asset valuations the Company retained a high cash balance. Whilst this can be an uncomfortable position it is important to retain the ability to invest in new opportunities that market turmoil might present.

Looking to the future we can see sentiment beginning to change and valuations being more closely scrutinised. It is early in this process but, with inflation now impossible to ignore, attention is turning to the sustainability of the central bank ‘put’ which has underpinned liquidity and hence asset prices. These liquidity injections eventually will turn into withdrawals and this will focus minds on the debt overhang. A rising interest rate environment will compound this and simultaneously change market dynamics. The new investment policy allows us to try to ensure that the portfolio is both protected as much as possible in this new environment and has the ability to react and take advantage of the opportunities that will emerge. In general, our view was that even a small disruption could be sufficient to expose the fragility of market levels. However, as the world is now painfully aware geo-political events have lurched into very dangerous territory. Whatever the resolution in the Ukraine from the terrible events that are now unfolding, there is little doubt that inflation will remain higher for longer, growth will be slower and government debt pressures will become even more acute. Asset markets have begun to react but this reaction is only in the early stages and is likely to be punctuated by periodic rallies. We are in the fortunate position of being able to wait to take advantage of asset price declines. The key to optimising returns will be retaining the patience and resolve to wait until genuine bargains emerge at which time the portfolio can return to a more fully invested position.

Dr Sandy Nairn

Edinburgh Partners

11 March 2022

Past performance is not a guide to future performance.

OTHER STATUTORY INFORMATION

Principal activity and status of the Company

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

The Company is registered as a public limited company and is an investment company within the terms of section 833 of the Companies Act 2006 (the "Act"). 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 (the “CTA“), subject to there being no subsequent serious breaches of the regulations. In the opinion of the Directors, the Company is directing its affairs so as to enable it to continue to qualify for such approval.

The Company's shares are listed on the premium segment of the Official List of the Financial Conduct Authority (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 also develops best practice for its members.

Purpose, business model and strategy

The Board is responsible for the overall management of the Company, and in accordance with the AIC Code, the Board establishes the Company’s purpose, values and strategy, and to report to Shareholders on the detail of how this is achieved.

As an investment company, the Company’s purpose is expressed in its investment objective, which is to provide Shareholders with an attractive real long-term total return by investing globally in undervalued asset classes. As a closed-ended investment company whose shares are traded on the main market of the London Stock Exchange, the Company can pursue its investment objective by taking long-term investment decisions without being constrained by the need to sell investments to meet redemptions, as other investment funds such as open-ended investment companies may need to do. The strategy applied by the Company in this context is contained in the Company’s investment policy, as set out in the full Annual Report and Financial Statements.

In order to achieve its investment objective, the Board has decided it will continuously evaluate the appropriateness of appointing third party providers with the necessary capability and established track records to deliver the required service requirements to the Company. The AIFM and the Investment Manager have the responsibility of investing and managing the assets of the Company in accordance with the investment objective and for managing its activities on a daily basis. The Company also appoints the Depositary to have responsibility for the safekeeping and monitoring of its assets and the Registrar to maintain Shareholder records.

The Board retains responsibility for decisions regarding corporate strategy, corporate governance, risk and internal control assessment, reviewing the appropriateness of appointing and selecting service providers and determining the overall limits under which the AIFM, the Investment Manager and other service providers operate. To ensure that the Company’s service providers continue to deliver the required level of service, the Board receives regular reports, evaluates their control environments and formally assesses their appointment on an annual basis.

The Board maintains a close working relationship with all of its current service providers, in particular with the AIFM and Investment Manager, and monitors their performance closely. Further details of the current service providers and of how their activities are monitored is detailed in the Corporate Governance Statement in the full Annual Report and Financial Statements.

Investment objective

The investment objective of the Company is set out in the full Annual Report and Financial Statements.

Investment policy

The Company’s investment policy is set out in the full Annual Report and Financial Statements.

The Investment Manager's compliance with the limits set out in the investment policy is monitored by the Board and the AIFM.

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 Investment Manager. The Investment Manager’s approach is long-term and focused on absolute valuation. It 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. Further details of the investment strategy can be found in the Chairman’s Statement and the Investment Manager’s Report above.

Portfolio analysis

A detailed review of how the Company’s assets have been invested is contained in the Chairman's Statement and the Investment Manager’s Report above. A list of all the Company’s investments is contained in the Portfolio of Investments above. The portfolio consisted of 32 investments, excluding cash and other net assets as at 31 December 2021, thus ensuring that the Company has a suitable spread of investment risk. A sector and geographical distribution of investments is shown above.

Directors’ duties and stakeholder engagement

Section 172 of the Act requires a director to act in a way that he considers, in good faith, would be most likely to promote the success of a company. In doing so, Directors must take into consideration the interests of the various stakeholders of the Company, the impact of the Company’s operations on the community and the environment, take a long-term view on the consequences of the decisions they make as well as maintaining a reputation for high standards of business conduct and fair treatment between the members of the Company.

In complying with the requirements of section 172 of the Act, the Directors should be able to ensure that all decisions are made in a responsible and sustainable way for the benefit of all stakeholders. In accordance with the requirements of the Companies (Miscellaneous Reporting) Regulations 2018, the Company explains below how the Directors have discharged their duty under section 172 of the Act. This section serves as the Company’s section 172 Statement.

A company’s stakeholders are normally considered to comprise Shareholders, employees, customers and suppliers as well as the wider community in which the company operates and impacts. The Company is unlike a trading company in that as an investment trust it has no employees and, significantly, its customers are synonymous with its Shareholders. In terms of suppliers, the Company receives professional services from a number of different providers, principal among them being the AIFM and the Investment Manager. The Board believes the wider community in which the Company operates encompasses its portfolio of investee companies and the communities in which they operate.

Details of how the Board seeks to understand the needs and priorities of the Company’s stakeholders and how these are taken into account during all its discussions and as part of its decision-making are set out below:

Shareholders

Communication and regular engagement with Shareholders is given a high priority by both the Board and the AIFM and the Investment Manager. The Directors seek to maintain regular contact with major Shareholders and are always available to enter into dialogue with all Shareholders. A regular dialogue is maintained with the Company’s institutional Shareholders and private client asset managers through the Investment Manager, which regularly report to the Board on significant contact, the views of Shareholders and any changes to the composition of the share register. Following the COVID-19 pandemic meetings with institutional shareholders and private client asset managers have been conducted by electronic means.

All Shareholders are encouraged, if possible, to attend and vote at the Annual General Meeting and at any general meetings of the Company, during which the Board and the Investment Manager are available to discuss issues affecting the Company. Shareholders wishing to communicate directly with the Board should contact the Company Secretary at the registered office address. 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 and quarterly investment commentaries, for downloading from the Company’s website at www.epgot.com. The Company also releases portfolio updates to the market on a monthly basis.

AIFM and Investment Manager

The Board believes that maintaining a close and constructive working relationship with the AIFM and the Investment Manager 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 and society at large are properly taken into account when decisions are made. Representatives of the AIFM and the Investment Manager attend Board meetings and provide reports on investments, performance, marketing, operational and administrative matters. An open discussion regarding such matters is encouraged, both at Board meetings and by way of ongoing communication between the Board, the AIFM and the Investment Manager. Board members are encouraged to share their knowledge and experience with the AIFM and the Investment Manager and where appropriate, the Board adopts a tone of constructive challenge in its discussions with the AIFM and the Investment Manager. The Board keeps the ongoing performance of the AIFM and the Investment Manager under continual review and conducts an annual appraisal of both the parties. Details regarding the continuing appointment of the AIFM are set out below. This review includes the performance of an administrator, Link Alternative Fund Administrators Limited (the "Administrator") whose services are provided under contract to the AIFM, rather than directly to the Company.

Other service providers

The Company’s day-to-day operational functions are delegated to a number of third-party service providers, each engaged under separate contracts. In addition to the AIFM and the Investment Manager, the Company’s principal service providers include the Depositary, the Registrar and the Auditor. The Company, through the AIFM, engages with the 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 the third-party service providers.

Portfolio of investee companies

The day-to-day management of the Company’s investment portfolio has been delegated by the AIFM to the Investment Manager. As such, the Investment Manager has primary responsibility for engaging with investee companies on behalf of the Company. The Investment Manager does so in accordance with the United Nations Principles for Responsible Investment, and the UK Stewardship Code, and is a signatory to both regimes. The Investment Manager’s approach to engagement in this context is detailed in its Engagement Policy Statement and a Proxy Voting Policy. Copies of the Investment Manager’s Engagement Policy and Proxy Voting Policy can be found on its website at www.edinburghpartners.com, together with a summary of all votes cast by the Investment Manager as proxy on behalf of its clients. Further details regarding the approach to ESG matters are set out below. In 2019, the FRC published a new version of the code, the UK Stewardship Code 2020. The Investment Manager is a signatory of the the UK Stewardship Code 2020 published by the FRC. A copy of its stewardship report is available at www.edinburghpartners.com.

The Board recognises the importance of engagement with investee companies, both in the context of ESG matters and more generally. The Board is aware of evolving expectations in this regard and is committed to working with the Investment Manager 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.

In addition to the above, certain key decisions taken by the Board during the year also serve as examples of how the needs and priorities of the Company’s stakeholders are taken into account by the Board as part of its decision-making process. Key decisions made during the year include:

Additional details of the above changes are contained within the Chairman's Statement above.

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, he 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 AIFM, the Investment Manager and the Company’s other service providers. As detailed in the Corporate Governance Statement in the full Annual Report and Financial Statements, 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 Investment Manager, particular attention is paid to the Investment Manager’s environmental, social and governance, engagement and proxy voting policies. Additional information on the Board’s approach to environmental, social and governance matters is detailed below.

Results and dividends

The results for the year are set out in the Income Statement and in the Statement of Changes in Equity below.

For the year ended 31 December 2021, the net revenue return attributable to Shareholders was £1.6 million (2020: £1.9 million) and the net capital return attributable to Shareholders was £3.6 million (2020: -£4.8 million). Total Shareholders’ funds, after taking account of those returns, the dividend payment relating to the prior year of £2.2 million, and share buybacks of £6.0 million, decreased by 2.5% to £116.1 million (2020: £119.1 million).

A final dividend of 5.0p per share for the year ended 31 December 2021 (2020: a final dividend of 6.0p per share) has been recommended by the Board. Subject to the approval of Shareholders at the Annual General Meeting to be held on 27 April 2022, the final dividend will be payable on 25 May 2022 to Shareholders on the register at the close of business on 6 May 2022. The ex-dividend date will be 5 May 2022.

Key performance indicators

At each Board meeting, the Directors consider a number of performance measures to assess how the Company is achieving its investment objective. The key performance indicators used to measure the progress and performance of the Company over time are established industry measures and are as follows:

Net asset value

In the year to 31 December 2021, the NAV increased by 3.1% from 308.4p to 317.9p. After taking account of the 6.0p per share final dividend paid on 28 May 2021 relating to the year ended 31 December 2020, the NAV total return was 5.1% (2020: -1.3%). The UK Retail Price Inflation rate was 7.5% (2020: 1.2%) over the same period.

The annualised NAV total return since the launch of the Company on 15 December 2003 to 31 December 2021 was 8.4%. The annualised UK Retail Price Inflation rate was 3.1% over the same period.

Share price

In the year to 31 December 2021, the Company’s share price increased by 2.5% from 284.0p to 291.0p. After taking account of the 6.0p per share final dividend paid on 28 May 2021 relating to the year ended 31 December 2020, the share price total return was 4.6% (2020: -5.6%). The UK Retail Price Inflation rate was 7.5% (2020: 1.2%) over the same period.

The annualised share price total return since the launch of the Company on 15 December 2003 to 31 December 2021 was 7.7%. The annualised UK Retail Price Inflation rate was 3.1% over the same period.

For information, in the year to 31 December 2021, the total return from the FTSE All-World Index, adjusted to sterling, was 20.0% (2020: 13.0%). Since the launch of the Company on 15 December 2003 to 31 December 2021, the annualised total return on the FTSE All-World Index, adjusted to sterling, was 10.9%.

Share price discount to NAV

In the year to 31 December 2021, the share price discount to NAV increased from 7.9% to 8.5%.

Revenue return per share

In the year to 31 December 2021, the revenue per share decreased by 10.2% from 4.9p to 4.4p.

Dividends per share

The Directors are recommending a final dividend of 5.0p per share. This compares to the prior year final dividend of 6.0p per share.

Subject to approval by Shareholders at the Annual General Meeting to be held on 27 April 2022, the final dividend will be payable on 25 May 2022 to all Shareholders on the register at the close of business on 6 May 2022. The ex-dividend date will be 5 May 2022.

Ongoing charges

In the year to 31 December 2021, the ongoing charges ratio was 1.1% (2020: 1.0%). The ongoing charges ratio is based on total expenses, excluding finance costs and certain non-recurring items for the year as a percentage of the monthly net asset value. The ongoing charges ratio includes look-through costs of 0.1% relating to the two funds in which the Company is invested, the Templeton European Long-Short Equity SIF, representing 7.6% of net assets, and the Volunteer Park Capital Fund SCSp, representing 4.7% of net assets, representing a total of 12.3% of net assets.

The longer-term records of the key performance indicators are shown in the Performance Record below.

Management Agreement

In order to comply with the Alternative Investment Fund Managers’ Directive (“AIFMD”), the Company appointed Edinburgh Partners AIFM Limited as its Alternative Investment Fund Manager with effect from 16 July 2014. Edinburgh Partners AIFM Limited changed its name to Franklin Templeton Investment Trust Management Limited with effect from 6 July 2021. Franklin Templeton Investment Trust Management Limited has been approved as an Alternative Investment Fund Manager by the FCA. With the approval of the Directors, the AIFM appointed Edinburgh Partners as Investment Manager to the Company pursuant to a delegation agreement.

The AIFM receives a management fee of 0.75% per annum (payable monthly in arrears) of the month-end market capitalisation of the issued shares (excluding treasury shares) up to £100 million and 0.65% above £100 million. No performance fee is payable. The AIFM receives an administration and secretarial fee of £142,000 per annum (payable monthly in arrears), which is adjusted annually in line with changes in the Retail Price Index. The Company also pays the Investment Manager £25,000 per annum in respect of marketing-related services.

The Company has served protective notice to terminate the Management Agreement on 1 May 2022 or such other date as may be agreed between the Company and the AIFM. No additional compensation is payable to the AIFM on the termination of this agreement other than the fees payable during the notice period. Further details relating to the Management Agreement are detailed in note 3 of the Financial Statements below.

Following the review of the strategic direction of the Company, it is intended to change the Company’s management arrangements by becoming a self-managed investment trust. The Board will assume overall control of the Company’s investment policy and have overall responsibility for the Company’s activities. It is proposed that the Company’s present portfolio manager, Dr Sandy Nairn, will stand for election as a Director at the Annual General Meeting to be held on 27 April 2022 and will become an executive Director of the Company and will have day-to-day responsibility for investment management of the Company.

The change in management structure is subject to the Company being approved by the FCA as a small registered alternative investment fund manager. This is expected to occur in the second calendar quarter of 2022. Once the Company has been approved to act as its own alternative investment fund manager, the current arrangements with the existing AIFM and Investment Manager will cease and the sub-advisory investment management agreement with the Franklin Templeton group will be entered into. As part of the interim arrangements to facilitate this change the Board has agreed that the Company’s investment management responsibilities be transferred from Edinburgh Partners Limited to Franklin Templeton Investment Management Limited in the second calendar quarter of 2022. When the Company becomes a self-managed investment trust, new administration arrangements will be put in place. The Company will also, by resolution of the Board, change its name to Global Opportunities Trust plc.

Continuing appointment of the AIFM

The Board keeps the performance of the AIFM under continual review. As the AIFM has delegated the investment management function, the performance of the Investment Manager is also regularly reviewed. The Investment Manager adopts a consistent, long-term approach to investing which is focused on company valuations. This results in a high conviction approach, with a concentrated portfolio and low turnover. The Board, through delegation to the Audit and Management Engagement Committee, has considered the performance of the AIFM and the terms of its engagement. It is the opinion of the Directors that the continuing appointment of the AIFM on the terms agreed is in the interests of Shareholders as a whole, until the Company becomes a self-managed investment trust at which time the appointment of the AIFM will cease. The reasons are that the long-term real return has been satisfactory and the investment strategy remains convincing. The remuneration of the AIFM is fair both in absolute terms and compared to that of managers of comparable investment companies. The Directors believe that by paying the management fee calculated on a market capitalisation basis, rather than a percentage of assets basis, the interests of the AIFM are more closely aligned with those of Shareholders.

AIFM remuneration disclosures

Details of the Remuneration Policy of the AIFM and amounts attributable to the Company are available to Shareholders upon request at the registered office of the Company.

Risk management by the AIFM

As required under the AIFMD, the AIFM has established and maintains a permanent and independent risk management function to ensure that there is a comprehensive and effective risk management policy in place and to monitor compliance with risk limits. This risk policy covers the risks associated with the management of the investment portfolio and the AIFM reviews and approves the adequacy and effectiveness of the policy on at least an annual basis, including the risk management processes and controls and limits for each risk area.

The AIFM sets risk limits that take into account the risk profile of the Company’s investment portfolio, as well as its investment objective and strategy. The AIFM monitors the risk limits, including leverage, and periodically assesses the portfolio’s sensitivity to key risks.

Leverage

Leverage is defined in the AIFMD as any method by which the Company increases its exposure, whether through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means. The Company did not have any borrowings and did not use derivative instruments for currency hedging during the year ended 31 December 2021. The Company has an investment in the Templeton European Long-Short Equity SIF which uses derivatives.

In accordance with the detailed requirements of the AIFMD, leverage has been measured in terms of the Company’s exposure, and is expressed as a ratio of net asset value. The AIFMD requires this ratio to be calculated in accordance with both the Gross Method and the Commitment Method. Details of these methods of calculation can be found by referring to the AIFMD. In summary, these methods express leverage as a ratio of the exposure of debt, non-sterling currency, equity or currency hedging and derivatives exposure against the net asset value. The principal difference between the two methods is that the Commitment Method enables derivative instruments to be netted off to reflect hedging arrangements and the exposure is effectively reduced, while the Gross Method aggregates the exposure.

The AIFMD introduced a requirement for the AIFM to set maximum levels of leverage for the Company. The Company’s AIFM has set a maximum limit of 1.25 for both the Gross and Commitment Methods of calculating leverage. However, the AIFM anticipates that the figures are likely to be lower than this under normal market conditions. At 31 December 2021, the Company’s Gross ratio was 1.0 and its Commitment ratio was 1.0. In accordance with the AIFMD, any changes to the maximum level of leverage set by the Company will be communicated to Shareholders.

Principal risks and uncertainties

The Board considers that the following are the principal risks associated with investing in the Company: investment and strategy risk, key manager risk, discount volatility risk, price risk, foreign currency risk, liquidity risk, and regulatory risk. Other risks associated with investing in the Company include, but are not limited to, credit risk, interest rate risk, gearing risk, operational risk and other financial risk. The risks are unchanged from the previous year with the exception of liquidity risk which has increased following the change of the investment policy which allows the Company to invest in private markets. An explanation of these risks and how they are managed and the policy and practice with regards to financial instruments are contained in note 16 of the Financial Statements below.

The Board, through delegation to the Audit and Management Engagement Committee, has undertaken a robust annual assessment and review of all the risks stated above, together with a review of any new and emerging risks which may have arisen during the year, including those that would threaten the Company’s business model, future performance, solvency or liquidity. These risks are formalised within the Company’s risk assessment matrix.

The Board discussed the ongoing impact of COVID-19, the implications of the United Kingdom’s withdrawal from the European Union and the longer-term impact of issues such as climate change. As detailed in the Company's Half-Yearly Report for the period to 30 June 2021, the Directors have noted the operational risks that COVID-19 posed to the Company and its service providers due to global and local movement restrictions imposed by governments worldwide. Where necessary, business continuity arrangements have been implemented by the Company's service providers, principally a work at home strategy, and the Board has obtained assurances that they are continuing to operate effectively. As detailed below the Board is satisfied that there are no issues which trigger a need to re-examine the going concern assumption at this time. Any emerging risks considered to be of immediate significance will be evaluated, and their potential implications integrated into the principal risks.

Those risks identified by the Board are not exhaustive and various other risks may apply to an investment in the Company. Potential investors may wish to obtain independent financial advice.

Internal financial control

In accordance with the guidance issued to directors of listed companies by the Financial Reporting Council (“FRC”), the Directors confirm that they have carried out a review of the effectiveness of the systems of internal financial control during the year ended 31 December 2021, as set out in the Corporate Governance Statement in the full Annual Report and Financial Statements. There were no matters arising from this review that required further investigation and no significant failings or weaknesses were identified.

Depositary agreement

With effect from 1 September 2021, the Company appointed Northern Trust Investor Services Limited to act as its depositary (the “Depositary”). Northern Trust Investor Services Limited is authorised by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and Prudential Regulation Authority in the conduct of its UK depositary activities. Prior to 1 September 2021 the Company’s depositary was Northern Trust Global Services SE. This change was made to comply with post-Brexit regulatory changes that require depositary services for UK alternative investment funds, including investment trusts such as the Company, to be provided by an entity incorporated in the UK. Northern Trust Global Services SE is an authorised credit institution in Luxembourg under Chapter 1 of Part 1 of the Luxembourg law of 5 April 1993 on the financial sector. It is authorised by the European Central Bank (“ECB”) and subject to the prudential supervision of the ECB and the Luxembourg Commission de Surveillance du Secteur Financier. Prior to 1 September 2021 the UK offices of Northern Trust Global Services SE were a UK branch of Northern Trust Global Services SE and the branch was authorised by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and Prudential Regulation Authority in the conduct of its UK depositary activities.

Custody services are provided by The Northern Trust Company (as a delegate of the Depositary). A fee of 0.01% per annum of the net assets of the Company, plus fees in relation to safekeeping and other activities undertaken to facilitate the investment activity of the Company, are payable to the Depositary. The Company and the Depositary may terminate the Depositary Agreement at any time by giving six months’ written notice. The Depositary may only be removed from office when a new depositary is appointed by the Company.

Main trends and future development

A review of the main features of the year ended 31 December 2021, the outlook for the current year and the factors likely to affect the future development, performance and position of the business, can be found in the Chairman’s Statement and the Investment Manager’s Report above. The Board’s main focus is on the investment return and strategy, with attention paid to the integrity and success of the investment approach and on the factors which may have an impact on this.

Forward-looking statements

This Strategic Report contains “forward-looking statements” with respect to the Company’s plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events that are beyond the Company’s control. Factors that could cause actual results to differ materially from those estimated by the forward-looking statements include, but are not limited to:

As a result, the Company’s actual future condition, performance and results may differ materially from the plans set out in the Company’s forward-looking statements. The Company undertakes no obligation to update the forward-looking statements contained within the Strategic Report or any other forward-looking statements it makes.

Employees, human rights and community issues

The Board recognises the requirement under the Act 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. These requirements, which may apply to the Company’s investments, do not apply to the Company as it has no employees, all the Directors are non-executive and it has outsourced all its functions to third party service providers. The Company has therefore not reported further in respect of these provisions.

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.

Gender diversity

As at 31 December 2021, the Board of Directors of the Company comprised three male and one female Directors. The appointment of any new Director is made in accordance with the Company’s diversity policy as detailed in the full Annual Report and Financial Statements.

Environmental, social and governance policy

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 Investment Manager on behalf of the Company. The Investment Manager 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 Investment Manager focuses are corporate governance, including disclosure and transparency, board composition and independence, control structures, remuneration, and social and environmental issues.

The day-to-day management of the Company’s investment portfolio has been delegated by the AIFM to the Company’s Investment Manager, Edinburgh Partners, which has an ESG policy in place. The ESG policy statement, which can be found on the website at www.edinburghpartners.com and on the AIC website at www.theaic.co.uk, describes the manner in which the principles of the UK Stewardship Code are incorporated within the investment process. The Investment Manager does so in accordance with the United Nations Principles for Responsible Investment, and the UK Stewardship Code, and is a signatory to both regimes. The Investment Manager’s approach to engagement in this context is detailed in its Engagement Policy, an Environmental, SRI and Corporate Governance (“ESG”) Policy Statement and a Proxy Voting Policy. Copies of the Investment Manager’s Engagement Policy and ESG Policy Statement can be found on its website at www.edinburghpartners.com, together with a summary of all votes cast by the Investment Manager as proxy on behalf of its clients. The Investment Manager is a signatory of the UK Stewardship Code 2020 and a copy of its stewardship report will be available at www.edinburghpartners.com.

The assessment of the quality of investee companies in relation to environmental considerations, socially responsible investment and corporate governance forms part of the Investment Manager’s stock selection process.

Approval

This Strategic Report has been approved by the Board and signed on its behalf by:

Cahal Dowds

Chairman

11 March 2022

Past performance is not a guide to future performance.

EXTRACTS FROM THE DIRECTORS’ REPORT

Share capital

At 31 December 2021, the Company’s issued share capital comprised 64,509,642 ordinary shares of one pence each, of which 27,981,917 shares were held in treasury.

At general meetings of the Company, on a show of hands every Shareholder who is present in person or by proxy shall have one vote and on a poll every Shareholder present in person shall have one vote for every share held. Shares held in treasury do not carry voting rights. The total voting rights of the Company at 31 December 2021 were 36,527,725.

Issue of shares

On 11 October 2005, the Company applied for a block listing of 1,300,000 ordinary shares on the main market of the London Stock Exchange. As at 31 December 2021, and at the date of signing this report, a balance of 745,830 shares may be issued under this block listing.

No shares were issued during the year or since the year end.

Purchase of shares

During the year ended 31 December 2021, the Company purchased in the stock market 2,095,000 shares (with a nominal value of £20,950) to be held in treasury, at a total cost of £5,984,000. This represented 3.2% of the issued share capital at 31 December 2020. During the year ended 31 December 2021, no shares were purchased for cancellation. The share purchases were made with a view to reducing discount volatility.

Subsequent to the year end of 31 December 2021, the Company undertook a tender offer to buy back up to 20% of the Company’s shares in circulation, the details of which are contained in the Tender Offer section of this Directors’ Report.

Sale of shares from treasury

No shares were sold from treasury during the year ended 31 December 2021 or since the year end.

Shares held in treasury

Holding shares in treasury enables a company to cost-effectively issue shares that might otherwise have been cancelled. The total number of own shares held in treasury as at 31 December 2021, including those shares bought back in prior accounting periods, was 27,981,917 shares. The Board has not set a limit on the number of shares that can be held in treasury at any one time. The maximum number of own shares held in treasury during the year was 27,981,917 shares (with a nominal value of £279,819.17) representing 43.4% of the issued share capital at the time they were held in treasury.

Tender offer

As disclosed in the Chairman’s Statement above and note 20 below, following the approval by Shareholders at the General Meeting of the Company held on 17 December 2021, a Circular was issued to Shareholders on 26 January 2022 with details of the tender offer proposing to buy back up to 20% of the Company’s shares in circulation as at 24 February 2022. Following completion of the tender offer, the Company bought back 7,305,545 shares into treasury at a total cost of £23,231,000.

Going concern

The Company’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report above. In addition, notes 16 and 17 of the Financial Statements below include the Company’s objective, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its risk exposure. The Company’s principal risks are set out in the Strategic Report above. The Company’s assets consist principally of a diversified portfolio of listed equity shares, private market investments and fixed income securities which, with the exception of private market investments, in most circumstances are realisable within a short period of time and exceed its liabilities by a significant amount.

After due consideration of the above factors, the principal and emerging risks facing the Company, consideration of the implications of the COVID-19 pandemic as detailed in note 1 of the Financial Statements below and, where appropriate, action taken by the Company's service providers, and the information detailed in the long-term viability statement below, the Directors have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12 months from the date of this Annual Report and Financial Statements. For this reason, they have adopted the going concern basis in preparing the Financial Statements.

Long-term viability statement

The Directors have assessed the prospects of the Company over a period longer than one year. The Board considers that, for a company with an investment objective to provide Shareholders with an attractive real long-term return by investing globally in undervalued asset classes, a period of five years is an appropriate period to consider for the purpose of the long-term viability statement.

In making its assessment, the Board considered a number of factors, including those detailed below:

The Board has also considered the recent change to the Company’s investment objective and investment policy, the tender offer in February 2022 and the proposed change to the Company’s management arrangements by becoming a self-managed investment trust. As part of this change, which is expected to occur in the second calendar quarter of 2022, it is proposed that the Company’s present portfolio manager, Dr Sandy Nairn, will stand for election as a Director at the Annual General Meeting to be held on 27 April 2022 and will become an executive Director of the Company and will have day-to-day responsibility for investment management of the Company. The current arrangements with the existing AIFM and Investment Manager will cease and the sub-advisory investment management agreement with the Franklin Templeton group will be entered into.

The Board’s assessment was based on the following assumptions:

The Board considers that, following its assessment, there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period of its assessment.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

Company 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 company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these Financial Statements, the Directors are required to:

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 Act and include the information required by the Listing Rules of the FCA. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

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

The Directors, to the best of their knowledge, state that:

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

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. 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.

On behalf of the Board

Cahal Dowds

Chairman

11 March 2022

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company’s statutory accounts for the years ended 31 December 2020 and 31 December 2021 but is derived from those accounts. Statutory accounts for the year ended 31 December 2020 have been delivered to the Registrar of Companies, and those for the year ended 31 December 2021 will be delivered in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Act. The text of the Auditor’s report can be found in the Company’s full Annual Report and Financial Statements at www.epgot.com

INCOME STATEMENT

for the year ended 31 December 2021

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 columns are prepared under guidance published by the AIC.

There were no items of other comprehensive income in the year and therefore the return for the year is also the total comprehensive income for the year.

Dividend information

A final dividend for the year ended 31 December 2021 of 5.0p per share (2020: final dividend of 6.0p per share paid on 28 May 2021) has been recommended by the Board. Subject to Shareholders' approval, the final dividend will be payable on 25 May 2022 to Shareholders on the register at the close of business on 6 May 2022. The ex-dividend date will be 5 May 2022. Based on 29,222,180 shares, being the number of shares in issue (excluding shares held in treasury) on 11 March 2022, the date of signing this report, the total dividend payment will amount to £1,461,000. Dividends are accounted for in the period when they become a liability of the Company. Further information on dividend distributions can be found in note 6.

The notes below form part of these Financial Statements.

BALANCE SHEET

As at 31 December 2021

These Financial Statements were approved and authorised for issue by the Board of Directors of EP Global Opportunities Trust plc and were signed on its behalf by:

Cahal DowdsChairman

11 March 2022

Registered in Scotland No. 259207

The notes below form part of these Financial Statements.

STATEMENT OF CHANGES IN EQUITYfor the year ended 31 December 2021

1 The distributable reserves consist of £113,867,000 (2020: £116,839,000). The capital reserve of £77,026,000 (2020: £73,436,000), consists of realised gains of £77,686,000 (2020: £70,372,000) and unrealised losses of £660,000 (2020: unrealised gains of £3,064,000).

The notes below form part of these Financial Statements.

NOTES TO THE FINANCIAL STATEMENTS

at 31 December 2021

1 Accounting policies

Statement of compliance

EP 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 registered office is detailed below. The nature of the Company’s operations and its principal activities are set out in the Strategic Report above.

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 2021.

The comparative figures for the Financial Statements are for the year ended 31 December 2020.

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.

In making this assessment, the Directors have considered, in particular, the continuing economic impact of the COVID-19 pandemic on the Company’s operations and the investment portfolio.

The Directors have noted that the Company, holding a portfolio consisting principally of liquid listed investments, fixed income 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 Board has completed stress tests assessing the impact of changes and scenario analysis prepared by the Investment Manager to assist them in determination of going concern. In making this assessment, the Investment Manager has considered plausible downside scenarios that have been financially modelled. These tests included the possible further effects of the continuation of the COVID-19 pandemic but, as an arithmetic exercise, apply equally to any other 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, the Investment Manager 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, borrowing facilities 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. Finance costs are accounted for using the effective interest rate method. 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. Until 31 December 2020 all management fees and finance costs related to borrowings were charged to revenue 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. 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. Additional information on the valuation of unquoted investments is detailed in note 8.

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 significant 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 policy for the valuation of unquoted investments is detailed in the investments section of note 1 and additional information is detailed in note 8.

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:

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:

Capital reserve – investment holding gains, not distributable:

Revenue reserve

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

With effect from 16 July 2014, the Company appointed Franklin Templeton Investment Trust Management Limited (previously named, until 6 July 2021, Edinburgh Partners AIFM Limited) as the Company’s AIFM. Under the Management Agreement, the AIFM is entitled to a 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 exceeds this amount. The equity market capitalisation is based on shares in circulation which excludes shares held in treasury. No performance fee will be paid.

During the year the Company invested in the Templeton European Long-Short Equity SIF, a Luxembourg Specialised Investment Fund managed by an affiliate of the AIFM and the Investment Manager, 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 also deducted from the market capitalisation of the Company prior to calculation of the management fees payable by the Company to the AIFM. During the year the Company invested in the Volunteer Park Capital Fund SCSp and the Company’s investment in the Fund is deducted from the market capitalisation of the Company prior to the calculation of the management fees payable by the Company to the AIFM.

During the year ended 31 December 2021, the management fees payable to the AIFM totalled £762,000 (2020: £766,000). At 31 December 2021, there was £124,000 outstanding payable to the AIFM (2020: £135,000) in relation to management fees.

During the year ended 31 December 2021, the administration fees payable to the AIFM, as detailed in note 4, totalled £144,000 (2020: £142,000). At 31 December 2021, there was £24,000 outstanding payable to the AIFM (2020: £23,000) in relation to administration fees.

During the year ended 31 December 2021, the Company paid Edinburgh Partners £25,000 (2020: £25,000) for marketing-related services. At 31 December 2021, there was £6,000 outstanding to Edinburgh Partners (2020: £6,000) in relation to marketing-related services. The fees for marketing-related services are included within marketing and website costs as detailed in note 4.

4. Other expenses

Directors' remuneration and outstanding amounts are detailed in the Directors' Remuneration Report in the full Annual Report and Financial Statements.

5. Taxation

b) The current taxation charge for the year is higher than the standard rate of Corporation Tax in the UK of 19% (2020: 19%). The differences are explained below: 

At 31 December 2021, the Company had no unprovided deferred tax liabilities (2020: £nil). At that date, based on current estimates and including the accumulation of net allowable losses, the Company had unrelieved losses of £12,520,000 (2020: £11,191,000) that are available to offset future taxable revenue. A deferred tax asset of £3,130,075 (2020: £2,126,000) based on the effective rate of 25% (2020: 19%), which is effective from 1 April 2023, has not been recognised because the Company is not expected to generate sufficient taxable income in future periods in excess of the available deductible expenses and accordingly, the Company is unlikely to be able to reduce future tax liabilities through the use of existing surplus losses.

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an investment trust company, pursuant to sections 1158 and 1159 of the CTA.

6. Dividends

The Directors recommend a final dividend of 5.0p per share for the year ended 31 December 2021 (2020: final dividend of 6.0p per share, paid on 28 May 2021). Subject to Shareholder approval at the Annual General Meeting to be held on 27 April 2022, the dividend will be payable on 25 May 2022 to Shareholders on the register at the close of business on 6 May 2022. The ex-dividend date will be 5 May 2022. Based on 29,222,180 shares, being the number of shares in issue (excluding shares held in treasury) at 11 March 2022, the date of signing this report, the total dividend payment will amount to £1,461,000. The proposed dividend will be paid from the revenue reserve.

7. Return per share

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

8. Investments

The Company sold investments in the year ended 31 December 2021 for a total of £49,287,000 (2020: £55,040,000). The book cost of these investments when purchased was £41,680,000 (2020: £56,351,000). These investments have been revalued over time and until they were sold any unrealised gains or losses were included in the fair value of investments.

Within the equity investments detailed above, there is included the Company’s investment in the Templeton European Long-Short Equity SIF, a Luxembourg Specialised Investment Fund, a sub-fund of Franklin Templeton Specialised Funds, a Luxembourg investment company with variable capital – specialised investment fund, as detailed in note 9, which was valued at £8,838,000 at 31 December 2021 (2020: £nil). As at 31 March 2021, the most recent year end of the Templeton European Long-Short Equity SIF, the aggregate amount of capital and reserves was US$5,026,000. For the year to 31 March 2021 the profit for the year after tax and distributions was US$26,000.

Within the equity investments detailed above, there is an unquoted investment in the Volunteer Park Capital Fund SCSp, a Luxembourg Special Limited Partnership, as detailed in note 9, which was valued at £5,515,000 at 31 December 2021 (2020: £nil). As at 31 December 2020, the most recent year end of the Volunteer Park Capital Fund SCSp, the aggregate amount of capital and reserves was US$6,349,000. For the year to 31 December 2020 the loss for the year after tax and distributions was US$796,000. Please see note 19 for additional information on this investment.

Transaction costs

During the year, the Company incurred transaction costs of £41,000 (2020: £52,000) and £48,000 (2020: £61,000) on purchases and sales of investments respectively. These amounts are included in gains on investments at fair value, as disclosed in the Income Statement above.

Fair value hierarchy

In accordance with FRS 102, the Company must disclose the fair value hierarchy of financial instruments.

The different levels of the fair value hierarchy are as follows:

1 The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

2 Inputs other than quoted prices included within level 1 that are observable (developed using market data) for the asset or liability, either directly or indirectly.

3 Inputs are unobservable (for which market data is unavailable) for the asset or liability.

The fair value measurement of financial instruments as at 31 December 2021, by the level in the fair value hierarchy into which the fair value measurement is categorised is detailed below.

The Company’s level 2 investment is its investment in the Templeton European Long-Short Equity SIF.

Fair value of Level 3 investments

The Company’s level 3 investment is its investment in Volunteer Park Capital Fund SCSp.

The fair value of the Company’s investments in private equity funds is based on its share of the total net asset value of the fund calculated on a quarterly basis, being the measurement date. The fair value of the private equity funds is derived from the value of its underlying investments using a methodology which is consistent with the IPEV guidelines. The Company reviews the fair valuation methodology adopted for the underlying investments of the private equity funds on a quarterly basis and will adjust where it does not believe the valuations represent fair value. Where formal valuations are not completed as at the Balance Sheet date, the last available valuation is adjusted to reflect any changes in circumstances from the last formal valuation date to arrive at the estimate of fair value.

9. Significant holdings

As detailed in note 8, as at 31 December 2021, the Company owned 67.4% (2020: nil) of the net assets of the Templeton European Long-Short Equity SIF, a Luxembourg Specialised Investment Fund, a sub-fund of Franklin Templeton Specialised 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 detailed in note 8, as at 31 December 2021, the Company owned 25% (2020: nil) 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.

10. Debtors

11. Creditors: amounts falling due within one year

The voting rights attached to the Company’s shares are detailed in the extracts from the Directors’ Report above.

Duration of the Company

The Company does not have a termination date or the requirement for any periodic continuation vote.

13. Own shares held in treasury

Details of own shares purchased for and sold from treasury are shown below:

During the year ended 31 December 2021, 2,095,000 shares (2020: 2,525,000) were purchased for treasury at a cost of £5,984,000 (2020: £7,020,000) and no shares were sold from treasury (2020: none). Please see the Chairman’s Statement above for details of share buy backs.

14. Net asset value per share

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

The NAV is based on net assets of £116,123,000 (2020: £119,095,000) and on 36,527,725 (2020: 38,622,725) shares, being the number of shares, excluding shares held in treasury, in issue at the year end.15. Analysis of financial assets and liabilities

Interest rate and currency profile

The interest rate and currency profile of the Company’s financial assets and liabilities were:

At 31 December 2021, the Company had no financial liabilities other than the short-term creditors as stated above. The carrying amount on the Balance Sheet approximates the fair value of all financial assets and liabilities.

At 31 December 2021 the Company has undrawn financial commitments relating to its investment in Volunteer Park Capital Fund SCSp of USD1,743,000, equivalent to £1,291,000.

The following exchange rates were used to convert investments, assets and liabilities to the functional currency of the Company which is sterling.

16. Risk analysis

Principal risks

The principal risks the Company faces are:

The Board undertakes an annual assessment and review of all the risks stated above together with a review of any new risks which may have arisen during the year. These risks are formalised within the Company’s risk assessment matrix.

The Investment Manager monitors the financial risks affecting the Company on an ongoing basis within the policies and guidelines determined by the Board. The Directors receive financial information, which is used to identify and monitor risk, quarterly. The Company may enter into derivative contracts to manage risk. A description of the principal risks the Company faces is set out below.

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 asset classes, will be achieved.

The Investment Manager meets regularly with the Board to discuss the portfolio performance and strategy. The Board receives quarterly reports from the Investment Manager detailing all portfolio transactions and any other significant changes in the market or stock outlooks.

Key manager risk

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.

The Investment Manager frequently considers succession planning. The Board is in regular contact with the Investment Manager and would be informed of any proposed change in the lead manager.

Under the proposals to change the Company’s management arrangements by becoming a self-managed investment trust, it is proposed that the Company’s present portfolio manager, Dr Sandy Nairn, will stand for election as a Director at the Annual General Meeting to be held on 27 April 2022 and will become an executive Director of the Company and will have day-to-day responsibility for investment management of the Company. The Company’ ability to deliver its investment strategy will be dependent on Dr Nairn.

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. The Company is permitted to employ gearing, a process whereby funds are borrowed principally for the purpose of purchasing securities, should the Board feel that it is appropriate to do so. The use of gearing can magnify discount volatility.

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.

Details of the shares purchased into treasury during the year are set out in note 13 above.

Price risk

The Company is exposed to market risk due to fluctuations in the price risk of its investments. Price risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s business. It represents the potential loss the Company might suffer through holding market positions in the face of price movements. The Investment Manager monitors the prices of financial instruments held by the Company on an ongoing basis.

The Investment Manager actively monitors market and economic data and reports to the Board, which considers investment policy on a regular basis. The NAV of the Company is issued daily to the London Stock Exchange and is also available on the Company’s website at www.epgot.com.

Details of the Company’s investment portfolio as at 31 December 2021 are disclosed in the Portfolio of Investments above.

If the investment portfolio valuation fell by 5.0% from the amount detailed in the Financial Statements as at 31 December 2021, it would have the effect, with all other variables held constant, of reducing the total return before taxation and therefore net assets by £4,196,000 (2020: £5,182,000). An increase of 5.0% in the investment portfolio valuation would have an equal and opposite effect on the total return before taxation and net assets.

Foreign currency risk

The functional currency of the Company is sterling. The international nature of the Company’s investment activities gives rise to a currency risk which is inherent in the performance of its overseas investments. The Company’s overseas income is also subject to currency fluctuations.

It is not the Company’s policy to hedge this risk on a continuous basis.

Details of the Company’s foreign currency risk exposure as at 31 December 2021 are disclosed in note 15.

If sterling had strengthened by 1.0% against all other currencies on 31 December 2021, with all other variables held constant, it would have the effect of reducing the total return before taxation and net assets by £1,010,000 (2020: £1,036,000). If sterling had weakened by 1.0% against all other currencies, there would have been an equal and opposite effect on the total return before taxation and net assets.

Liquidity risk

The Company’s policy with regard to liquidity is to ensure continuity of funding. Short-term flexibility is achieved through cash management.

Investments in private markets are more difficult to value than those in public markets. The valuations of the Company’s interests in private markets used to calculate the NAV (which is calculated and published on a daily basis) will be based on the Company’s ‘fair values’ of those interests, applying valuation techniques which are consistent with the International Private Equity and Venture Capital Valuation Guidelines. Such estimates, and any NAV published by the Company, may vary (in some cases materially) from realised or realisable values. Such private market investments are likely to be formally valued on a quarterly basis but this will depend on the nature of the specific investments.Investments in private markets are less liquid than those in public markets. There may not be a secondary market for interests in private market investments. Such illiquidity may affect the Company’s ability to vary its portfolio or dispose of or liquidate part of its portfolio, in a timely fashion (or at all) and at satisfactory prices in response to changes in economic or other conditions. If the Company were required to dispose of or liquidate an investment on unsatisfactory terms, it may realise less than the value at which the investment was previously recorded, which could result in a decrease in NAV.

There may be restrictions on the transfer of interests in private markets investments that mean that the Company will not be able to freely transfer its interests. For instance, the sale or transfer of interests in private market investments may be subject to the consent or approval of the issuer or (other) holders of the relevant interests, and obtaining such consent or approval cannot be guaranteed. Contractual restrictions on transfer may exist in shareholder agreements or the issuer’s constitutional documents. Accordingly, if the Company were to seek to exit from any of its investments in private market investments, the sale or transfer of interest may be subject to delays or additional costs, or may not be possible at all.

Investments in illiquid assets may impact on the Company’s ability to buy back its shares.

The Company’s assets comprise mainly of readily realisable securities which, it is believed, can be sold freely to meet funding requirements if necessary. Securities listed on a recognised stock exchange have been valued at bid prices and exchange rates ruling at the close of business on 31 December 2021. In certain circumstances, the market prices at which investments are valued may not represent the realisable value of those investments, taking into account both the size of the Company’s holding and the frequency with which such investments are traded.

The maturity profile of the Company’s financial liabilities, including creditors, is as follows:

Regulatory risk

The Company operates in an evolving regulatory environment and faces a number of regulatory risks.

Relevant legislation and regulations which apply to the Company include, but are not limited to, the Act, the CTA, the Listing Rules and the Disclosure Guidance and Transparency Rules of the FCA, the AIFMD, the GDPR, the Foreign Account Tax Compliance Act and the Common Reporting Standard.

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 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 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. 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.

If all price sensitive issues are not disclosed in a timely manner, this could create a misleading market in the Company’s shares. 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 AIFM would notify the Board immediately if it became aware of any disclosure issues.

The Investment Manager has a comprehensive market abuse policy and any potential breaches of this policy would be promptly reported to the Board.

Although not considered to be a principal risk for the Company, the Board continues to monitor developments around the UK’s departure from the European Union. Many of the Company’s holdings, particularly those in European and UK equities, will be impacted by the new agreement between the UK and the European Union which became effective on 1 January 2021. We believe that overall the Company’s portfolio has a relatively modest exposure to the UK economy, but the Board and Investment Manager remain alert to developments at both macro-economic level and a stock-specific level.

The Board has agreed service levels with the Company Secretary and Investment Manager which include active and regular review of compliance with these requirements.

Other risks

Other risks the Company faces are:

A description of these other risks is set out below.

Credit risk

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

The carrying amounts of financial assets best represent the maximum credit risk exposure at the Balance Sheet date.

Investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Investment Manager. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed.

Cash is only held at banks and in liquidity funds that have been identified by the Board as reputable and of high credit quality. As at 31 December 2021, The Northern Trust Company London Branch had a long-term rating from Standard and Poors of AA-.

The maximum exposure to credit risk as at 31 December 2021 was £38,290,000 (2020: £26,528,000). The calculation is based on the Company’s credit risk exposure, being fixed income investments, cash at bank and short-term deposits and debtors, as at 31 December 2021 and this may not be representative of the year as a whole.

None of the Company’s assets are past due or impaired.

Interest rate risk

The Company’s assets and liabilities, excluding short-term debtors and creditors, may comprise financial instruments which include investments in fixed income securities.

Details of the Company’s interest rate exposure as at 31 December 2021 are disclosed in note 15.

Surplus cash is invested in liquidity funds.

If interest rates had reduced by 0.25% (2020: 0.25%) from those obtained as at 31 December 2021 it would have the effect, with all other variables held constant, of decreasing the total return before taxation and therefore net assets on an annualised basis by £80,000 (2020: £65,000). If there had been an increase in interest rates of 0.25% (2020: 0.25%) there would have been an equal and opposite effect in the total return before taxation and net assets. The calculations are based on cash at bank and short-term deposits as at 31 December 2021 and these may not be representative of the year as a whole.

Gearing risk

Gearing can be used to enhance long-term returns to Shareholders. The Company is permitted to employ gearing should the Board feel it appropriate to do so up to a maximum of 25% of total assets.

The use of gearing is likely to lead to volatility in the NAV, meaning that a relatively small movement either down or up in the value of the Company’s total investments may result in a magnified movement in the same direction of the NAV. The greater the level of gearing, the greater the level of risk and likely fluctuation in the share price.

At the year end, the Company had no gearing (2020: nil).

Operational risk

There are a number of operational risks associated with the fact that third parties undertake the Company’s administration, depositary and custody functions. The main risk is that third parties may fail to ensure that statutory requirements, such as compliance with the Act and the FCA requirements, are met.

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 (ISAE 3402, SSAE 16 or equivalent) to the Board each year.

The AIFM 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 Investment Manager and the Company's third party suppliers have contingency plans to ensure the continued operation of the business in the event of disruption, such as the impact of COVID-19. The Board monitor the risks associated with COVID-19 and its impact on the operation of the business.

17. Capital management policies

The Company’s investment objective is to provide Shareholders with an attractive real long-term total return by investing globally in asset classes. The portfolio is managed without reference to the composition of any stock market index. In pursuing this objective, the Board has a responsibility for ensuring the Company’s ability to continue as a going concern. This involves the ability to: issue and buy back share capital within limits set by the Shareholders in general meeting; borrow monies in the short and long term; and pay dividends to Shareholders out of current year revenue earnings as well as out of brought-forward revenue reserves.

The Company's capital is set out in the Balance Sheet above.

The Company’s objectives for managing capital are the same as the previous year and have been complied with throughout the year.

18. Transactions with the AIFM and the Investment Manager

Information with respect to transactions with the AIFM and the Investment Manager is detailed in note 3 and in the Strategic Report above.

19. Related party transactions

Details in respect of the Directors’ remuneration are set out in note 4 and in the Directors’ Remuneration Report in the full Annual Report and Financial Statements.

Under the AIC SORP, an investment manager is not considered to be a related party of the Company.

Dr Sandy Nairn is the lead investment manager of the Company and is a substantial Shareholder. Under the current proposals relating to the future strategy he will also become a Director of the Company. 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 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.

20. Post Balance Sheet events

As disclosed in the Chairman’s Statement above and in the Directors’ Report in the full Annual Report and Financial Statements, following the approval by Shareholders at the General Meeting of the Company held on 17 December 2021, a Circular was issued to Shareholders on 26 January 2022 with details of the tender offer proposing to buy back up to 20% of the Company’s shares in circulation as at 24 February 2022. Following completion of the tender offer, the Company bought back 7,305,545 shares into treasury at a total cost of £23,231,000.

Following the review of the strategic direction of the Company, it is intended to change the Company’s management arrangements by becoming a self-managed investment trust. The Board will assume overall control of the Company’s investment policy and have overall responsibility for the Company’s activities. It is proposed that the Company’s present portfolio manager, Dr Sandy Nairn, will stand for election as a Director at the Annual General Meeting to be held on 27 April 2022 and will become an executive Director of the Company and will have day-to-day responsibility for investment management.

The change in management structure is subject to the Company being approved by the FCA as a small registered alternative investment fund manager. This is expected to occur in the second calendar quarter of 2022. Once the Company has been approved to act as its own alternative investment fund manager, the current arrangements with the existing AIFM and Investment Manager will cease and the sub-advisory investment management agreement with the Franklin Templeton group will be entered into. As part of the interim arrangements to facilitate this change the Board has agreed that the Company’s investment management responsibilities be transferred from Edinburgh Partners Limited to Franklin Templeton Investment Management Limited in the second calendar quarter of 2022. When the Company becomes a self-managed investment trust, new administration arrangements will be put in place. The Company will also, by resolution of the Board, change its name to Global Opportunities Trust plc.

1 Period 13 November 2003 to 31 December 2004. The Company commenced operations on the admission of its shares to trading on the London Stock Exchange on 15 December 2003.

2 Includes a special dividend of 1.0p.

3 Includes a special dividend of 1.5p.

4 Proposed dividend for the year.

5 Ongoing charges ratio based on total expenses, excluding finance costs, transaction costs and certain non-recurring items for the year as a percentage of the average monthly net asset value.

6 Total expense ratio based on total expenses for the year as a percentage of the average monthly net asset value.

7 Total expense ratio 1.3% excluding VAT refund.

8 The total expense ratio would have been 1.0% if investment management fees of £236,000 had not been waived as a consequence of the merger with Anglo & Overseas Plc.

9 The ongoing charges ratio includes look-through costs of 0.1% relating to the investments in the Templeton European Long-Short Equity SIF and the Volunteer Park Capital Fund SCSp.

ANNUAL GENERAL MEETING

The Company’s Annual General Meeting will be held at The Bonham Hotel, 35 Drumsheugh Gardens, Edinburgh EH3 7RN on Wednesday, 27 April 2022 at 12.00 noon.

DIRECTORS

Charles (Cahal) Dowds (Chairman)1Teddy Tulloch2Hazel Cameron3David Hough4David RossTom Walker

1 Appointed as a Director on 18 May 2021 and Chairman on 9 June 2021

2 Retired as a Director and Chairman on 9 June 2021

3 Appointed as a Director on 18 May 2021

4 Retired as a Director on 3 March 2021

All of the Directors are non-executive and independent of the AIFM and the Investment Manager.

ALTERNATIVE INVESTMENT FUND MANAGERFranklin Templeton Investment Trust Management Limited5 Morrison StreetEdinburghEH3 8BH

INVESTMENT MANAGEREdinburgh Partners Limited27-31 Melville StreetEdinburghEH3 7JF

National Storage Mechanism

A copy of the full Annual Report and Financial Statements will shortly be submitted to the National Storage Mechanism (“NSM”) and will be available for inspection at the NSM, which is situated at:

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

Enquiries:

Dr Sandy NairnKenneth J GreigFranklin Templeton Investment Trust Management LimitedTel: 0131 270 3800

The Company’s registered office address is:27-31 Melville StreetEdinburghEH3 7JF

Neither the contents of the Company’s website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

LEI: 2138005T5CT5ITZ7ZX58

END