GLIF.L Regulatory News (GLIF)

GLI Finance Limited

(the "Company" or "GLI")

Audited Consolidated Results for the year ended 31 December 2015

Group and strategic review

· 2015 was a year of significant change, both in the management of the business and in corporate transactions undertaken.

· Strategic review initiated in December 2015 with significant progress already made in platform prioritisation and against the short-term goals announced in February 2016.

· Commenced second leg of the review with primary aim to increase focus on the core business:

o Aiming to obtain the largest and most sustainable 'gain' for the level of investment in human and capital resources.

o Seeking to maximise value of stakes in assets with complementary strengths, e.g. BMS, Sancus Gibraltar and Isle of Man alongside wholly owned Sancus entities.

· Post year-end transaction with Somerston has significantly reduced Group indebtedness.

· New focus on delivering margin and cash flow improvement with a focus on costs, efficiencies and asset utilisation.

· Ultimate focus on creating a more robust business better placed to drive shareholder value.

Financial Highlights

· Audited NAV per share of 42.73p as at 31 December 2015 (31 December 2014 51:00p). The reduction was primarily driven by write-downs in the value of investments and loans as at the year-end.

· Loans processed by GLI's portfolio of platforms increased significantly in FY15 due to the addition of several platforms and strong origination growth at many of the platforms. The number of loans completed in the period increased by 113.4% while the average loan size decreased by 12.8%.

· 5p dividend paid (5p paid for the comparable period last year). At the end of 2015 the Company announced an update on the Dividend Policy to pay a dividend of not less than 2.5p per annum, paid quarterly.

Operational Highlights

· Andy Whelan was appointed permanent CEO on 16 February 2016.

· Disposal of our remaining CLO investment in Fair Oaks Income Fund.

· Raised £20m in ordinary share capital in March 2015.

· Funding Options, an SME finance aggregator and one of GLI's prioritised platforms, has been recommended by the British Business Bank as one of 3 platforms to go forward for designation by HM Treasury for the Bank Referral Scheme.

Patrick Firth, Chairman said

"We are going through a strategic review and the remainder of 2016 and beyond will be a period in which we assist the development of the prioritised platforms to enable them to significantly scale. As the platforms become more successful, we will seek to maximise and capture additional value for GLI. There will be further examples of potential areas we can exploit over time, but we will only do so where there is a manifest and measurable benefit to our own shareholders. The outlook for the industry is exciting although there are bound to be challenges along the way, the potential for GLI Finance and its prioritised platforms is considerable and the Board and Executive team are focused on improving shareholder value."

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Please note that the Chief Financial Officer's Review is supplemented by charts in a document (the "Supplementary Document") which can be found at the following location: http://www.rns-pdf.londonstockexchange.com/rns/3235T_1-2016-3-28.pdf 

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Enquiries

GLI Finance Limited

Andy Whelan

+44 (0)1534 708900

Panmure Gordon (Nominated Adviser and Corporate Broker)

Dominic Morley

+44 (0)20 7886 2954

Peter Steel

+44 (0)113 357 1152

Charles Leigh-Pemberton

+44 (0)20 7886 2906

Instinctif Partners (PR Advisor)

Tim Linacre/Nick Woods

+44 (0)207 457 2020

GLI Finance Limited

For the year ended 31 December 2015

CHAIRMAN'S STATEMENT

I am pleased to report the results of GLI Finance Limited ("GLI" or the "Company") for the year ended 31 December 2015.

This year was a year of significant change and challenges, both in the management of the business and through a number of corporate transactions, and I comment on these in more detail below. Despite these, the core of the activity remains the provision of finance to the SME sector. I also believe that the changes we have undertaken so far, and the strategic review which is currently underway and which is commented on below and in the CEO's review, will lead to a more robust business, better placed to deliver positive cashflow and to drive shareholder value.

Company Strategy and Performance

Following the resignation of Geoff Miller on 19 December 2015, Andy Whelan was appointed interim CEO and I am delighted that he was appointed permanent CEO on 16 February 2016.

The Company's executive team now comprises Andy Whelan as Chief Executive Officer, Emma Stubbs as Chief Financial Officer, Marc Krombach as Managing Director and Louise Beaumont as Head of Public Affairs & Marketing.

Following Andy's appointment, we announced that we were starting a strategic review. The objective of the review is to determine the best utilisation of the Company's human and capital resources to build shareholder value most effectively. The strategic review is substantive and thorough. We shall continue to announce progress as it is made over the next 12 months but a current update is provided in the CEO Report.

In accordance with the 2014 UK Corporate Governance Code, GLI has, for the first year, undertaken a longer term viability statement. The Board has considered the Company's current position and principal risks and has assessed the Company's future prospects, the details of which can be found in the Directors' report.

In the first half of the year we disposed of our remaining CLO Investment in Fair Oaks Income Fund ("FOIF') for USD32.3m (GBP20.4m) and raised a further GBP20m in ordinary share capital in March 2015. The funds were subsequently used to fund the growth of loan origination within our family of platforms as well as funding the acquisition of four new platforms, taking the total to 19. What has become clear is that the growth of the business lacked a coherent strategy. Going forward we do have a clear strategy and will invest with this is mind.

As stated within our strategic review of the platform portfolio, we are prioritising our resources for platforms where we have greatest confidence of building value for our shareholders. We will consider, where appropriate, increasing stakes within existing platforms that make strategic sense for the continued growth of the business.

Each quarter the Board reviews the valuation of the platforms on a fair value basis. We have independent valuations carried out which are also referred to. As we have increased some, we have also decreased the carrying value of those platforms where we deem it appropriate in order to ensure we hold our assets at a fair value on a conservative basis as we have done with a number of our platforms this year.

Regulation

The Company has seen regulatory changes in the year which we view as an important step in GLI's progress, these changes are noted below:

- With effect from 27 March 2015, GLI ceased to be classified by the Guernsey Financial Services Commission ("GFSC") as an Authorised Collective Investment Scheme and has been registered with the GFSC as a Non-regulated Financial Services Business. Although this includes the word 'non-regulated' we are actually more closely monitored than we have ever been and we aim to filter this down to our platforms to ensure that we not only lead the way in regulatory strength within the alternative finance space, but also at the same time provide comfort to our shareholders.

- On 30 June 2015, our 100% owned subsidiary, GLI Asset Management Ltd ("GLIAM") secured its 'Protection of Investors' ("POI") asset management licence from the GFSC, thereby enabling GLIAM to manage collective investment schemes and general securities and derivatives. GLIAM launched its first fund 'GLI Alternative Finance plc' ("GLIAF"), on 21 September 2015. This is a closed end fund focusing on a loan portfolio diversified by geography, size of loan, type of lending and duration. Subject to regulatory approval, we have agreed to sell 50% of GLIAM to Golf Investments Limited.

GLI Finance Limited

For the year ended 31 December 2015

CHAIRMAN'S STATEMENT (continued)

Dividend Policy

During 2015 the Company paid 5.0p per share in dividends (vs 5.0p 2014). At the end of 2015 the Company announced an update on the Dividend Policy to pay a dividend of not less than 2.5p per annum, paid quarterly. The change in policy reflects the change in our business away from an income producing CLO portfolio towards a trading business with significant capital appreciation potential.

Financials

As at 31 December 2015, the Company had net assets of GBP98.2m or 42.73p per Ordinary Share compared with net assets of GBP88.2m, or 51.00p per ordinary share at 31 December 2014, which represents a 16.2% decrease in NAV per share. A breakdown of this movement is provided in the CFO report.

The comparative Group numbers show net assets attributable to equity holders increasing from GBP73.4m as at 31 December 2014 to GBP81.6m as at 31 December 2015. The difference in the net assets at a Group and Company level represents the difference in accounting treatment of our subsidiaries and associates in the Group accounts versus fair value treatment of assets held in the Company's financial statements. The Board continues to believe that, at present, the performance of the net asset value at the Company level, as opposed to the Group consolidated level, is the more appropriate measure for the assessment of performance of the underlying business.

At the Company level, for the twelve months ended 31 December 2015, GLI received interest income, dividends and other income totalling GBP5.9m, compared to GBP7.0m for the comparable period. This decline is a result of the final exit from our CLO investments which, in the past, had generated returns in the high teens. The returns we now see are a combination of interest earned on loans to SMEs, which currently average around 10%, and changes to the value of our equity stakes in loan origination platforms, recognised in unrealised gains of GBP4.5m for the period. In the CFO's Report there is a re-analysed Company Statement of Comprehensive Income which provides a detailed breakdown and further insight into our costs and explains the variance against previous periods.

As the Company is currently classified as an investing company under the AIM Rules, we are required to have an investing policy. This is included at the end of the document after the financial statements.

Public Affairs

In the last Chairman's statement, we noted the measures the Government have brought forward to require banks to refer applicants they reject for finance on to designated neutral finance platforms. This should make a tangible difference to the flow of applicants coming to GLI platforms via aggregators. The Board of Directors has welcomed the announcement that Funding Options, an investee of GLI, has been recommended by the British Business Bank to go forward for designation by HM Treasury for the Bank Referral Scheme. GLI are working to raise awareness amongst SMEs of the breadth of financing options available, but beyond this, it is expected to drive behavioural change so that the alternative finance sector achieves, over time, an equal footing with the high street banks.

Along with Cambridge University's Centre for Alternative Finance, GLI published a report which looked at the net benefit to the UK economy of raising SME awareness and understanding of alternative finance, and called for a concerted awareness raising campaign, rooted in the principles of behavioural economics, to achieve this. This idea is gaining traction. At a recent roundtable at Innovate Finance, parliamentarians, major industry bodies, academics, journalists and platforms in attendance demonstrated that they are increasingly coalescing around GLI's position. We have submitted supporting documentation to the Business, Innovation and Skills Select Committee, spoken at the Small Business All Party Parliamentary Group and will continue to engage with parliamentarians and government to emphasise the need for this measure - which could add up to an additional £20 billion to the UK's GDP, according to the Confederation of British Industry. GLI has seen notable success in garnering broad industry support for this measure, and we will continue our efforts on this front.

GLI have also been involved in the Government's efforts with regard to setting an Open Bank Standard, sitting on the review into the standardising of data and opening APIs so that the alternative finance sector can compete on a more equal footing with the established banks. While notable progress has been made, we will continue to make the case for a true level playing field between the alternative providers and the incumbent high street banks.

More broadly, GLI continues to be engaged in the European Commission's efforts to establish a Capital Markets Union across the member states, meeting with Commission officials to underline the contribution the alternative finance sector can make to the economy.

GLI Finance Limited

For the year ended 31 December 2015

CHAIRMAN'S STATEMENT (continued)

Outlook

As discussed above, we are going through a strategic review and the remainder of 2016 and beyond will be a period in which we begin the process of assisting the development of the prioritised platforms to enable them to scale significantly. As the platforms become more successful, we will seek to maximise and capture additional value for GLI. There will be further examples of potential areas we can exploit over time, but we will only do so where there is a manifest and measurable benefit to our own shareholders. The outlook for the industry is exciting although there are bound to be challenges along the way, the potential for GLI Finance and its prioritised platforms is considerable and the Board and Executive Team are focused on improving shareholder value.

I would like to thank shareholders for their continued support during this period of volatility and welcome any feedback or discussion.

Patrick Firth

Non-Executive Chairman

Date: 24 March 2016

GLI Finance Limited

For the year ended 31 December 2015

CHIEF EXECUTIVE OFFICER'S REVIEW

It is a pleasure to introduce myself to you. I took over the role of CEO (initially interim CEO in December 2015) in February 2016 following the unexpected resignation of the previous CEO Geoff Miller, in the wake of the unsuccessful potential capital raise expected for December 2015.

My priority during my time as CEO has been articulated in various announcements since my appointment, however I have summarised the key points below.

Strategic Review

At the end of 2015, we announced that we were starting a strategic review of GLI. The objective of the review is to determine the best utilisation of the Company's human and capital resources to build shareholder value most effectively. The strategic review is substantive and thorough and further commentary on where we have reached three months in to the process is set out below. We will continue to announce progress as it is made during the course of 2016.

Short-term goals

As announced in February 2016, we have identified a need to achieve the following goals in the short term:

a. Clarify and restate the Company's strategic objective;

b. Remove the risks of conflicts of interest;

c. Initiate measures to strengthen the balance sheet;

d. Ensure that positive cash flows are returned to GLI group level;

e. Initiate measures to address the cost base;

f. Remove unnecessary complexity;

g. Rationalise and invest in the Company's core businesses;

h. Improve communication to aid stakeholders' understanding of operations;

i. Work with our prioritised platform portfolio to ensure it is appropriately financially resourced to achieve growth.

We report on progress to date against each of these goals as below:

a) The Company's Strategic Objective

The Company will invest and operate in niche or complementary small and medium-sized enterprises (SME) lending verticals where we can secure enduring competitive positions and take advantage of the disintermediation of lending by banks to SMEs.

b) Conflicts of Interest

Conflicts have primarily arisen from inter-company loans and/or from the relationship between GLI Alternative Finance PLC (the "Fund" or "GLIAF") and GLI.

We have already made significant progress rationalising intercompany loans. In the future GLI will only lend to platforms where it is of benefit to GLI's investment strategy. GLI will not lend through platforms and will seek to realise its existing such loans.

The manager of the Fund, Amberton Asset Management Limited (formerly GLI Asset Management Limited) (the "Manager" or "Amberton") has rebranded, following the approval of the Somerston share purchase agreement at the EGM on the 25 February 2016. Somerston will own 50% of Amberton once regulatory approval has been obtained. The Manager now has a distinct board of directors with an independent non-executive chairperson.

The Fund's objective is to earn attractive risk adjusted yields by lending directly to SMEs via lending platforms. The Manager has absolute discretion to assess the platforms and makes investments in accordance with the Investment Mandate as set out in the prospectus. Whether GLI is invested in a platform will have no bearing on whether or not the Manager makes loans through that platform.

GLI, on the other hand, will make debt and equity investments in platforms with the aim of achieving its strategic objective. In so doing, it will build on its competitive advantages in niche and complementary lending verticals.

GLI presently manages a book of loans made through platforms. This activity does not meet GLI's strategic objective. These loans will be run off and GLI will use the proceeds from maturity or realisation to support its investments.

c) Balance Sheet

The Company now has debt of £35m relative to capital of £98m. The Company's financial liabilities comprise a syndicated loan of GBP14.86m and ZDPs of GBP20.79m. The Company's average weighted cost of debt and ZDPs is 6.85%. This is a very strong position from which to grow the Company.

GLI presently manages a book of loans made through platforms. This activity does not meet GLI's strategic objective. These loans will be run off and GLI will use the proceeds from maturity or realisation to support its investments.

Proceeds from the sale of GBP15m of GLIAF shares as part of the Somerston transaction post year end, have been used to repay GBP15m of the Sancus loan facility. On 15 March 2016, the existing loan was repaid and in its place a new GBP14.86m syndicated loan was entered into with a term of one year, which carries a lower interest rate of 8.75% (previously 11%).

BMS has repaid GBP3m of a loan made by the Company to BMS and has agreed to pay interest on its remaining loan quarterly to better match the cash flow needs of the Company. At the same time, we have taken the opportunity to reset the loan maturity to a date which matches commitments made by BMS so that it can better demonstrate its access to capital.

GLI Finance Limited

For the year ended 31 December 2015

CHIEF EXECUTIVE OFFICER'S REVIEW (continued)

c) Balance Sheet (continued)

Sancus held 6.8m shares in GLIAF, acquired by Sancus in return for seeding loans into GLIAF. Sancus has transferred these shares to the Company to repay GBP6.8m of inter-company loans from GLI. This will ensure that all of the shares of GLIAF owned by the Group are retained at the Company level and the Company will benefit from the future dividend stream from this investment. Going forward, Sancus will also pay interest on all remaining inter-company debt to better match the cash flow needs of the Company.

d) Cash Flow

Historically the source of cash flow has been from income paid by the CLO portfolio. Following disposal of its CLO interests GLI is now a radically different company with investments in many early stage ventures. This portfolio of assets is young, and will take time to mature.

We will be disciplined about cash flows and their use. We want to ensure that GLI makes the capital allocation decision across the platform portfolio and that GLI can properly fund the development of its growth potential.

GLI has two existing trading businesses in Sancus and BMS. Both businesses operate in niche sectors/jurisdictions and have high sustainable margins and strong growth prospects. Sancus has loaned in excess of GBP150m in the last two years and has offices in four locations; Jersey, Guernsey, Gibraltar and Isle of Man. The Jersey and Guernsey corporate entities are owned 100% by GLI, with the Company having a small minority shareholding in the other two entities. Jersey has been operational since inception in January 2014 and generated net profits of GBP750k in 2014 and GBP1.5m in 2015. Sancus (Guernsey) Limited has been slow to commence operations due to lack of finding the correct person to drive the business forward. We appointed Simon Brown as Managing Director in January 2016 and we now expect the business under his leadership to become fully operational and reach its potential, which we believe could replicate the success of Sancus Limited. BMS has been in operation for 10 years and part of its strategy is to expand its business in new jurisdictions as well. BMS made a net profit of GBP1m in 2015 and is forecasting further growth.

The Company sees great potential for these businesses in terms of generating free cash-flow to service future dividend payments to GLI's ordinary shareholders.

Our intention is to pay a dividend of not less than 2.5p per annum paid quarterly. Following the initial findings of the strategic review, we can confirm that this will be sustainable once we have executed and implemented our strategy during 2016.

e) Cost

From our initial findings, we believe there is opportunity to reduce costs in several areas such as closure of non-performing subsidiaries, advisory fees and travel.

It is estimated that approximately GBP1m can be saved from future operating expenditure and the Company is vigorously moving to implement these cost saving initiatives. Other measures for improving cash flow are ensuring the loans to the platforms are serviced at least quarterly to align with the Company's dividend policy.

f) Complexity

The Company's growth to date has come despite increasing complexity. A large part of this complexity can be removed by the measures being taken above, unlocking future growth potential.

g) Invest and Rationalise to Strengthen Core Businesses

Over the last few years, GLI's growth has lacked a coherent strategy. Going forward we have a clear strategic goal and will invest with this in mind. GLI's management will assess all demands for capital and allocate where it has the highest opportunity for value creation.

We are part way through our strategic review. However, we have identified certain platforms that have strong management coupled with excellent electronic platforms such as Finexkap, The Credit Junction, LiftForward and Funding Options that we believe have the ability to grow significantly. This was further demonstrated by the announcement on 18 March 2016 that Funding Options has been recommended by the British Business Bank to go forward for designation by HM Treasury for the Bank Referral Scheme. Announced within HM Treasury Budget 2016, businesses that are rejected for finance by high-street banks will be able to access new options, with the Budget announcing that Funding Options will be designated as one of only three finance platforms to help match borrowers and alternative lenders.

I or one of my Executive Team has joined the board of each of these businesses, which will be prioritised platforms going forward. We will be providing further detailed information on the remainder of the platform portfolio as we work our way through the strategic review during the first half of 2016.

GLI Finance Limited

For the year ended 31 December 2015

CHIEF EXECUTIVE OFFICER'S REVIEW (continued)

g) Invest and Rationalise to Strengthen Core Businesses (continued)

Platform Black

In accordance with our approach of maximising value where possible within the platform portfolio, GLI, which previously held 43.9% of the ordinary share capital of Platform Black, increased its stake to 84% on 5 February 2016 at a reduced valuation. Platform Black has potential, but material change has been required for some time. The recent appointment of Caroline Langron as Platform Black's Managing Director is a very positive step in the right direction. We have recently changed the shape of the business's balance sheet and fully expect the platform to be profitable by the end of 2016.

FundingKnight

It has not been possible to agree a way forward where GLI could feel confident in deploying further resources to FundingKnight. An amicable process for separation has been agreed where GLI will remain a passive investor whilst reducing overall financial exposure and seeking a long term exit.

h) Communications

Although the Board makes every effort that the Report and Accounts are set out clearly, the Company realises that greater detail is required to explain progress and the development of value creation.

The Company has appointed Instinctif Partners as PR Advisors. As a first step towards better communication the Company will issue more comprehensive quarterly reviews and will seek to meet with shareholders to provide detailed updates on a quarterly basis. Where GLI has a majority stake in a platform, we plan to provide regular updates on areas such as volume of loan origination, average size of loans, loan impairments, funding commitments and operating cash-flow to show the progress.

i) Resourcing

We are working with our prioritised platform portfolio to ensure it is appropriately financially resourced to achieve growth.

In light of the progress outlined above since initiating our strategic review, we are now undertaking the second leg of the review which we have termed 'Project Clarity'.

Project Clarity is focused on:

1. Clearly defining GLI's 'core' business as a speciality lender and underpinning it as the backbone of the Company;

2. Taking necessary measures to ensure the core business focuses on the sustainable generation of surplus cash flow which can be used for investment and growth of the dividend; and

3. Aligning the interests of senior management with GLI, eliminating any remaining conflicts of interest and mitigating key man risks in some of GLI's most valued assets.

Our objective with the strategic review is to obtain the largest and most sustainable 'gain' for the level of investment in human and capital resources. Where we have stakes in assets with particular complementary strengths, for example our investments in GLIF BMS Holdings Limited and the Sancus Gibraltar and Sancus Isle of Man entities alongside our wholly owned subsidiary Sancus Limited, we believe the whole would be materially greater than the sum of the parts.

GLI has several large minority stakes in very promising assets that have excellent management teams. Our investment in these companies will flourish in due course. These assets are not in scope for 'Project Clarity'.

With this in mind, we hope to announce further developments in the weeks and months ahead which will materially strengthen the long term cash generation potential for GLI Finance.

Conclusion

2016 is going to be a year of delivering increased shareholder value whilst focusing on a concentrated portfolio of prioritised platforms and improving margins throughout the business. GLI has a unique positon in the market place lending sector, which with effective execution of our strategic plan, has the ability to reward shareholders for their continued support.

I want to personally thank shareholders for their support.

Andrew Whelan

Chief Executive Officer

Date: 24 March 2016

GLI Finance Limited

For the year ended 31 December 2015

CHIEF FINANCIAL OFFICER'S REVIEW

The 2015 financial results were shaped by the significant changes that the Company has undergone in the financial year. The Company's exit from its last CLO holding in March 2015, accounts for the drop in CLO income while the expanded loan book is the driver behind higher interest earnings in the period. To enable this shift, the Group's regulatory status was successfully changed from a Guernsey Authorised Collective Investment Scheme to a Non-regulated Financial Services Business.

In the year, we also established a 100% owned subsidiary, GLI Asset Management ("GLIAM") which obtained its POI (Protection of Investors) licence on 30 June 2015, thereby paving the way for an asset management business providing GLI with a non-interest income stream. GLIAM has been revenue generating since the launch of its first closed end fund ("GLIAF") in September 2015 and now has a solid platform for growth in 2016. Upon launch, GLI as a Group novated GBP42m of its loan book to GLIAF and correspondingly received a 76.3% holding entitling GLI to a monthly dividend.

To assist the growth in the loan volume on the platform portfolio during the year, GLI relied on funding from a GBP20m ordinary share issue in March 2015 and further drawdowns on the GBP30m loan facility provided by Sancus and its co-lenders. This capital expansion has led to higher financing expenses and elevated dividend requirements.

December 2015 saw further important changes following an agreement with Somerston, a family office, to form a strategic partnership and their resulting investment in the Group through Golf Investments Limited. The issue of 15,000,000 new Ordinary Shares at the end of December 2015 and the sale of GBP15m of GLIAF shares (post year-end) to Golf has not only cemented a valuable partnership but it has also enabled GLI to reduce its overall cost of capital, through the reduction of the Sancus loan facility which was subsequently refinanced with a new GBP14.86m syndicated facility on 15 March 2016 at a reduced interest rate of 8.75% (previously 11%) for a term of twelve months.

Income

(See Figure 1 in supplementary document)

FY15 income was driven by three main developments:

- Interest income increased significantly in the period following the expansion of the GLI loan book in the period. Loan interest in the fourth quarter was lower than the first three quarters due to part of the loan book being transferred to GLIAF in September 2015 and several interest write-offs in December 2015.

- Dividend income increased in FY15 due to the commencement of dividend receipts from GLIAF in November 2015.

- Other income in FY14 almost entirely relates to CLO income. Due to the disposal of the remaining CLO assets in the early part of 2015, this balance significantly reduced.

Company Summarised Results

GLI Finance Limited

For the Year ended 31 December 2015

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

As noted in the Chairman's Statement, we look at Company results as opposed to Group results to get an accurate understanding of how GLI is performing. A full reanalysed Statement of Comprehensive Income is included on page 15 which strips out the effects of movements in foreign exchange and unrealised and realised gains and losses.

In FY15, in light of the lower overall income levels and higher financing costs, the reanalysed profit/(loss) shows a loss for the 2015 period - we refer to page 15 for detailed consideration of the development of this number. Reported losses were greater due to the impact of downwards revaluations on the realised/unrealised gains/losses account.

Investment Portfolio

(See Figures 2 and 3 in supplementary document)

At 31 December 2015, GLI's investment portfolio was valued at GBP147.4m, compared to GBP106.9m at 31 December 2014, representing a 37.9% increase. This increase was driven by the net effect of additional funding, which enabled further investment in both loans and equity in new and existing platforms, and the net capital losses on investments recognised during the year (as detailed in the Company Statement of Comprehensive Income - Reanalysed on page 15):

§ The value of our SME Platform portfolio increased from GBP49.3m at the end of 2014, to GBP57.8m at the end of 2015, representing a 17.3% increase. This increase was due to the acquisition of four new equity stakes since the end of 2014, plus revaluations in the period.

§ The loan book has grown 61.2% from the end of 2014 when the balance was GBP34.8m to GBP56.2m at the end of 2015 as a result of higher platform and working capital loans. Since June 2015 when the loan book was GBP83.3m, the balance reduced due to the partial transfer of the GLI loan book into GLIAF in September 2015.

§ GLIAF shares were purchased in September 2015 for an amount of GBP40.3m, of which GBP6.8m was held by Sancus, with GLI Company holding a value of GBP33.5m at 31 December 2015. Post year-end the shares held by Sancus were transferred back up to GLI and offset against inter-company loans.

§ Following the disposal of FOIF in March 2015, GLI no longer held any CLO assets at 31 December 2015.

Given that we are partway through our strategic review, we have decided to limit information on the underlying platforms whilst we consider and finalise plans for each platform. Further information will be provided to shareholders during the course of 2016. Details of all of the platforms can however be found on our website www.glifinance.com under 'our platforms' section.

Geographical Split

From December 2014 to December 2015, a higher asset weighting towards UK assets can be observed. This is attributable to the disposal of the CLO assets (US based) in the past year and the novation of some US loan assets into GLIAF (UK based).

(See Figures 4 and 5 in supplementary document)

GLI Finance Limited

For the year ended 31 December 2015

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

Lending activity

Loans processed by GLI's family of platforms increased significantly in FY15 due to the addition of several platforms and strong origination growth at many of the platforms. The number of loans completed in the period increased by 113.4% from 2014 to 2015 while the average loan size decreased by 12.8% over the same period.

(See Figures 6, 7 and 8 in supplementary document)

Company Statement of Comprehensive Income - Reanalysed

The below table reanalyses the Company's Statement of Comprehensive Income to show a like for like comparison of income earned by separating out realised gains/losses, unrealised gains/losses and gains/losses on currency transactions.

GLI Finance Limited

For the year ended 31 December 2015

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

Company Statement of Comprehensive Income - Reanalysed (continued)

Reanalysed total income for the year ending December 2015 was GBP5.9m compared to GBP7.0m in 2014. The main variance resulting from a drop in CLO income in the year following the final disposal of CLO assets in March 2015. However, this drop in CLO income was partially offset by a GBP2.3m increase in interest income that was driven by the loan book increasing from GBP34.8m in 2014 to GBP56.2m in 2015.

After expenses and legal costs, we saw a loss of GBP3.9m in the year versus a profit of GBP0.3m in 2014. Going forward as noted in the CEO report the Company will be looking to achieve cost savings but also looking to decrease the cost of debt by halving the loan balance and lowering the rate from 11% to 8.75%. The reanalysed loss of GBP3.9m excludes any unrealised gains or losses on financial assets, which although overall in 2015 we had a total loss of GBP6.8m following the strategic review, in future it could be likely that we see this line increase again as the platforms grow and become more successful.

Expenses in 2015 were approximately GBP0.2m lower than the equivalent period in 2014 mainly due to the elimination of CLO Management fees. However, this was offset by increases in the following primary expense categories:

- Legal and professional fees at GBP2.4m were approximately GBP1.5m higher than 2014. These costs rose significantly, particularly in the first six months of the year following a busy start to the year in terms of platform acquisitions and investments.

- Marketing and PR expenses saw an increase in 2015 and were approximately GBP0.7m higher than the equivalent period in 2014. These are considered to be recurring costs however, work is ongoing to try to reduce these costs where possible, by reducing some of the service providers GLI have previously used.

- As anticipated, Staff and Director costs have increased in 2015 in line with the strengthening of several in-house GLI functions.

We saw an increase in Finance costs during the year at GBP4.1m compared to GBP0.8m in 2014. The higher finance costs were driven by the following:

- Higher Sancus loan interest and facility fees of approximately GBP2.8m (2014 GBP0.8m) due to elevated loan drawdowns as well as further loan amendments; and

- And increased zero dividend preference share uplift charges amounting to approximately GBP1.31m, (2014 GBP0.06m) due to FY15 being the first full year of 2019 ZDP uplift charge.

The loan book includes loans to both platforms in which GLI holds an investment as well as third party platforms. Based on the December platform loans balance, the weighted average return on loans is 7.15%, which is lower than the equivalent figure for December 2014 (9.1%). This is due to a large proportion of the loan book being novated into GLIAF in September 2015, leaving mostly loans with our subsidiaries which return a lower rate of return.

GLI Finance Limited

For the year ended 31 December 2015

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

Change in Net Asset Value

During the year, the Company NAV increased from GBP88.2m as at 31 December 2014 to GBP98.2m as at 31 December 2015, representing an 11.4% increase. This comprises net proceeds from the issue of new shares of GBP29.3m, losses of GBP9.5m and dividends paid of GBP9.8m.

During the year the number of shares in issue increased by 32.93% from 172,960,021 Shares (31 December 2014) to 229,917,343 Shares (31 December 2015). The Company NAV per share moved from 51.00p at the end of December 2014, to 42.73p at the end of December 2015 representing a 16.2% decrease for the period. This was largely due to a net write-down of investments and loans at the year end the increase in the number of shares in issue.

Net Asset Value Summary

Loan Payable

The loan facility of GBP30m with Sancus Limited which was in place at the year-end stood at GBP28.9m. A new syndicated facility was signed on the 15 March 2016 for GBP14.86m and at a lower rate of 8.75% on a twelve month term (see note 23 of the financial statements).

ZDP Payable

The balance of GBP22.2m includes:

- 20,000,000 GBP zero dividend preference (ZDP) shares issued in December 2014 for the Sancus acquisition;

- 791,418 GBP ZDPs issued in March 2015 for the investment in TradeRiver Finance;

- GBP1.4m of entitlement accrued to date on the ZDPs.

Please refer to note 15 of the financial statements for details.

Other Net Assets

The other net assets balance of GBP2.0m is lower than previous periods largely due to the increase in payables.

GLI Finance Limited

For the year ended 31 December 2015

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

FX Rates

The Company has transactions in a number of currencies. The table below lists out the rates used for the years/periods ended 31 December 2015, 30 June 2015, 31 December 2014 and 30 June 2014:

Rate of exchange vs. GBP1:00

Principal Risks and Uncertainties

There are a number of risks and uncertainties that can impact the performance of the Company. Some of these are beyond the control of the Company and its Board. However, the Board and Executive Team do closely monitor market trends and risks on an on-going basis and a review of risks forms part of the quarterly board meetings. The main risks identified by the Board that could affect the Company's performance are as follows:

Business risk:

The Company faces risks from a rapidly changing industry landscape and increased competition. The Executive Team monitor current trends and forecasts on a regular basis.

Interest rate risk:

A shift in interest rates is a risk during the current environment of changing economic conditions and volatility in global financial markets. The portfolio is diversified in fixed and floating rate assets to reduce risk and the Board and Executive Team also monitor data from advisors on a regular basis in order to ensure a balance between funding and returns.

Portfolio Management risk:

There is a risk of underperformance of the underlying investments.

There is Company representation on the majority of the portfolio company boards with the Chief Executive Officer or a member of the Executive Team being involved with portfolio companies' management. The Company closely monitors developments within portfolio companies.

The Company also has a currency risk in that it has transactions in non-GBP currencies. The financial statements are prepared in GBP. The Board monitors the foreign exchange fluctuations and considers using a hedging programme to mitigate loss against foreign exchange. After consideration it was deemed that a hedging programme was not necessary at this time.

Availability of financing risk:

The Company faces the risk of lack of available financing to fund potential acquisitions. The Executive Team continually monitor the working capital requirements and engage independent financing specialists to advise on financing and source loans.

Operational risk:

The Company performs ongoing internal monitoring of operational processes and controls and receives regular reports from the administrators of the Company on operational breaches and errors, adherence to policies and procedures and compliance reporting to reduce risk of fraud and bribery. The Board is aware of the UK Bribery Act 2010 and has adopted an anti-bribery and corruption policy relevant to the nature of the Company and its business activities. The Board has also adopted a succession plan to mitigate the risk of disruption from the loss of key individuals.

Default Risk:

The Company is exposed to default risk from the loans made on the underlying platforms. The Executive Team closely monitors the loans made and is confident in the management skills in assessing risk, origination and recovery. The Chief Executive Officer or an Executive Team member is on the majority of the boards of these platforms and are kept informed of procedures around risk and are also alerted to any possible defaults early on.

GLI Finance Limited

For the year ended 31 December 2015

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

Principal Risks and Uncertainties (continued)

Compliance/Regulatory risk:

As a Guernsey Investment Company traded on the AIM market, the Company is required to comply with the AIM Rules. In conjunction with the Nomad, the Company Secretary monitors statutory requirements to ensure compliance with AIM Rules. As a Guernsey incorporated company under the AIM Rules for Companies, the Company is not required to comply with the UK Corporate Governance Code issued by the Financial Reporting Council (formerly the Combined Code on Corporate Governance) and applicable for accounting periods beginning on or after 1 October 2014 (the "UK Code"). However, the Directors place a high importance on ensuring that high standards of corporate governance are maintained and have considered the principles and recommendations of the UK Code. The compliance monitoring policies and procedures operated by the Administrator and adopted by the Company provide compliance oversight and regular reporting of the Company's adherence with the Law and applicable legislation issued by the GFSC. Direct responsibility for anti-money laundering and counter financing of terrorism currently lies with the internal MLRO.

GLI Finance Ltd - FATCA compliance:

During 2014, the Company and the relevant financial entities within the Group completed registration with the IRS in order to receive their Global Intermediary Identification Numbers. By 31 December 2015, management confirmed that GLI Finance was fully compliant with the requirements of FATCA. The Foreign Account Tax Compliance Act (FATCA) is a United States federal law that requires United States persons, including individuals who live outside the United States, to report their financial accounts held outside of the United States, and requires foreign financial institutions to report to the Internal Revenue Service about their U.S. clients. Inter-Governmental Agreements are in place with various Governments around the world, including all of the jurisdictions in which our platforms are incorporated, which allows Foreign Financial Institutions (as defined by FATCA) to report to their local tax authorities, who then report the data to the Internal Revenue Service in the US.

In order that GLI Finance is fully compliant with the requirements of FATCA, the Company and its relevant subsidiary companies, as well as the platforms in which GLI Finance has a stake, are all registered and are in possession of their Global Intermediary Identification Number (GIIN), which is an essential part in proceeding towards reporting status.

Conflicts risk:

The Company now invests in a number of platforms and whilst no platform is in direct competition with any other, this is a consideration when looking at potential new platforms and one which the Company looks to avoid. The Chief Executive Officer or a member of the Executive Team is on the board of the majority of the platforms in which the Company invests. There are service agreements in place to confirm that any information acquired as a result of being a Director of each platform remains confidential to that platform. No information is shared with other platforms without the knowledge and consent of the relevant platform.

Emma Stubbs

Chief Financial Officer

Date: 24 March 2016

GLI Finance Limited

For the year ended 31 December 2015

DIRECTORS' REPORT

The Directors present their Annual Report and Audited Consolidated and Company financial statements (the "financial statements") for the year ended 31 December 2015. 

The Directors submit their Report together with the Consolidated and Company Statements of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Shareholders' Equity, the Consolidated and Company Statements of Cash Flows and the related notes for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, in accordance with any relevant enactment for the time being in force, and are in agreement with the accounting records, which comply with Section 238 of The Companies (Guernsey) Law, 2008.

Principal Activities

GLI Finance Limited (the "Company") was incorporated and domiciled in Guernsey, Channel Islands, as a company limited by shares and with limited liability on 9 June 2005 in accordance with The Companies (Guernsey) Law, 1994 (since superseded by The Companies (Guernsey) Law, 2008). Until 25 March 2015, the Company was Authorised as a Closed-ended Investment Scheme and was subject to the Authorised Closed-ended Investment Scheme Rules 2008 issued by the Guernsey Financial Services Commission ("GFSC"). On 25 March 2015, the Company was registered with the GFSC as a Non-Regulated Financial Services Business, at which point the Company's authorised fund status was revoked. The Company's Ordinary Shares were admitted to the AIM market of the London Stock Exchange on 5 August 2005. The zero dividend preference ("ZDP") shares were listed and traded on the main market of the London Stock Exchange with effect from 5 October 2015.

The Company does not have a fixed life and the Articles do not contain any trigger events for a voluntary liquidation of the Company.

The Company is currently an investing company for the purpose of the AIM rules. The Executive Team is responsible for the management of the Company.

The Group

As at 31 December 2015, the Group comprises the Company and the entities disclosed in note 18 to the financial statements.

Investment Objective & Policy

Please refer to pages 82 for the detailed version of the Company's investment objective and policy.

Directors and Executive Team of the Company

A list of the Directors and the Executive Team who served the Company during the year is shown on page 3.

Results and Dividends

The Group and Company results for the year are set out on pages 33 and 34. Dividends of GBP9,774,010 were paid during the year (31 December 2014: GBP7,036,588).

A detailed review of the Company's performance during the year ended 31 December 2015 is contained in the Chief Financial Officer's Report.

Foreign Account Tax Compliance Act

The Foreign Account Tax Compliance Act ("FATCA") became effective on 1 January 2013. The legislation is aimed at determining the ownership of US assets in foreign accounts and improving US tax compliance with respect to those assets. On 13 December 2013, the States of Guernsey entered into an intergovernmental agreement ("IGA") with US Treasury, in order to facilitate the requirements under FATCA. The relevant legislation to bring the IGA into Guernsey Law is currently being drafted and is expected to be brought into force within the next few months. In May 2014, the US announced a six month delay to the new entity account on-boarding rules, from 1 July 2014 to 1 January 2015, for the operation of the US FATCA regulations, which was extended to the IGA. The Company registered with the Internal Revenue Service ("IRS") and was approved on 30 June 2014 as a Foreign Financial Institution ("FFI") and a lead member of an Expanded Affiliated Group.

GLI Finance Limited

For the year ended 31 December 2015

DIRECTORS' REPORT (continued)

Substantial Shareholdings

As at 22 March 2016, the Company was aware of the following substantial shareholders who held more than 3 percent of issued share capital of the Company:

* Based on the share register as at 22 March 2016.

Directors Interests

As at 31 December 2015, the Directors had the following beneficial interests in the Ordinary Shares of the Company:

(1) Appointed 8 December 2015

(2) Resigned 19 December 2015 and therefore his shareholding as at 31 December 2015 is not disclosed

See Note 23 of the financial statements for details of the Directors interest in the Ordinary Shares of the Company between the year end and the date of this report.

As at 31 December 2015, there were no unexercised share options for Ordinary Shares of the Company (31 December 2014: nil Ordinary Shares).

Statement of Directors' Responsibilities

The Directors are responsible for preparing the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), and The Companies (Guernsey) Law, 2008 for each financial period which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial period and of the profit or loss for that period. International Accounting Standard 1 requires that financial statements present fairly for each financial period the Company's financial position, financial performance and cash flows. This requires faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's "Framework for the preparation and presentation of financial statements". In virtually all circumstances a fair presentation will be achieved by compliance with all IFRS as adopted by the EU.

In preparing these financial statements, the Directors are required to:

· ensure that the financial statements comply with the Memorandum and Articles of Incorporation and IFRS, as adopted by the European Union;

· select suitable accounting policies and apply them consistently;

· present information including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· make judgements and estimates that are reasonable and prudent; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

GLI Finance Limited

For the year ended 31 December 2015

DIRECTORS' REPORT (continued)

Statement of Directors' Responsibilities (continued)

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements have been properly prepared in accordance with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Directors Statement

The Directors who held office at the date of approval of this Directors' Report confirm that:

· there is no relevant audit information of which the Company's auditors are unaware;

· the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information; and

· the annual report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Company's performance, business model and strategy.

Going Concern

The Directors have considered the going concern basis in the preparation for financial statements as supported by the Director's assessment of the Company's ability to pay its debts as they fall due and have assessed the current position and the principal risks facing the business with a view to assessing the prospects of the Company. Based on this assessment, the Directors are of the opinion that the Company has adequate financial resources to continue in operation and meet its liabilities as they fall due for the foreseeable future. Hence the Directors believe it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

Viability Statement

In accordance with provision C.2.2 of the 2014 revision of the Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months required by the 'Going Concern' provision. The Directors have conducted this review for a three-year period for the following reasons:

• The Group's plan period covers a three-year period, thereby providing a degree of long-term visibility that is not excessive for the rapidly shifting alternative finance sector.

• The Group holds significant investments in relatively early stage companies that become increasingly challenging to forecast for periods beyond three years.

The Directors confirm that they have a reasonable expectation that the Group will continue to operate and meet its liabilities as they fall due over the three-year period to December 2018. In making this statement, the Directors have taken account of the Group's current position and prospects, the Group's strategy and the principal risks facing the business (please refer to the CEO Report). This assessment has been supported by subjecting the Group's three-year model to severe but reasonable scenarios and reviewing the effectiveness of any mitigating actions. This assessment mainly focused on the risk of default on loans, the underlying investment performance risk, the pricing pressure from competitors as well as risks in lending rates, currency rates and the availability of financing. Furthermore the Directors have considered the credit facility with Sancus Limited, which at the year end was a GBP30m facility but post year end the Company repaid and entered into a new loan for GBP14.86m with a 1 year term at a reduced rate of 8.75%. It is the intention of the Directors to refinance this new loan prior to maturity. The Directors have considered the potential impact of these risks on the business model, future performance, solvency and liquidity over the period.

Approved and signed on behalf of the Board of Directors on 24 March 2016.

GLI Finance Limited

For the year ended 31 December 2015

CORPORATE GOVERNANCE

Compliance

As a Guernsey incorporated company and under the AIM Rules for Companies, it is not a requirement for the Company to comply with The UK Corporate Governance Code ("UK Code"), however, the Directors place a high degree of importance on ensuring that high standards of corporate governance are maintained in order to safeguard and enhance long-term shareholder value. The Directors have reviewed their responsibilities and reporting obligations against the standards included in the UK Code published in September 2014, furthermore, the Directors have considered the provisions of the Finance Sector Code of Corporate Governance published by the Guernsey Financial Services Commission ("GFSC") in September 2011 (the "Guernsey Code").

The Board has in place a coherent and robust corporate governance framework designed to deliver the Company's strategy and grow a diversified business. In recognition of the Company's evolution from a traditional investment fund and the ensuing internalisation of key management functions, the Board believes that applying the principles and reporting against the provisions of the UK Code better reflects the nature, scale and complexity of the business and enables the Board to provide better information to shareholders than would have otherwise been possible by using an alternative corporate governance code.

As at 31 December 2015, the Company complied substantially with the relevant provisions of the UK Code and it is the intention of the Board that the Company will comply with those provisions (save with regard to the following provisions listed below) throughout the year ending 31 December 2016:

· The appointment of a Senior Independent Director: Given the size and composition of the Board it is not felt necessary to separate the roles of Chairman and Senior Independent Director. The Board considers that all the independent Directors have different qualities and areas of expertise on which they may lead where issues arise and to whom concerns can be conveyed.

· Establishment of management engagement committee: Due to its size and composition, the Board does not consider it necessary to establish a management engagement committee. The Board as a whole monitors the performance of the Company's key service providers, either through Board meetings or, if appropriate, through the use of an appropriately constituted committee.

· Internal audit function: The Board has reviewed the need for an internal audit function, as recommended by the Code. Due to the size of the Company and the delegation of day-to-day operations to regulated service providers, an internal audit function is not considered necessary. The Directors will continue to monitor the systems of internal controls in place in order to provide assurance that they operate as intended.

Composition and Independence of Directors

As at 31 December 2015, the Board consisted of five members, three of whom are non-executive and independent. Mrs Stubbs and Mr Whelan are both members of the Group's Executive Team and are therefore not considered independent under the UK Code.

The Chairman of the Board is Patrick Firth and biographies for all Directors can be found on pages 5 and 6. In considering the independence of the Chairman, the Board has considered the provisions of the UK Code relating to independence and has determined that Patrick Firth is an Independent Director.

The Directors recognise the importance of succession planning for the Company's Board and review the composition of the Board annually. As of December 2015, Patrick Firth and Fred Forni will have each served as Directors of the Company for ten years, however, the Board is of the view that length of service will not necessarily compromise the independence or contribution of Directors where continuity and experience can be a benefit to the Board. In considering the independence of the Chairman and Mr Forni, the Board has considered the provisions of the UK Code relating to independence and remains satisfied that they remain independent of the Company.

GLI Finance Limited

For the year ended 31 December 2015

CORPORATE GOVERNANCE (continued)

Composition and Independence of Directors (continued)

The Board believes that long serving Directors should not be prevented from forming part of an independent majority or from acting as Chairman and no limit has been imposed on the overall length of service of the Directors. Each Director will retire, and seek reappointment at every third annual general meeting ("AGM"), with those serving for nine years or more subject to reappointment annually.

The Directors believe that the Board has a balance of skills and experience which enables it to provide effective strategic leadership and proper governance of the Company.

The Board has contractually delegated external service providers for the share registration and the day to day accounting and company secretarial requirements. Each of these contracts was only entered into after proper consideration by the Board of the quality and services offered. The Board is responsible for the appointment and monitoring of these service providers.

The Board, Audit and Risk Committee and Remuneration Committee undertake an annual evaluation of their own performance and that of individual Directors. This includes a formal process of self-appraisal together with the Chairman reviewing each member's balance of skills, experience, independence, performance, contribution and commitment to the Group to ensure that the Board and its committees continue to operate effectively, or to identify areas where action is required. The remainder of the Board is responsible for evaluating the performance of the Chairman. The Chairman also has responsibility for assessing the individual Board members' training requirements.

Executive Team

As at the year end, the Company employs an executive team comprising Andrew Whelan (Chief Executive Officer), Emma Stubbs (Chief Financial Officer), Marc Krombach (Managing Director) and Louise Beaumont (Head of Public Affairs and Marketing) (together the "Executive Team"). The Executive Team is responsible for the management of the Company's investment portfolio. Geoff Miller resigned as Chief Executive Officer on 19 December 2015.

The non-executive independent Directors monitor and evaluate the performance of the Executive Team.

Board Committees

Audit and Risk Committee

An Audit and Risk Committee has been appointed and conducts formal meetings at least three times a year. The Audit and Risk Committee's main role and responsibility is to provide advice to the Board on whether the annual report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

In addition, the Audit and Risk Committee acts as an integral part of the Company's risk management framework by overseeing and advising the Board on the current and potential risk exposures of the Company. Particular focus is paid to the Company's principal risks, being those with the greatest potential to influence shareholders' economic decisions, and the controls in place to mitigate those risks.

The Audit and Risk Committee is currently chaired by John Whittle (as an alternate interim chairman to James Carthew) and its other members are Patrick Firth and Fred Forni. The Board has considered the membership of the Audit and Risk Committee and has determined that the members of the Audit and Risk Committee have recent and relevant financial experience. For the principal duties and report of the Audit and Risk Committee please refer to the Audit and Risk Committee Report on pages 26 to 27.

Remuneration Committee

A Remuneration Committee has been appointed and is comprised of Fred Forni as Chairman, Patrick Firth and James Carthew. The key duties include, but are not limited to, agreeing a framework for Director remuneration, ensuring management staff are appropriately incentivised to enhance performance, and reviewing the effectiveness of the remuneration policy on an on-going basis. The Remuneration Committee, which was formed on 16 August 2011, has adopted a formal terms of reference. Refer to the Remuneration Report on pages 28 and 29 for details of fees paid to the Directors during the year.

Nomination Committee

A Nomination Committee has been appointed and is comprised of Patrick Firth as Chairman, Fred Forni and James Carthew. The key duties include, but are not limited to, reviewing the structure, size and composition of the Board, to consider the succession planning for directors and senior executives, reviewing the leadership needs of the organisation and identifying candidates for appointment to the Board.

Management Engagement Committee 

The Directors do not consider it necessary to establish a separate management engagement committee at this stage. The business, which would have otherwise been delegated to such a committee, is considered by the Board as a whole.

GLI Finance Limited

For the year ended 31 December 2015

CORPORATE GOVERNANCE (continued)

Meetings

The Directors meet on a quarterly basis ("Management" meetings per the table below) and at other unscheduled times ("Other" meetings per the table below) when necessary to assess Group operations and the setting and monitoring of investment strategy and investment performance. At Management meetings, the Board receives from the Administrator and Executive Team a full report on the Group's holdings and performance. The Board gives directions to the Executive Team as to the investment objectives and limitations, and receives reports in relation to the financial position of the Group and the custody of its assets.

The Board is responsible for monitoring and scrutinising the performance of the Executive Team and has formally defined the types of decision which must be taken at Board level from those which have been delegated. Matters reserved for the Board include (but are not limited to) those which affect long-term strategy, appointment and movement of senior personnel, key service providers and their remuneration, communication with shareholders, corporate actions, determining the value of the Company's investments and agreeing the terms for any borrowing arrangement.

The table below, details the attendance at Board and Committee meetings during the year:

(1) Appointed 8 December 2015

(2) Resigned 19 December 2015

Anti-bribery and Corruption

The Board acknowledges that the Company's international operations may give rise to possible claims of bribery and corruption. In consideration of the UK Bribery Act, the Board had conducted an assessment of the perceived risks to the Company arising from bribery and corruption to identify aspects of business which may be improved to mitigate such risks. The Board has adopted a zero tolerance policy towards bribery and has reiterated its commitment to carry out business fairly, honestly and openly.

Shareholder Views

The Net Asset Value figures are published quarterly. The Board's advisers and the Executive Team maintain regular dialogue with institutional and substantial shareholders, the feedback from which is reported to the Board and the Chairman. Shareholders who wish to communicate with the Board should contact the Company Secretary in the first instance, whose contact details can be found on page 3.

The Board also regularly monitors the shareholder profile of the Company. All shareholders have the opportunity, and are encouraged, to attend the Company AGM at which members of the Board are available in person to meet shareholders and answer questions. In addition, the Company's Corporate Broker and Executive Team each maintain regular contact with major shareholders and report regularly to the Board on shareholder views.

Social, Ethical and Environmental Policies

The Board does not consider it appropriate to directly implement social, ethical and environmental policies in place within a company investing in financial instruments. However, the Board acknowledges that in addition to financial, legal and market due diligence, the Executive Team's investment appraisal process includes a rigorous assessment of a potential Investee company's social, ethical and environmental policies, and therefore the Executive Team monitors such policies and practices following any investment.

GLI Finance Limited

For the year ended 31 December 2015

AUDIT AND RISK COMMITTEE REPORT

The Company has established an Audit and Risk Committee with formally delegated duties and responsibilities within written terms of reference (which are available from the Company's Secretary). The Audit and Risk Committee has been in operation throughout the year under review.

Chairman and Membership

The Audit and Risk Committee is chaired by James Carthew, and its other members are the other independent Directors of the Company. John Whittle has been appointed as an alternate director to Mr Carthew and is currently acting as the Company's interim chairman of the Audit and Risk Committee. Only independent Directors serve on the Audit and Risk Committee and members of the Audit and Risk Committee have no links with the Company's external auditor and are independent of the Executive Team. The Audit and Risk Committee meets not less than three times a year in Guernsey, and meets the external auditor at least twice a year in Guernsey. The identity of the chairman of the Audit and Risk Committee is reviewed on an annual basis and the membership of the Audit and Risk Committee and its terms of reference are kept under review.

Duties

The principal duties of the Audit and Risk Committee in discharging its responsibilities include reviewing the annual report and audited financial statements and half yearly report and audited financial statements, the valuation of the Company's investment portfolio, the system of internal controls and the terms of appointment of the external auditor together with their remuneration. The Audit and Risk Committee consider the appointment of the external auditor, discuss and agree with the external auditor the nature and scope of the audit, keep under review the agreed scope, review the results and effectiveness of the audit and the independence and objectivity of the external auditor, and review the external auditor's letter of engagement and management letter.

The Audit and Risk Committee is responsible for monitoring the financial reporting process, including the appropriateness of the Company's accounting policies and the effectiveness of the Company's internal control and risk management systems by analysing the key procedures adopted by the Company's service providers. The Audit and Risk Committee oversees the Company's relationship with the external auditor, including making recommendations to the Board on the appointment of the external auditor and their remuneration. The Audit and Risk Committee also reviews, considers and, if thought appropriate, recommends for the purposes of the Group's financial statements valuations prepared by the Executive Team. These valuations are the most critical element in the Group's financial statements and the Audit and Risk Committee questions them carefully.

The Audit and Risk Committee is charged with reviewing the risk appetite, tolerance and strategy of the Company, in addition to overseeing current risk exposures and the future risk strategy. The Audit and Risk Committee reviews the Company's overall risk assessment processes used for the identification and management of new risks and monitoring risks of critical importance. The Audit and Risk Committee is responsible for ensuring timely reporting of information that aids the Board's decision making.

Risk Management and Oversight

The Audit and Risk Committee is responsible for assessing the principal risks facing the business, with particular focus on critical risks or those which might threaten the Company's business model, future performance, solvency or liquidity. At the end of the year under review, the Audit and Risk Committee remained satisfied that each of the principal risks and uncertainties faced by the Company (as described in the Chief Financial Officer's Report) were appropriate.

Financial Reporting and Audit

The Audit and Risk Committee reviews, considers and, if thought appropriate, recommends to the Board the approval of the contents of the half yearly report and audited financial statements and annual report and audited financial statements together with the external auditor's report thereon. The Audit and Risk Committee focuses particularly on compliance with legal requirements, accounting standards and the relevant Listing Rules and ensuring that an effective system of internal financial and non-financial controls is maintained. The ultimate responsibility for reviewing and approving the half yearly report and unaudited financial statements and annual report and audited financial statements remains with the Board.

The Audit and Risk Committee provides a formal forum through which the external auditor reports to the Board and the external auditor is invited to attend Audit and Risk Committee meetings at which annual and half yearly financial statements are considered.

After discussions with the Executive Team and external auditor, the Audit and Risk Committee determined that the key risk of misstatement of the Company and Group's financial statements relates to the valuation of financial assets at fair value through profit or loss, in the context of judgements used to evaluate current fair value, and revenue recognition.

Note 3 to the Financial Statements highlights that the total carrying amount of the Group's financial assets was GBP121.9m. Freely tradeable market prices are not available for these financial assets and liabilities such that the Group's financial assets and liabilities are valued based on the accounting policies described in detail in Note 2(m) to the financial statements. The valuation process and methodology have been discussed with the Executive Team and external auditor. The Executive Team provides a detailed valuation report to the Company on a quarterly basis. The Audit and Risk Committee has reviewed the valuation report and the Executive Team has confirmed to the Audit and Risk Committee that the valuation methodology has been applied consistently during the year and that the external auditor's work had not identified any errors or inconsistencies that were material in the context of the financial statements as a whole.

GLI Finance Limited

For the year ended 31 December 2015

AUDIT AND RISK COMMITTEE REPORT (continued)

Financial Reporting and Audit (continued)

The accounting policies for revenue recognition are described in detail in Note 2(e) to the financial statements. The Audit and Risk Committee has reviewed the revenue recognition policies of the Group and has determined that they are in accordance with the accounting standards and have been applied consistently. The external auditor's work has not identified any errors or inconsistencies that were material in the context of the financial statements as a whole.

After due consideration the Audit and Risk Committee recommends to the Board that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Company's performance, business model and strategy.

External Auditor

The Audit and Risk Committee considers the nature, scope and results of the auditor's work, monitors the independence of the external auditor, and reviews, develops and implements policy on the supply of non-audit services that are to be provided by the external auditor. All non-audit services are pre-approved by the Audit and Risk Committee after they are satisfied that relevant safeguards are in place to protect the auditor's objectivity and independence.

During the 31 December 2015 year end audit process, the Audit Committee assessed the effectiveness of the audit by:

· Meeting with the external auditors and reviewed the audit plan;

· Considering the external auditors' fulfilment of the agreed audit plan and variations from it;

· The Audit Committee Report from the auditor highlighting any major issues that arose during the course of the audit; and

· Conducting interviews to obtain feedback from the Executive Team and Administrator evaluating the performance of the audit team.

For the year ended 31 December 2015, the Audit Committee were satisfied that the audit was effective and that there were no factors which had any bearing on the independence or effectiveness of the external auditor during the course of the audit or the year under review.

Audit Tender

During 2015, the Audit and Risk Committee considered the length of tenure of the external auditor and assessed the suitability of the arrangements in light of the expected future requirements of the business going forward. It was agreed to re-tender the Group's audit and proposal requests were submitted to three of the major audit firms operating in Guernsey. Having met with each firm and after due consideration was given to each proposal, it was agreed by the Audit and Risk Committee that on the grounds of cost, the quality of the service provided and the credentials of the external auditor, it remained appropriate to retain the services of Grant Thornton Limited for the 2015 financial year. This is the sixth year of Grant Thornton Limited's appointment as the Company's external auditor. The Audit and Risk Committee will continue to assess whether a formal re-tendering of the Group's audit is appropriate on an annual basis.

Internal Controls

The Executive Team and Administrator together maintain a system of internal control on which they report to the Audit and Risk Committee. The Audit and Risk Committee has reviewed the need for an internal audit function and has decided that the systems and procedures employed by the Executive Team and Administrator, provide sufficient assurance that a sound system of risk management and internal control, which safeguards shareholders' investment and the Group's assets, is maintained. An internal audit function specific to the Group is therefore considered unnecessary.

The Audit and Risk Committee is responsible for reviewing and monitoring the effectiveness of the internal financial control systems and risk management systems on which the Group is reliant. These systems are designed to ensure proper accounting records are maintained, that the financial information on which the business decisions are made and which is issued for publication is reliable, and that the assets of the Group are safeguarded. Such a system of internal financial controls can only provide reasonable and not absolute assurance against misstatement or loss.

In accordance with the guidance published in the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting by the Financial Reporting Council (the "FRC"), the Audit and Risk Committee has reviewed the Company's internal control procedures. These internal controls are implemented by the Company's Executive Team and the Administrator. The Audit and Risk Committee has performed reviews of the internal financial control systems and risk management systems during the year. The Audit and Risk Committee is satisfied with the internal financial control systems of the Group.

The Audit and Risk Committee has considered non-financial areas of risk such as disaster recovery and investment management, staffing levels and considers adequate arrangements to be in place.

On behalf of the Audit and Risk Committee

John Whittle

Audit and Risk Committee Interim Chairman

Date: 24 March 2016

GLI Finance Limited

For the year ended 31 December 2015

REMUNERATION REPORT

Introduction

An ordinary resolution for the approval of the annual remuneration report will be put to the shareholders at the annual general meeting to be held in 2016.

Remuneration Policy

A Remuneration Committee was appointed in 2011 comprised of Fred Forni as Chairman, Patrick Firth and James Carthew. The key duties include, but are not limited to, agreeing a framework for Director remuneration, ensuring management staff are appropriately incentivised to enhance performance, and reviewing the effectiveness of the remuneration policy on an on-going basis. No Director is involved in determining their own remuneration.

Non-Executive Directors

The Articles of Incorporation provide that, unless otherwise determined by Ordinary Resolution, there shall be paid to the Board such fees for their services in the office of Director as the Board may determine. It is the Board's policy to determine the level of Directors' fees having regard to the fees payable to non-executive directors in the industry generally, the role that individual Directors fulfil in respect of Board and Committee responsibilities and time committed to the Company's affairs.

An ordinary resolution will be proposed to shareholders at the 2016 AGM to instate a limit to the aggregate annual remuneration payable by the Company to non-executive Directors.

The Directors shall also be entitled to be repaid all reasonable out of pocket expenses properly incurred by them in or with a view to the performance of their duties or in attending meetings of the Board or of committees or general meetings.

The Board shall have the power at any time to appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors. The number of Directors shall not be less than two and there shall be no maximum number unless otherwise determined by the Company by Ordinary Resolution. Any Director so appointed shall hold office only until the next following annual general meeting and shall then be eligible for re-election.

Executive Team

Fixed Salary

The Executive Team members are entitled to receive a fixed salary (less applicable tax and social security contributions). See below for details.

Executive Bonus Scheme

In addition to the fixed salary referred to above, certain Executive Team members are also entitled to a contractual bonus.

With effect from 21 January 2013, the Remuneration Committee resolved to implement an incentive pool, which is allocated to the Executive Team members at the Remuneration Committee's discretion. The total pool available is 10% of the total shareholder return in excess of 12%, with the amount to be actually paid out capped at 0.5% of net asset value (NAV) in any one year. To ensure that incentive payments are primarily long term in nature, all payments from the incentive pool will be made one third in cash and two-thirds Company equity, the acquisition price of which for the individual will be the prevailing share price or NAV, whichever is higher. All shares in the Company issued via the Executive Bonus Scheme must be retained by the Executive Bonus Scheme members for the entire tenure of their employment by the Company.

Independent Review

The last independent review of the Company's remuneration policy was conducting September 2014 when the Company engaged Patterson Associates LLP to perform this duty. The scope of the review included the remuneration for both executive and non-executive Directors and sampled the remuneration policies published by a number of peer group and comparable listed companies. The findings of the review were considered by the Remuneration Committee before changes were recommended to the Board. Each of the recommendations was approved and took effect from 1 November 2014.

Save for producing the September 2014 remuneration review, Patterson Associates LLP has no other connections with the Company.

Remuneration

Non-executive Directors

As at 31 December 2015, the non-executive Directors' annualised fees, excluding all reasonable expenses incurred in the course of their duties which were reimbursed by the Company, were as detailed in the table below:

(1) Appointed 8 December 2015

GLI Finance Limited

For the year ended 31 December 2015

REMUNERATION REPORT (continued)

Remuneration (continued)

Non-executive Directors (continued)

The non-executive Directors base fee increased to GBP35,000 per annum with effect from 1 November 2014. In addition to the base fee, the Chairman receives an additional GBP15,000 per annum, the Audit and Risk Committee Chairman (in their absence their Alternate) receives an additional GBP5,000 per annum and the Remuneration Committee Chairman receives an additional GBP2,500 per annum.

There was no increase in Directors' fees during the year ended 31 December 2015. Total Directors fees charged to the Company for the year ended 31 December 2015 were GBP127,717 (31 December 2014: GBP113,340) with GBPnil (31 December 2014: GBPnil) remaining unpaid at the year end.

Executive Team

For the year ended 31 December 2015, the Executive Team members' annual remuneration from the Company, excluding all reasonable expenses incurred in the course of their duties which were reimbursed by the Company, were as detailed in the table below:

(1) Annual Salary of GBP150,000 remunerated via Sancus. Annual salary increased to GBP175,000 with effect from 1 January 2016.

(2) Annual salary increase from GBP99,000 to GBP120,000 with effect from 1 September 2015.

(3) Appointed 6 October 2014 with a fixed annualised salary of GBP130,000.

(4) Previously remunerated via Finpoint. During the current year remunerated via the Company.

(5) Annual salary increase from GBP150,000 to GBP165,000 with effect from 1 November 2014. Mr Miller resigned on 19 December 2015.

During the year, the total Executive Bonus Scheme pool charged to the Company's expenses relating to 2015 was GBPNil (31 December 2014: GBP354,289), with GBPNil (31 December 2014: GBP45,906) remaining outstanding as at 31 December 2015. However, within the current year's Company Statement of Comprehensive Income there is a write back of the Executive Bonus Scheme pool expense overall accrual relating to 2014 amounting to GBP45,906.

As the Executive Bonus Scheme is a non-fixed amount, the total Executive Team remuneration will fluctuate year on year.

Discretionary Executive Bonus Payments

In addition to their fixed salaries and participation in the Executive Bonus Scheme, the Executive Team members were awarded the following discretionary executive bonus payments, by the Remuneration Committee, for duties performed during the year ended 31 December 2015:

(1) Remunerated via Sancus.

On behalf of the Remuneration Committee

Fred Forni

Remuneration Committee Chairman

Date: 24 March 2016

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF

GLI Finance Limited

Our opinion on the financial statements is unmodified

In our opinion the financial statements:

· give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2015 and of the Group's and the parent Company's loss for the year then ended;

· are in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and

· comply with The Companies (Guernsey) Law, 2008.

Who we are reporting to

This report is made solely to the Company's members, as a body, in accordance with section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

What we have audited

GLI Finance Limited's financial statements for the year ended 31 December 2015 comprise the Consolidated and Company Statements of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Shareholders' Equity, the Consolidated and Company Statements of Cash Flows and the related notes.

The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union.

Our assessment of risk

In arriving at our opinions set out in this report, we highlight the following risks that are, in our judgement, likely to be most important to users' understanding of our audit.

Financial assets designated at fair value through profit or loss

The risk: The principal activity of the Group is the provision of secured lending to small and medium sized companies with the objective of producing a stable and predictable dividend yield, with long term preservation of net asset value. Accordingly, the investment portfolio is the largest asset in the financial statements and the unquoted investments therein are designated at fair value through profit or loss ("FVTPL") in accordance with International Accounting Standard (IAS) 39 "Financial Instruments: Recognition and Measurement". Measurement of the fair value of an unquoted investment includes significant assumptions and judgments and we have therefore identified the valuation of financial assets as a significant risk requiring special audit consideration.

Our response: Our audit work included, but was not restricted to, obtaining an understanding of how valuations are performed and Board's process to recognise and measure investments. Our audit work also included agreeing the valuation of the investment portfolio to valuation reports prepared by third party experts, discussion with management and challenging the valuation in conjunction with inspection of supporting documents.

The Group's accounting policy and other disclosures on financial assets and liabilities designated at FVTPL are included in Notes 2 and 3 to the financial statements. The Audit and Risk Committee identified valuation of financial assets at fair value through profit or loss as a key risk of misstatement in its report on pages 26 and 27, where the Committee also described the action it has taken to address this risk.

Revenue recognition

The risk: Under International Standards on Auditing (ISAs) (UK and Ireland), there is a presumption that there are risks of fraud in revenue recognition. Due to the nature of this risk we are required to assess it as a significant risk requiring special audit consideration.

Our response: Our audit work included, but was not restricted to, assessing whether the Group's revenue recognition policies are in accordance with IFRSs as adopted by the European Union, understanding management's process to recognise revenue in accordance with those policies and reviewing significant contracts to determine whether interest and/or dividends have been accounted for in accordance with that policy.

The Group's accounting policy in respect of revenue recognition is included in Note 2. The Audit and Risk Committee identified revenue recognition as a key risk of misstatement in its report on pages 26 and 27, where the Committee also described the action it has taken to address this risk.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF

GLI Finance Limited (continued)

Management override of controls

The risk: Under ISAs (UK and Ireland), for all our audits we are required to consider the risk of management override of controls. Due to the unpredictable nature of this risk we are required to assess it as a significant risk requiring special audit consideration.

Our response: Our audit work included, but was not restricted to, specific procedures relating to this risk that are required by ISA (UK and Ireland) 240, The Auditors Responsibilities relating to Fraud in an Audit of the Financial Statements. This includes tests of journal entries, the evaluation of judgments and assumptions in management's estimates and tests of significant transactions outside the normal course of business.

In particular, our work on financial assets at FVTPL addressed key aspects of ISA (UK and Ireland) 240.

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

Materiality

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

We determined materiality for the audit of the Group financial statements as a whole to be £3,744,000, which is 4% of the Group's net asset value. This benchmark is considered the most appropriate because Group's net asset value (NAV) is the primary performance measure and the quarterly NAV report published by the Group is used to provide financial information to the Group's investors.

Materiality for the current year is higher than the level that we determined for the year ended 31 December 2014 to reflect the increase in the measurement percentage from 2% in 2014 to 4% in the current year. We increased the measurement percentage as we have considered the control environment of the Group to be effective, and the business operations of the Group remain consistent with prior periods and there have been no changes that would require significant additional audit focus.

We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 60% of financial statement materiality for the audit of the Group financial statements. We also determine a lower level of specific materiality for certain areas such as revenues, Directors' remuneration and related party transactions.

We determined the threshold at which we will communicate misstatements to the audit committee to be £187,200. In addition we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.

Overview of the scope of our audit

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

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

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

Our audit approach was based on a thorough understanding of the Group's business and is risk-based. The maintenance of the Group's accounting records is outsourced to third-party service providers. Accordingly, our audit work included:

· obtaining an understanding of, and evaluating, internal controls at the Group and the third-party service providers, and inspecting records and documents held by these third-party service providers; and

· undertaking substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment, the effectiveness of controls over individual systems and the management of specific risks.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF

GLI Finance Limited (continued)

Matters on which we are required to report by exception

Under The Companies (Guernsey) Law, 2008 we are required to report to you if, in our opinion:

· proper accounting records have not been kept by the Company; or

· the Company's financial statements are not in agreement with the accounting records; or

· we have not obtained all the information and explanations, which to the best of our knowledge and belief, are necessary for the purposes of our audit.

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

· materially inconsistent with the information in the audited financial statements; or

· apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or

· otherwise misleading.

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

· we have identified any inconsistencies between our knowledge acquired during the audit and the Directors' statement that they consider the annual report is fair, balanced and understandable; or

· the annual report does not appropriately disclose those matters that were communicated to the audit committee which we consider should have been disclosed.

We have nothing to report in respect of the above.

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

· the Directors' confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the Group including those that would threaten its business model, future performance, solvency or liquidity;

· the disclosures in the annual report that describe those risks and explain how they are being managed or mitigated;

· the Directors' statement in the financial statements about whether they have considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the Group's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; and

· the Directors' explanation in the annual report as to how they have assessed the prospects of the Group, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Responsibilities for the financial statements and the audit

What the Directors are responsible for:

As explained more fully in the Directors' Responsibilities Statement set out on pages 21 and 22, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

What are we responsible for:

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

Grant Thornton Limited

Chartered Accountants

St Peter Port, Guernsey, Channel Islands

Date: 24 March 2016

GLI Finance Limited

For the year ended 31 December 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

The accompanying notes on pages 41 to 81 form an integral part of these financial statements.

GLI Finance Limited

For the year ended 31 December 2015

COMPANY STATEMENT OF COMPREHENSIVE INCOME

All of the (loss)/profit for the current and prior years is attributable to the equity holders of the parent.

The accompanying notes on pages 41 to 81 form an integral part of these financial statements.

GLI Finance Limited

As at 31 December 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The financial statements were approved by the Board of Directors on 24 March 2016 and were signed on its behalf by:

The accompanying notes on pages 41 to 81 form an integral part of these financial statements.

GLI Finance Limited

As at 31 December 2015

COMPANY STATEMENT OF FINANCIAL POSITION

The financial statements were approved by the Board of Directors on 24 March 2016 and were signed on its behalf by:

The accompanying notes on pages 41 to 81 form an integral part of these financial statements.

GLI Finance Limited

For the year ended 31 December 2015

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY