GLIF.L Regulatory News (GLIF)

GLI Finance Limited

Full Year Results 2013

26 March 2014

GLI Finance Limited ("GLIF" or the "Company"), a specialist lender to small and medium sized enterprises, today announces its audited results for the twelve months ended 31 December 2013.

Financial highlights

· Net asset value at 31 December 2013 of 49.99p per share (31 December 2012: 49.09p)

· Total shareholder return of 9%, total return in NAV terms 12.0% over the period

· Interest income, dividends and other income totalled £12.5m, compared to £11m for the same period in 2012, on a like for like basis

· Operating expenses including finance costs, fell from £4.8m for the same period in 2012 to £4.1m in 2013

Company highlights

· Interests acquired in four SME finance platforms during the year, five since year end, bringing total to ten

· Platforms provide an offering that is complementary to the mainstream banking sector

· Current portfolio of platforms will form the core of the Company's business in future

· Monies from exit of CLO portfolio to be deployed into the underlying SME finance assets

Outlook and strategy

· Unique origination capability within SME finance

· Diversified by geography, industry, size of lending and type of lending

· Continued focus on smaller companies' finance assets capable of 10-15% target return

· Potential for synergies between the complementary offerings of the various platforms

· Working with GMB Partners on exit of CLO investments over time

Commenting, Patrick Firth, Chairman of GLIF, said:

"The Board is delighted to present another positive set of results for the Company in a period of significant positive change and development. In the last twelve months we have seen nine new investments being made with SME Lenders, and we now have a diversity of platforms offering a comprehensive range of SME finance solutions

The continuing low interest rate environment and increasing confidence of investors in financial assets has brought more and more competition into the mainstream loan markets, and our preference remains to seek more niche opportunities with greater potential for sustainable competitive advantage across the economic cycle.

I would like to thank shareholders for their continued support and enthusiasm for the changes we have made over the past year and we strongly believe that we have an exciting and profitable future ahead."

For further information, please contact:

Geoffrey Miller

GLI Finance Limited

+1 203 916 0003

+44 7408 830719

Panmure Gordon

Dominic Morley

Fred Walsh

+44 (0)20 7886 2500

Ed Berry

FTI Consulting

+44 (0) 37271046

GLI Finance Limited

For the year ended 31 December 2013

CHAIRMAN'S STATEMENT

I am pleased to report the results of GLI Finance Limited ("GLIF" or the "Company") for the year ended 31 December 2013.

Although the Company's Net Asset Value was stable during the year, it was nonetheless a year of significant change, as our Company continues to develop its strategy of moving from investing only in loans originated by third parties towards origination of Small and Medium Enterprises ("SMEs") finance through the platforms in which we have an equity interest. Although it is relatively early days, the signs are encouraging that we have a range of businesses and management teams capable of producing strong returns through the economic cycle.

Our first origination platform, BMS Finance ("BMS") continues its progress and towards the end of the year a matched funding facility from the UK Government's Business Bank was agreed. We believe that this is a very positive step for the Company as the management team seek to build on their impressive track record.

New Investments

In contrast to 2012, 2013 was a busy year for strategic transactions, with four new investments being made during the second half of the year. In accordance with our stated strategy, these investments were all in SME finance companies. The first was in FundingKnight, a peer-to-peer lender to UK SMEs, the second was Platform Black, a UK peer-to-peer provider of invoice finance and supply chain finance, the third was Raiseworks, a peer-to-peer lender to SMEs based in the US and finally Sancus, an offshore peer-to-peer lending platform.

As with all of the platforms in which we have invested, these companies are seeking to provide an offering that is complementary to the mainstream banking sector, rather than attempting to take on the banks at their own game. This is important, as we believe that this will ensure a sustainable competitive advantage across the cycle, rather than just a cyclical play due to the weakness of the banks after the financial crisis.

A further five investments have been made since the year end. Additional details on these are included in the Chief Executive Officer's Report, Strategic Review and in the Post Year End Events note at the back of these financial statements. All five investments are in complementary areas to the current portfolio.

Performance

In 2013 despite the hive of activity going on with the new investments, we continued to deliver a stable capital performance whilst the continuing strong income flow to the Company underpinned an increased dividend. During the year the Company paid 5.0p in dividends (vs 4.7p in the previous year).

The Company Net Asset Value ("NAV") increased by 20% during the year, from GBP58.5m in 2012 to GBP70.1m at the end of 2013. The NAV per share at the year end was 49.99p compared to 49.09p last year.

The Company's share price remained stable over the year with a slight decline in the year by 0.4p or 1% over the period. This year's total return of 9% compared to 31.2% in the previous year, as the discount to the Company's Net Asset Value was closed during 2012.

CLO Portfolio

Whilst our new businesses will provide the potential to accrete value for the future, the current income of the Company and the majority of its assets remain with the CLO portfolio. The intention has been to look to gradually transition assets from the CLO portfolio to the origination businesses over time but we are aware that the transition period, in which the Company is neither finance business nor pure CLO investor, has the potential to cause uncertainty and confusion.

The Company is now investigating the potential to segregate the CLO portfolio in a subsidiary, to which it may be possible to attract third party funding, both to reduce the Company's exposure and to expand the CLO portfolio, thus reducing our position-specific risk. Our intention would be to consider a separate listing of the CLO portfolio in time. In exploring this potential, our overriding consideration will be to ensure that, in aggregate, Company shareholders will receive at least as high a dividend as they do currently.

Financials

As of 31 December 2013, the Company had net assets of GBP70.1m, or 49.99p per share, compared to net assets of GBP58.5m, or 49.09p per share at 31 December 2012. The reason for the rise in net assets being greater than the net assets per share is because the Company issued 11.9m shares in January 2013 to raise an additional GBP5.96m (gross of broker fees) and a further 9.0m shares were issued in October 2013 raising GBP4.59m (gross of broker fees).

GLI Finance Limited

For the year ended 31 December2013

CHAIRMAN'S STATEMENT (continued)

Financials (continued)

The comparative Group numbers show net assets attributable to equity holders rising from GBP69.2m as at 31 December 2012 to GBP74.1m as at 31 December 2013. However, at a Group level the debt within T2 CLO 1 Ltd is marked to market and as the discount to par narrowed over the past year the net assets per share at a Group level fell from 58.09p as at 31 December 2012 to 52.81p as at 31 December 2013. The difference in the net assets at a Group and Company level represents the market view of the net present value of the low cost of the T2 CLO 1 Ltd debt. The Board continues to believe that the performance of the net asset value at the Company level as opposed to the Group level is the more appropriate in assessing the performance of the underlying business.

For the year ended 31 December 2013, GLIF received interest income, dividends and other income totalling GBP12.5m, compared to GBP16.2m for the comparable period in 2012. However the 2012 numbers included GBP5.2m which related to one off dividends received from Asset Management Investment Company Ltd ("AMIC"), the subsidiary acquired in 2011. If the effect of these dividends is excluded the revenue increased year on year by 13.5%. In the Chief Financial Officer's Report there is a reanalysed Company Statement of Comprehensive Income which splits out these adjustments to hopefully make the numbers more understandable. Operating expenses fell from GBP4.5m for the year in 2012 to GBP3.6m in 2013.

In November 2013, the Company made an application to the CISX for the cancellation of the listing of its Ordinary Shares on the CISX Official List. The reason for this was due to a change to the ISA rules with effect from 5 August 2013 which permits investors to hold some or all of their annual ISA allowance in AIM shares. Previously the shares were only able to be held in ISAs by virtue of the listing on the CISX and this was the primary reason for this listing. This will reduce the Company's costs going forward as we will no longer need to incur the administrative and compliance costs in connection with the maintenance of its CISX listing. Furthermore this has allowed the Company's listing structure to be simplified by having shares admitted to trading only on AIM.

As the Company is an investing company under AIM Rules, we are required to have an investing policy. The shareholders approved a new investing policy in November 2013, reflecting the broadening of the business beyond its origins as a passive loan investor. Details of the new investing policy form part of these annual financial statements.

Market Commentary

The loan markets started the year in buoyant fashion and the first quarter saw accelerating issuance of loans and collateralised structures to package those loans. For the first time since the financial crisis the European market for CLOs reopened in earnest.

In the second quarter the markets were rocked by the prospect of the Federal Reserve indicating that it was considering unwinding, or tapering, its policy of extremely loose monetary policy and this saw an immediate increase in spreads but, by the end of the quarter, markets were taking a more measured view and pricing stabilised.

In the second half of the year, despite tapering concerns, overall credit markets remained healthy due to the continuing demand for yield.

Similarly the sterling/US dollar rate, to which we are exposed through having the majority of the Company's assets in US dollars, saw the US dollar strengthen until March 2013 but since then there has been significant weakness; in part due to policy decisions in the US, and in part due to a positive response to more healthy economic numbers in the UK and a positive reception for the new Governor of the Bank of England.

Executive Team

In the last annual report I reported that with the rapid development of the corporate strategy there was a need for GLIF to have the resources necessary to manage its growth and this would mean adding additional executive personnel over time.

On the 18 November 2013, Emma Stubbs joined the company as Chief Financial Officer ("CFO") as part of the Executive Team. For the first time we include a Chief Financial Officer's Report, and it is my hope and belief that Emma will make a great contribution to both the clarity of reporting of our historic performance and our planning for the future. Previously, from the launch of the business, Patrick Conroy of T2 Advisors was filling the role and I would like to thank Patrick for his contribution to the success of GLIF and helping make it the business it is today.

Corporate Strategy

Our strategy remains that we will continue to focus on smaller companies where the returns to GLIF on an unlevered basis fall within our 10-15% target return.

GLI Finance Limited

For the year ended 31 December2013

CHAIRMAN'S STATEMENT (continued)

Corporate Strategy (continued)

With the acquisition of BMS Finance in November 2012 and the more recent investments this has given us greater capability to originate our own lending and ensure that our money is put to work through the most profitable channels.

As has been flagged previously, the Company is working closely with GMB Partners on the optimal way for the Company to realise value from its CLO investments over time. Preparatory work for the potential transfer of the CLO portfolio into a separately listed fund is underway and we are intending to assess market support for an offering in the first half of the year.

Outlook

As I have noted above, in the last twelve months we have seen nine new investments being made with SME Lenders. We now have a diversity of platforms which should provide some very substantial potential with an acceptable level of risk.

We believe we have a comprehensive range of SME finance solutions and no further deals are needed to enable us to reinvest the proceeds of exits from the CLO portfolio or further diversify our portfolio. However, the management team remains alert to any opportunities that may arise.

The continuing low interest rate environment and increasing confidence of investors in financial assets has brought more and more competition into the mainstream loan markets, and hence our Company's preference to seek more niche opportunities where there is greater potential for sustainable competitive advantage across the economic cycle.

I would like to thank shareholders for their continued support and enthusiasm for the changes we have made over the past year and hope that they agree with the GLIF Board's belief that we have an exciting and profitable future ahead.

Patrick Firth

Non-Executive Chairman

Date: 25 March 2014

GLI Finance Limited

For the year ended 31 December 2013

CHIEF EXECUTIVE OFFICER'S REVIEW

As the Chairman has said, 2013 was a transitional year and we expect the coming twelve months to continue this reshaping of our business, with the goal of becoming a leading alternative provider of SME finance across the US and Europe, but with the heart of the business in the UK, reflecting the sterling investor base, share price and dividend policy.

In order to achieve our goal we are building a range of partnerships with online and offline finance platforms that we believe have a sustainable competitive advantage, strong and experienced management teams, are complementary in approach to the traditional finance industry and have a strong qualitative and quantitative approach towards their business. We invest in and through these platforms to optimise return to our shareholders.

In pursuing this strategy our focus remains on an optimal return on equity for our shareholders. Whilst other alternative finance providers are seeking growth for its own sake, and are seeking to be valued by investors on the basis of the number of clients that they have or the size of their loan book, we wish to achieve a good rate of return for our investors from our investments as we believe this will provide an optimal risk/return balance, and reflects the significant experience in the finance industry that I and the rest of the Board bring to the decision making. We target a 10-15% return on equity across the economic cycle, in order that we can both support our current dividend and grow the equity within our loan book.

Our Chief Financial Officer's report which follows this report covers the progress made in 2013 and therefore I will not dwell on the operational results of 2013. From a strategic standpoint, GLIF BMS Holdings Limited ("BMS") continues to develop its business in line with its plans and the matched funding agreed with the Business Bank is an important strategic milestone in the development of the business. As for the earlier stage businesses in which we invested during the year, FundingKnight, and Platform Black are rapidly developing their reputations in their respective fields, Raiseworks is generating considerable interest in the US and Sancus is already showing a strong pipeline of business.

Since the year end we announced a number of other transactions that build out our range of platforms and put us in a position that, although we continue to see opportunities to build out our family of businesses, we do not have to do any further transactions.

The other transactions announced in January were:

Investment Strategy

TradeRiver Finance Global Trade finance

Finpoint UK UK SME lending

European Receivables Exchange European invoice discounting

Crowdshed Global multi-asset crowd funding

Proplend UK property-backed lending

We also confirmed in our January trading update that it is our intention to exit our CLO portfolio over time. The Company is working closely with GMB Partners on the optimal way for the Company to realise value from its CLO investments over time. Preparatory work for the potential transfer of the CLO portfolio into a separately listed fund is underway and we are intending to assess market support for an offering in the first half of 2014. As the CLO portfolio is exited, so the monies realised will be reinvested through to the Company's finance platforms.

Looking beyond the exit of our CLO portfolio, our strategy will be to add value to each finance platform in which we are invested and to seek benefits from different platforms working together. The most obvious area in which GLIF can benefit the businesses is to make capital available, either within the business or investing into the assets originated by the business, but beyond that we believe that a number of competitive advantages can be gained by our platforms through their relationship with GLIF.

Firstly there is the potential for cross-referral between the various platforms. Our strategy of backing entrepreneurs building their own businesses, rather than owning and controlling subsidiaries, we believe enhances the propensity for cross-referral of business, rather than diminishing it. Entrepreneurs will see clear mutual benefit in working together, where managers of two business units within an organisation might not. Cross-referral applies not only to borrowers but also to investors. As the platforms grow they will develop their investor base beyond GLIF and for investors our family of platforms offers a wide array of types of asset, of which we must ensure that they are all aware.

Secondly there is the pooling of knowledge across platforms. Many of our platforms are in the peer-to-peer space and are facing being regulated entities for the first time this year, and all of our businesses face an array of other regulatory challenges. Being able to discuss these amongst a peer group will bring best practice across the group and where professional advice is needed on specific issues the costs can be defrayed across a range of platforms.

GLI Finance Limited

For the year ended 31 December 2013

CHIEF EXECUTIVE OFFICER'S REVIEW (continued)

Finally there is the ability to seek efficiencies from a broader relationship with service providers. Many platforms use similar services and being able to pool this service provision could add value.

It is early days in the development of these synergies, and we have factored nothing into our assessment of each platform's prospects for such benefits, but so far the indications are encouraging that such benefits will flow across the platforms, resulting in better results at a group level.

This year will be a critical one in the development of the alternative finance industry, both in the UK and the US. Regulatory changes brought about by the JOBS Act in the US and by the introduction of FCA regulation of certain online platforms will begin to create an environment where investors can feel that standards are being met across the online finance industry and platforms can more readily be compared.

I believe that this and the increasing size of the alternative finance market will bring SME finance assets into the investment mainstream as a discrete asset class. We are already seeing institutional interest in alternative finance taking off, although amounts invested are tempered by the amount of SME finance assets available.

In this environment the management of supply and demand will be critical. Fortunately our platforms have a partner in GLIF that can help in managing this, but within the industry as a whole mis-pricing is almost inevitable and there have already been signs that certain parts of the yield curve within the peer-to-peer market are witnessing such a mismatch. In extremis this could present too great a challenge for platforms without sufficient capital behind them and looking forward it is my view that there will be both failures and consolidation in the sector. Given that our platforms have our balance sheet behind them this represents less of a challenge for the platforms in our portfolio than for others lacking such support, but it is nevertheless something of which we must be cognisant and plan accordingly.

The other feature of the alternative finance market I believe will become more important over the next year will be the blurring of the lines between peer-to-peer and other forms of alternative finance, due to the increasing institutionalisation of the market. As fund managers seek to gain exposure to SME finance assets as a discrete asset class, so peer-to-peer and other non-bank finance businesses will increasingly have an alternative source of funding to broad based peer-to-peer or the banks that would have traditionally funded the market. In the US there are already businesses that would have once been launched as peer-to-peer models that are now entirely institutionally funded, and I think the model will migrate to Europe in time.

Our approach has been to avoid focussing on one aspect of the market, be it peer-to-peer or directly funded, online or offline, but rather to seek to find a series of complementary niches that can exploit the areas within SME finance in which the banks cannot or will not compete, and so there is the potential for sustainable competitive advantage across the economic cycle. The reason the banks cannot compete in certain niches is because their need for a scaleable and efficient model has removed their ability to service business requiring a significant amount of human interaction; where they will not compete is in areas that due to capital requirements it is no longer economic for them to write the business. Our platforms cover both areas.

In conclusion, within GLIF we have built a unique origination capability within SME finance, diversified by geography, industry, size of lending and type of lending. We have the ability to put significant capital to work and intend to do so as we exit the CLO portfolio. With no fixed investment criteria we have the flexibility to adapt to changing conditions, which we believe will be a crucial competitive advantage in years to come.

This year will be a further year of significant change within GLIF, and we are well placed to take advantage of the opportunities and address the challenges that doubtless will present themselves as the business and the alternative finance industry matures.

Geoffrey Miller

Chief Executive Officer

Date: 25 March 2014

GLI Finance Limited

For the year ended 31 December 2013

STRATEGIC REVIEW

GLIF has an interest in ten SME finance platforms, five of which were held at the year end, five of which were acquired since the year end. The intention is that these platforms will form the core of the Company's business in future, with investment made by the Company into these platforms and through these platforms into the underlying SME finance assets.

Platforms Held at Year End

BMS Finance (through GLIF BMS Holdings LTD)

Size of loan book at year end GBP12.5m

GLIF economic interest 31 December 2013 GBP14.6m

The company finances high growth SMEs, predominantly in the UK. Typically these businesses have up to GBP25m of revenue, but do not require a three year track record of profits. The loans are two to three year senior secured amortising loans of GBP500k-GBP4.5m and in addition to the loan itself; BMS typically obtains a warrant or exit fee. The focus of the portfolio is business services and technology companies,

The business is relationship banking; keeping a close engagement with borrowers to ensure effective monitoring. Covenants set as an 'amber' warning level allowing time for remedial action to be taken.

Towards the end of 2013 BMS agreed a GBP15m matched funding facility with the Business Bank and it is expected that this money will start to be put to work in the first half of 2014.

GLIF owns GBP14.1m out of a total GBP14.6m enterprise value (67% of equity plus GBP12.6m debt)

FundingKnight

Size of loan book at year end GBP2.58m (GBP3.24m as at 13 March 2014)

GLIF economic interest 31 December 2013 GBP2.8m

FundingKnight provides SME finance through crowd funding from a broad base of investors. The maximum loan size is GBP150k and the maximum term is five years. An experienced in-house team of SME bankers, using both quantitative and qualitative analysis, underwrites the loans. The loan book has grown rapidly since our investment in July 2013 and we expect this to continue.

The business provides traditional small business banking delivered through modern architecture, in a way that is no longer possible through the "computer says yes/computer says no" approach of the larger banks. GLIF invested GBP1.5m in the ordinary shares and preference shares of FundingKnight for at least 20% of the business, and had a loan book originated through FundingKnight of GBP1.291m by the year end. This is a broadly based book of UK SME loans.

Platform Black

Total invoices financed in 2013 GBP36.4m

GLIF economic interest 31 December 2013 GBP2.2m

Platform Black is a UK based peer-to-peer invoice trading and supply chain finance business. Its investor base is exclusively sophisticated investors, funds or corporate entities and these investors bid for tranches of invoices from 5% of the principal upwards through Platform Black's proprietary platform.

Platform Black launched in June 2012 and has financed invoices of over GBP45m, advancing over GBP40m to date in approximately 1,000 auctions for periods of 30, 60 or 90 days. The average auction size has been rising and the average cost of funding invoices falling, indicating that the building blocks are in place for growth in 2014. GLIF invested GBP163k over the Platform in 2013, all of the invoices acquired have matured and repaid in full generating an average IRR in excess of 13%.

Raiseworks

GLIF economic interest USD1.5m

GLIF invested USD1.5m in the US peer-to-peer SME lending business, Raiseworks, LLC ("Raiseworks"). In return for the investment, GLIF expects to retain a 20% to 30% holding. The Raiseworks business began in 2011, to improve small business access to credit and to increase investment opportunities in small businesses. The Raiseworks team has spent the past two years building the platform, developing the credit underwriting model, establishing partnerships, and securing a broker dealer license.

The Raiseworks platform automates the private capital formation process by bringing increased efficiency and transparency to businesses and investors. It utilizes one of the largest private company databases in the United States and a suite of proprietary, predictive algorithms in an effort to provide community members with an information advantage.

GLI Finance Limited

For the year ended 31 December 2013

STRATEGIC REVIEW (continued)

Sancus

GLIF economic interest 31 December 2013 - 7.4% of ordinary shares and the option of acquiring up to GBP2.75m preference shares

GLIF acquired a 7.4% stake in Sancus, an offshore peer-to-peer secured lender with significant permanent capital, run by a highly experienced team of professionals who have been in the financial sector for over 25 years.

Its target market is entrepreneurs, SMEs, HNWIs and professionals and it offers attractive returns to clients who wish to participate in co-investment lending opportunities. Sancus takes a holistic approach when reviewing complex borrowing opportunities and takes into consideration a potential borrower's total asset base, while making decisions quickly and providing certainty to potential borrowers. Sancus will also co-invest in all deals, providing comfort to fellow lenders. The loan book is growing rapidly, since the company opened for business in January. The company has now written GBP3.93m of loans, average size GBP1.31m and 20 months average duration.

Finpoint UK

GLIF economic interest GBP1.25m

Finpoint UK is a joint venture between CRX (the German company that owns Finpoint) and GLIF. The platform provides financial institutions with the opportunity to acquire loans direct from SMEs; a similar model to P2P, but with larger loan sizes and a solely institutional focus.

After a successful three years in Germany, Finpoint approached GLIF, as it wished to enter the UK market but wanted a local partner to help shape the strategy. On 24 January 2014, a new Company was created called Finpoint Ltd whereby GLIF purchased a 75% equity stake in the UK business for GBP0.75m and CRX subscribed for the remaining 25% for GBP0.25m. GLIF also subscribed to GBP0.5m of preference shares. The Company has been granted an exclusive perpetual license from CRX to use the Finpoint platform in the UK.

TradeRiver Finance

Total financed in 2013 GBP14.8m

GLIF economic interest 10% of equity plus GBP2m loan facility

TradeRiver Finance is a non-bank online funding solution which finances trade, both cross-border and in the UK. The company provides businesses with finance to purchase goods and services through a convenient online platform. Over the last three months, the amount TradeRiver has loaned to businesses has grown by 18 per cent to a total of GBP24m. The average loan term is approximately 100 days and loan sizes average approximately GBP80,000.

GLIF has provided TradeRiver with a GBP2m subordinated facility, and has acquired a 10% stake in the equity of the business for GBP800k. We expect the loan to be drawn down over time, as TradeRiver's book of business grows.

European Receivables Exchange (Dansk Faktura Børs)

GLIF economic interest 5% of equity

The company is an invoice discounting business, currently operating principally in Denmark but has the potential to broaden its reach across Europe. It is different from Platform Black not only geographically but also in the fact that there is no fractional bidding and the individual bids for the entire invoices are quoted as a percentage of the invoice face value, rather than the return per month. GLIF has acquired a 5% stake in the business.

CrowdShed

GLIF economic interest at least 26% of equity

CrowdShed is creating a new multi-faceted approach to crowd funding, bringing together rewards and donations with equity and commercial debt opportunities. GLIF has acquired at least a 26% stake in the business, giving GLIF exposure to the fast growing financial crowd funding industry. CrowdShed will also provide opportunities for GLIF to participate in a variety of assets as different products and funding campaigns are launched on the platform.

Proplend

GLIF economic interest 22.5% ordinary shares plus preference shares

GLIF has investing GBP1m in Proplend, in a combination of equity and preference shares, for a 22.5% stake in the business. Proplend is a secured P2P lender run by an experienced property team with a differentiated product, it has already completed its first commercial property loan and is expected to be fully launched online by the end of Q1 2014. The company expects to focus on the UK commercial property market and loan sizes of typically between GBP100k and GBP5m.

CLO Investments

As has been previously flagged, the Company is working closely with GMB Partners on the optimal way for the Company to realize value from its CLO investments over time. Preparatory work for the potential transfer of the CLO portfolio into a separately listed fund is underway and we are intending to assess market support for an offering in the first half of the year.

Future strategy

It is expected that the partnerships now agreed will form the core of the GLIF business in the future. We continue to actively examine other opportunities where we believe that a partnership would both add value to and be complementary with the existing platforms, but we now have the breadth of business required to ensure that we can redeploy the proceeds of realisation of the CLO assets in a timely manner. As the Board would expect at least a comparable long term return from the new platforms as those delivered by the CLO investments, the Company remains committed to its current dividend policy.

GLI Finance Limited

For the year ended 31 December 2013

CHIEF FINANCIAL OFFICER'S REVIEW

In 2013, the Company saw a successful continuation of the diversification begun in late 2012 with the acquisition of BMS Finance, moving away from reliance on the CLO portfolio towards becoming a leading alternative provider of SME finance. Although there has been this change in the strategy, the Company has been able to maintain the 5p dividend to its shareholders, supported by continued good returns from its CLO investments. It is expected in time that the newer investments will provide at least as high a return as has been provided by the CLO portfolio, and investment has been made on that basis.

Over the coming years we anticipate seeing a shift in the make up of the Company's income from income earned by the CLO investments to income from the increased investment in SME lending, which we believe offers sustainable high risk-adjusted returns. These returns are expected to come both from the investments in the platforms themselves, as well as from investing through the platforms, into finance assets.

As we have started to see changes in the way in which the Company's income is derived, the make-up of the income numbers has changed. The "Portfolio Update" set out immediately below describes the changes in the asset composition of the portfolio from the close of 2012 to the close of 2013. In addition, we have also included below a reanalysed statement of income to show clearly the changes in the composition of the income earned during the calendar years 2012 and 2013. Note that total income grew from GBP11.0m to GBP12.5m in 2013, an increase of 13.6%.

Portfolio Update

As at the 31 December 2013, at a Company level our Portfolio was valued at GBP68.9m, with net current assets of GBP1.2m bringing the total Net Asset Value ("NAV") to GBP70.1m. This was in comparison to a NAV of GBP58.5m last year, comprising GBP53.7m in investments and GBP4.8m net current assets.

During the year the Company completed investments in four new platforms, FundingKnight, Platform Black, Raiseworks and Sancus, details of these are noted later in this report.

As we have started to expand into alternative finance providers for SMEs it has diversified the Company's portfolio geographically and by asset class. Some statistics on our portfolio are set out in the tables below:

CLO Portfolio

The CLO Portfolio comprises the T2 CLO 1 and other CLO equity positions.

T2 CLO 1 remains our largest investment of GBP32.8m at the end of 2013 (GBP33.1m 2012). Interest earned in the year of GBP9.6m was up on last year by 6.2% from GBP9.0m, providing a return of 27.99%. During the year, T2CLO 1 reached the end of its reinvestment period. A portion of the continuing positive cash flows going forward will be used to repay the loan notes held in the structure.

In addition to the T2 CLO 1 we also hold other CLO equity positions with a total value of GBP10.3m (2012 GBP4.5m). These are Halcyon Structured Asset Management CLO, GSC Group CDO VIII Ltd, Ares XXVI CLO Ltd and Harvest CLO VII Limited. GMB Partners LLP advises us on all these. Income from these equity positions has increased by 8% in the year from GBP1.6m to GBP1.7m

SME Platforms

The total value held in SME Platforms increased during the year from GBP0.9m in 2012 to GBP8.9m in 2013, following the new investments in FundingKnight, Platform Black, Sancus and Raiseworks. Previously this balance was made up solely of GLIF BMS Holdings Ltd ("GBHL").

GLI Finance Limited

For the year ended 31 December 2013

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

BMS

The Company has a 66.7% equity stake in GBHL which has continued to perform well in 2013 and we have seen a strong growth in equity over the year of 65%. At the close of 2013, the value of equity was GBP1.5m compared to GBP0.9m at the close of 2012.

GBHL comprises of a 100% interest in BMS Finance AB Ltd ("BMS") the UK operating business, a 70% interest in Noble Venture II Nominees Ltd ("NVF") and a 95% interest in NVF Tech Ltd (previously named HiWave UK).

Raiseworks

On the 19 December 2013, we invested USD1.5m in Raiseworks, LLC ("Raiseworks") a national US peer-to-peer SME lending business to fund the purchase of certain peer-to-peer business assets in a deal led by Gary Chodes, CEO of Raiseworks. In return for the investment, we expect to retain a 20% to 30% holding.

Sancus

On 6 December 2013, the Company acquired a 7.4% equity stake in Sancus and the option of acquiring up to GBP2.725m preference shares.

Subsequent to the year end, a further five investments in SME platforms were made, which has been referred to earlier in the CEO Report.

Loans

At the year end, the Company's loan balance had increased from GBP13.3m in 2012 to GBP15.5m in 2013. This comprises loans with Koosharem (Select Remedy), Lombardia Capital Partners ("LCP"), BMS Finance AB Ltd ("BMS AB"), FundingKnight and Platform Black.

Koosharem (Select Remedy) loan value was GBP0.7m at the year end (31 December 2012: GBP0.2m).

During the year, Lombardia Capital Partners ("LCP") agreed to buy the Company out of its warrant position, via a swap of the warrant for an increased balance on its loan from GLIF of USD0.8m (a 60% uplift on the acquisition value in 2011). In addition, LCP repaid USD1.1m of the existing principal and thus the outstanding loan overall reduced during the year by USD0.3m. As at 31 December 2013, the loan principal was GBP0.7m (31 December 2012: GBP1m). During the year GBP55k was received as income (31 December 2012: GBP64k).

In November 2012, we invested GBP11.6m in the acquisition of BMS Finance, a specialist lender to small growth companies, based primarily in the UK. This was financed through the setting up of GBHL, funded by a GBP11.6m loan note issued to GLIF (which paid for the acquisition) and GBP1m of equity capital of which GBP667k was subscribed by GLIF and GBP333k by the BMS management. In December 2013, GLIF invested a further GBP1m into GBHL through an increase in the principal of the loan notes issued by GBHL, bringing this to GBP12.6m. The coupon rate of the loan is 8%.

At the year end, the Company had GBP1.291m invested through the FundingKnight platform, typically with gross returns in excess of 11%.

The Company also provides funding through the platform of Platform Black. In 2013, the Company had invested GBP163k in invoices, all of which have been repaid at an average IRR (in excess) of 13%.

Other

Other balances held by the Company at the year end include IFDC, Stratus and in 2012 there was a small balance held with AMIC of GBP32,829.

IFDC is a Japanese long-only equity manager which has an unparalleled track record and from which we receive a healthy dividend. During 2013, GBP169,430 was received in way of dividends (31 December 2012: GBP163,020) from our investment of GBP1.0m, producing a 16.2% return.

The equity value of Stratus Technologies Inc at the year end was GBP0.4m (31 December 2012: GBP0.9m).

AMIC was wound up in the year and was formally dissolved on 16 January 2014.The acquisition of AMIC proved highly successful and the Group was able to retain the relationship with two of the holdings, IFDC and LCP.

Company Statement of Comprehensive Income - Reanalysed

As the Company increases its investment in SME lending platforms, the breakdown of the income received will expand. The below table reanalyses the Company Income Statement to separate out the realised and unrealised gains and losses and gains and losses on currency transactions to try and show a like for like comparison of income earned in the year.

In 2012, the dividend income line included GBP5.2m which related to AMIC. As this subsidiary was being wound down in the year, the dividend payment was received from AMIC to the Company. For comparison purposes for income received in the year, this dividend of GBP5.2m has been excluded.

GLI Finance Limited

For the year ended 31 December 2013

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

Company Statement of Comprehensive Income - Reanalysed (continued)

In the reanalysed numbers, total income has increased by 13.6% this year from GBP11m in 2012 to GBP12.5m in 2013. A large reason for this is the interest earned on the loan with BMS finance as 2013 was the first full year the loan was held for. The original loan was for GBP11.6m at a rate of 8%. This was increased during the year to GBP12.6m.

Investment income received from the CLOs was also up 6.4%, with an increase in the T2 CLO I Ltd as well as an increase in return from the other CLO equity positions. Expenses decreased by 15% in 2013, from GBP4.8m last year to GBP4.1m in 2013.

In the reanalysed Company Statement of Comprehensive Income, the 2013 profit was GBP8.4m, compared to a profit of GBP6.2m in 2012 producing an increase of 36%. Out of the profits, GBP6.5m was paid in the way of dividends to shareholders in 2013 with GBP4.9m paid last year.

Change in Net Asset Value

During the year, we have seen the NAV increase from GBP58.5m to GBP70.1m, representing a 20% increase. GBP10.2m of this was from the issue of new shares with the remainder from profits in the year of GBP8.0m and dividends paid out of GBP6.6m. During the year the number of shares in issue has increased by 18% and the NAV per share has gone from 49.09p at the end of 2012, to 49.99p at the end of this year, being an increase of 2%.

GLI Finance Limited

For the year ended 31 December 2013

CHIEF FINANCIAL OFFICER'S REVIEW (continued)

FX Rates

The company has transactions in numerous currencies. The table below lists out the rates used for the years ended 31 December 2013, 31 December 2012 and 31 December 2011:

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 in a change in economic conditions as well as changes to lending rates and increased competition. The Executive Team monitor current economic information, trends and forecasts on a regular basis as well as the Board and Executive team monitoring data from the advisors and investee companies. The portfolio diversification in fixed and floating rate assets as well as robust underwriting by original platforms is in place to mitigate this risk.

Portfolio Management risk:

There is a risk of underperformance of the underlying investments. Investment advisors provide quarterly reports on the CLO portfolios and there is Company representation on the portfolio company boards with the Chief Executive Officer being involved with portfolio companies' management. The Company closely monitors developments within portfolios companies. The Company also has a currency risk in that it has transactions in non-GBP. 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.

Operational risk:

The Company performs on-going 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 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 monitor the loans being invested in and are confident in the management skills in accessing risk, origination and recovery. The CEO is on the board of these platforms and is kept informed of procedures around risk and is also alerted to any possible defaults early on. To date the Company has a zero default rate in the loans it has invested in.

Compliance/Regulatory risk:

As a Guernsey Investment Company listed 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 listing rules. As a Guernsey incorporated company under 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 2012 (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. As at 31 December 2013, the Company applies and reports against the principles of the AIC Code. The compliance monitoring policies and procedures operated by the administrator and adopted by the Company provides compliance oversight and regular reporting of the Company's adherence with the Law, applicable legislation issued by the GFSC and provides the Company with reporting channels under anti-money laundering legislation.

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 which the Company looks to avoid. The Chief Executive Officer is a board member on all 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 without the knowledge and consent of the relevant platform.

Note 3 of the Financial Statements gives further details of the 'Risks associated with financial instruments'.

Emma Stubbs

Chief Financial Officer

Date: 25 March 2014

GLI Finance Limited

For the year ended 31 December 2013

BOARD MEMBERS & EXECUTIVE TEAM

BOARD MEMBERS

James Carthew - Independent Non-Executive Director

James Carthew was for many years a fund manager. He now writes research on closed-end funds quoted in London. His career started at M&G in 1984, where he managed a number of UK equity income funds and the M&G Fund of Investment Trusts. He also covered a variety of sectors as an analyst for M&G, including the Financial Services sector. From 2001-2010 he managed the Advance UK Trust PLC, a quoted global fund of funds that specialised in the promotion of corporate governance within the closed-end fund industry. Today James is head of research at Marten & Co, a boutique specialising in the distribution of sponsored research on UK companies through its quoteddata and martenandco websites. James also writes articles on the closed-end fund industry on a freelance basis for Citywire and sits on the judging panel for the Investment Company of the Year Awards.

Mr Carthew is Chairman of the Audit Committee. He is also a Director on BMS Finance AS Limited, a company which forms part of the GLIF Group.

Patrick Firth - Independent Non-Executive Director

Patrick Firth qualified as a chartered accountant with KPMG in 1991 before building a career in fund administration with roles at Rothschild Asset Management (C.I.) Limited, BISYS where he became Managing Director of BISYS Fund Services (Guernsey) Limited, before joining Bank of Butterfield in 2002. Patrick left Butterfield Fulcrum in 2009 and has since taken on a number of non-executive positions in listed and private companies. Patrick is a former Chairman of the Guernsey Investment Fund Association, a position he held for two years to March 2012, and a member of the AIC Offshore Funds Committee.

Mr Firth is Chairman of the Board. He is also a Director on GLIF BMS Holdings Limited, a company which forms part of the GLIF Group.

Fred Forni - Independent Non-Executive Director

Mr. Forni was a senior finance professional with Macquarie Holdings (USA) Inc., a United States affiliate of Macquarie Group Limited from October 1997 to October 2012 (and a Senior Managing Director from and after July 2004) where he was involved in (i) developing, marketing, executing and managing structured and conventional financial products transactions for the Macquarie Group, including the establishment of an NYSE listed USD 425m closed-end fund (Macquarie Global Infrastructure Fund; ticker: MGU) and the formation and management of specialized investment portfolios of CLO and CMBS securities aggregating in excess of USD 1 billion and (ii) structuring principal and advisory transactions principally from an income taxation perspective. Mr. Forni acted as a non-executive director for numerous Macquarie Group entities, including an investment adviser under the Investment Company Act of 1940 and a fund incubation joint venture with M.D. Sass. From 1995 to 1997 Mr. Forni was employed as a tax associate with Morgan, Lewis & Bockius LLP. Mr. Forni holds a B.A. in Economics from Connecticut College, a J.D., awarded cum laude, from Georgetown University Law Center and an LL.M. in taxation from New York University Law School. Mr. Forni holds Series 24, Series 7 and Series 63 FINRA licenses and is admitted to practice law in both New York and Connecticut.

Mr Forni is Chairman of the Remuneration Committee.

Geoff Miller - Executive Director

Geoff Miller spent twenty years in the UK financial services industry, as an analyst and as a fund manager, focused within the Non-Bank Financials sector. As an analyst he led the number one-rated UK small and mid-cap Financials team, and as a fund manager ran the largest listed Financials fund in London. He moved offshore in 2007, working in Moscow and Singapore before moving to Guernsey.

In addition to leading the executive team at GLIF, Geoff sits as an independent director on a number of boards of financial and investment companies, including GLIF's investee companies.

EXECUTIVE TEAM

Geoff Miller -Chief Executive Officer

See above.

Emma Stubbs - Chief Financial Officer

Emma Stubbs was Head of Business Analysis and Projects at Sportingbet, an online gaming company from January 2007 to October 2013 where she was responsible for formulating strategy across Europe and Emerging Markets. She had a key role in providing business performance and analysis advice with regard to JVs, B2B, M&A and entering regulated markets. From November 2004 to January 2007 Emma worked as an Account Manager at Marsh Management Services (Guernsey) Limited, a Captive Insurance Company. Emma qualified as a Chartered Certified Accountant with Deloitte in Guernsey in July 2004 where she had been working in the Audit and Advisory department. She graduated from the University of the West of England with a BA Hons degree in Accounting and Finance. Emma is resident in Guernsey.

She is also a Director on Secured Loan Investments Limited, a company which forms part of the GLIF Group, and a director of Finpoint Limited, an investee company within GLIF Group's investment portfolio.

GLI Finance Limited

For the year ended 31 December 2013

DIRECTORS' REPORT

The Directors present their Annual Report and Audited Consolidated and Company financial statements (the "financial statements") for the year ended 31 December 2013. 

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 2013, 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" or "GLIF") 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). The address of the registered office is P.O. Box 296, Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 4NA. The Company is a Guernsey Authorised Closed-ended Investment Scheme and is subject to the Authorised Closed-ended Investment Scheme Rules 2008. The Company was admitted to the AIM market of the London Stock Exchange on 5 August 2005. On 1 February 2011, the Company's Ordinary Shares were admitted to trading on the Official List of the Channel Islands Stock Exchange ("CISX"). In accordance with the terms of the circular to shareholders dated 13 November 2013, application was made to the CISX for the cancellation of the listing of the Company's ordinary shares from the Official List of the CISX. The de-listing took effect on 10 December 2013.

The Company is an investing company for the purpose of the AIM rules. The Executive Team is responsible for the management of the Company. GMB Partners LLP (the "Investment Adviser" or "GMB") is employed by the Company to advise on UK, European and US CLO paper and senior secured loans. T2 Advisers, LLC ("T2 Advisers"), a registered investment adviser in the United States, managed the Company's assets under the terms of an investment management agreement, until 12 April 2013, at which time the investment management agreement was terminated by mutual consent. T2 Advisers provides management of the assets within T2 CLO I Ltd (the "CLO"), a vehicle of which GLIF owns a 100% interest in the residual economics. For the provision of this management, T2 Advisers receives a base fee of GBP10,000 per quarter, 0.25% of the gross assets of CLO, and 20% of the return from CLO to GLIF, over and above USD1,430,000 per quarter. T2 Advisers is also the collateral manager for the CLO.

On 30 April 2013, the Company received approval from shareholders and the Guernsey authorities to change its name from Greenwich Loan Income Fund Limited to GLI Finance Limited.

The Group

As at 31 December 2013, the Group comprises the Company and the entities disclosed in note 17 to the financial statements.

Investment Objective & Policy

The Company's objective is to produce a stable and predictable dividend yield, with long term preservation of net asset value. The Company aims to achieve this through the provision of secured lending to small and medium sized companies.

Please refer to pages 74 and 75 for 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 16.

On 18 November 2013, in accordance with a Service Agreement dated 23 October 2013, Emma Stubbs was appointed Chief Financial Officer ("CFO") of the Company. The CFO reports to the Audit Committee.

Results and Dividends

The Group and Company results for the year are set out on pages 30 and 31. Dividends of GBP6,556,713 were paid during the year (31 December 2012: GBP4,892,597).

A detailed review of the Company's performance to 31 December 2013 is contained in the Chief Financial Officer's Report.

GLI Finance Limited

For the year ended 31 December 2013

DIRECTORS' REPORT (continued)

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 assets of US persons in non-US accounts and improving US tax compliance with respect to those assets. The States of Guernsey has recently announced that it has decided to enter into an intergovernmental agreement ("IGA") with US Treasury in order to facilitate the requirements under FATCA and is currently in negotiations with regards to how this is to be implemented and, as a result, the impact this will have on the Company remains unknown. The Board is in the process of ensuring the Company complies with FATCA's requirements.

Alternative Investment Fund Managers Directive

The Board acknowledges that the Alternative Investment Fund Managers Directive is due to take effect during 2014. We are currently giving this matter consideration and liaising with the Company's advisers to determine the necessary action to be taken.

Substantial Shareholdings

As at 10 March 2014, the Company was aware of the following substantial shareholders who held more than 3 per cent. of issued share capital of the Company:

* Based on the share register as at 10 March 2014

**For or on behalf of Philip J Milton & Company Plc or its discretionary clients

Directors Interests

As at 31 December 2013, the Directors had the following beneficial interests in the Ordinary Shares of the Company:

See Note 22 of the financial statements for details of the Directors interest in the Ordinary Shares of the Company as at the date of this report.

As at 31 December 2013, there were no unexercised share options for Ordinary Shares of the Company (31 December 2012: 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, 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.

GLI Finance Limited

For the year ended 31 December 2013

DIRECTORS' REPORT (continued)

Statement of Directors' Responsibilities (continued)

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.

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.

Going Concern

The Directors have considered the going concern basis of preparation for financial statements supported by the Director's assessment of the Company's ability to pays its debts as they fall due. The Directors are of the opinion that the Company has adequate financial resources to continue in operational existence for the foreseeable future. Hence the Directors believe it is appropriate to continue to adopt the going concern basis in preparing the financial statement.

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.

Approved and signed on behalf of the Board of Directors on 25 March 2014.

Director: Patrick Firth Director: James Carthew

GLI Finance Limited

For the year ended 31 December 2013

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 and have considered the principles and recommendations of the UK Code. 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"), and the AIC Code of Corporate Governance (the "AIC Code").

The Board has considered the principles and recommendations of the AIC Code by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Code), will provide better information to Shareholders.

As at 31 December 2013, the Company complied substantially with the relevant provisions of the UK Code and the AIC 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 2014:

· 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 nomination committee: Due to its size and composition, the Board does not consider it necessary to establish a nomination committee. The Board as a whole monitors performance and arrangements for director succession, either through Board meetings or, if appropriate, through the use of an appropriately constituted committee or through the appointment of an external search consultancy. Prospective candidates will be considered on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender. The Company did not engage the services of an external search consultancy during the year.

· 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 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.

During the year under review, the Board authorised Mr Carthew and Mr Miller to review the suitability of the Company adopting the UK Code. As at 31 December 2013, the Company continues to apply and report against the principles of the AIC Code pending the outcome of this review and a possible transition to the UK Code.

Composition and Independence of Directors

As at 31 December 2013, the Board consisted of four members, three of whom are non-executive and independent. During 2011, Mr Miller became an executive Director of the Company and is therefore not considered independent under the AIC Code.

The Chairman of the Board is Patrick Firth and biographies for all Directors can be found on page 16. In considering the independence of the Chairman, the Board has taken note of the provisions of the AIC Code relating to independence and has determined that Patrick Firth is an Independent Director.

GLI Finance Limited

For the year ended 31 December 2013

CORPORATE GOVERNANCE (continued)

Composition and Independence of Directors (continued)

The Directors recognise the importance of succession planning for the Company's Board and review the composition of the Board annually. As of June 2014, Patrick Firth and Fred Forni will have each served as Directors of the Company for nine years, however, the Board is of the view that length of service will not necessarily compromise the independence or contribution of Directors of an investment company 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 AIC Code relating to independence and remains satisfied that they remain independent of the Company, despite their length of service.

The Board agrees with the view expressed in the AIC Code 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").

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

The Board has contractually delegated external service providers for the management of the investment portfolio, the custodial services 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 Committee and Remuneration Committee undertake an annual evaluation of their own performance and that of individual Directors on an annual basis. This includes a formal process of self-appraisal together with the Chairman reviewing each member's performance, contribution and commitment to the Group. 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

The Company employs an executive team comprising Geoff Miller, who became Chief Executive Officer ("CEO") during 2011, and Emma Stubbs who was appointed as the Company's Chief Financial Officer ("CFO") on 18 November 2013 (together the "Executive Team").

The non-executive independent Directors monitor and evaluate the performance of the CEO and CFO.

Board Committees

Audit Committee

An Audit Committee has been appointed and conducts formal meetings at least three times a year. The Audit Committee's main role and responsibilities is to provide advice to the Board on whether the annual report and financial statement, 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. The other principal duties, amongst others, is to consider the appointment, independence, effectiveness of the audit and remuneration of the auditor and to review and recommend the annual statutory accounts and interim report to the Board of Directors. Where non-audit services are to be provided to the Group by the auditor, full consideration of the financial and other implications on the independence of the auditor arising from any such engagement will be considered before proceeding. The Audit Committee is chaired by James Carthew and its other members are Patrick Firth and Fred Forni. The Board have considered the membership of the Audit Committee and have determined that the members of the Audit Committee have recent and relevant financial experience. For the principal duties and report of the Audit Committee please refer to the Audit Committee Report on pages 23 and 24.

Remuneration Committee

Further to the appointment of Geoffrey Miller as an executive Director, the Board resolved in 2011 to appoint a Remuneration Committee 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 25 and 26 for details of fees paid to the Directors during the year.

GLI Finance Limited

For the year ended 31 December 2013

CORPORATE GOVERNANCE (continued)

Management Engagement and Nomination Committees 

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

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 such meetings, the Board receives from the Administrator and Investment Adviser a full report on the Group's holdings and performance. The Board gives directions to the Investment Adviser 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 table below, details the attendance at Board and Committee meetings during the year:

Anti-bribery and Corruption

The Board acknowledge that the Company's international operations may give rise to possible claims of bribery and corruption. In consideration of the recently enacted UK Bribery Act, at the date of this report 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 monthly. The Boards advisers and the Executive Team plans to implement regular dialogue with institutional shareholders, the feedback from which will be reported to the Board and the Chairman. Shareholders who wish to communicate with the Board should contact the Administrator 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 Investment Adviser, 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 an investment company investing in financial instruments. However, the Board acknowledges that in addition to financial, legal and market due diligence, the Investment Adviser's / Executive Team's investment appraisal includes a rigorous assessment of a potential Investee company's social, ethical and environmental policies, and therefore the Investment Adviser / Executive Team monitors such policies and practices following any investment.

GLI Finance Limited

For the year ended 31 December 2013

AUDIT COMMITTEE REPORT

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

Chairman and Membership

The Audit Committee is chaired by James Carthew, and its other members are the other independent Directors of the Company. Only independent Directors serve on the Audit Committee and members of the Audit Committee have no links with the Company's external auditor and are independent of the Executive Team and the Investment Adviser. The Audit 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 Committee is reviewed on an annual basis and the membership of the Audit Committee and its terms of reference are kept under review.

Duties

The principal duties of the Audit Committee in discharging its responsibilities include reviewing the annual report and audited financial statements and half yearly report and unaudited 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 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 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 Group's service providers. The Audit Committee is also responsible for overseeing 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 Committee also reviews, considers and, if thought appropriate, recommends for the purposes of the Group's financial statements valuations prepared by the Investment Adviser or Executive Team. These valuations are the most critical element in the Group's financial statements and the Audit Committee questions them carefully.

Financial Reporting and Audit

The Audit Committee reviews, considers and, if thought appropriate, recommends to the Board the approval of the contents of the half yearly report and unaudited financial statements and annual report and audited financial statements together with the external auditor's report thereon. The Audit 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 Committee provides a formal forum through which the external auditor reports to the Board and the external auditor is invited to attend Audit Committee meetings at which annual and half yearly financial statements are considered.

After discussions with the Investment Adviser, Executive Team and external auditor, the Audit Committee determined that the key risk of misstatement of the Company and Group's financial statements relates to the valuation of financial assets and financial liabilities 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 and liabilities was GBP220.7m and GBP142.3m respectively. 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 Investment Adviser, Executive Team and external auditor. The Investment Adviser and Executive Team provide a detailed valuation report to the Company on a quarterly basis. The Audit Committee has reviewed the valuation report and the Investment Adviser and Executive Team have confirmed to the Audit 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 2013

AUDIT 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 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 Committee recommend 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 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 Committee after they are satisfied that relevant safeguards are in place to protect the auditor's objectivity and independence.

During 2013, the Audit Committee considered the length of tenure of the external auditor and assessed the suitability of the current arrangements in light of the expected future requirements of the business. It was subsequently 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 given to each proposal, it was agreed by the Audit 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 current period. This is the fourth year of Grant Thornton Limited's appointment as the Company's external auditor. The Audit Committee will assess whether a formal re-tendering of the Group's audit is appropriate on an annual basis.

Internal Controls

The Investment Adviser and Administrator together maintain a system of internal control on which they report to the Audit Committee. The Audit Committee has reviewed the need for an internal audit function and has decided that the systems and procedures employed by the Investment Adviser 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 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 Turnbull Report by the Financial Reporting Council (the "FRC"), the Audit Committee has reviewed the Company's internal control procedures. These internal controls are implemented by the Company's two main service providers, the Investment Adviser and the Administrator. The Audit Committee has performed reviews of the internal financial control systems and risk management systems during the year. The Audit Committee is satisfied with the internal financial control systems of the Group.

The Audit 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 Committee

James Carthew

Audit Committee Chairman

Date: 25 March 2014

GLI Finance Limited

For the year ended 31 December 2013

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 2014.

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.

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, the Executive Team members are also entitled to a contractual bonus. Prior to 21 January 2013, in accordance with the Employment Contract the actual bonus amount paid for any financial period was capped at a maximum of 0.3 per cent of the Company's Net Asset Value (adjusted pro rata for period less or more than one year) (the "Cap"). Any excess contractual bonus payable above this Cap was deferred and added to any contractual bonus payable (if any) in the next financial year. With effect from 21 January 2013, the Remuneration Committee resolved to amend the current incentive structure, which was applicable solely to Mr Miller at that time, to an incentive pool, which is allocated at the Remuneration Committee's discretion. The total pool available is, as before, 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 executives will have to hold all of their Company equity for their entire period of employment by the Company. Mrs Stubbs became eligible to participate in the Executive Bonus Scheme with effect from 1 December 2013.

In addition to participation in the Executive Bonus Scheme, Mrs Stubbs is entitled to a guaranteed cash bonus of GBP10,000 for the year 1 December 2013 to 30 November 2014. As at 31 December 2013, the accrued cash bonus recognised in the Company's Statement of Total Comprehensive Income was GBP821.

Remuneration

Non-Executive Directors

For the year then ended 31 December 2013, the non-executive Directors' annual 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:

The increase in Directors' fees noted above became effective 1 January 2013.

GLI Finance Limited

For the year ended 31 December 2013

REMUNERATION REPORT (continued)

Remuneration (continued)

Executive Team

For the year ended 31 December 2013, the Executive Team members' annual salaries, excluding all reasonable expenses incurred in the course of their duties which were reimbursed by the Company, were as detailed in the table below:

*appointed 18 November 2013 with a fixed annualised salary of GBP90,000.

During the current year, the Remuneration Committee resolved to settle to Mr Miller's deferred bonus accrual as at 31 December 2012, one half in cash and one half in shares which the Company purchased from the market.

Other than the above, there were no other fees paid to the Board and or Executive Team. Please note as the Executive Bonus Scheme is a non-fixed amount, total Executive Team remuneration will fluctuate year on year. The Company did not engage the services of an external remuneration consultant during the year.

On behalf of the Remuneration Committee

Fred Forni

Remuneration Committee Chairman

Date: 25 March 2014

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF

GLI Finance Limited

We have audited the Consolidated and Company financial statements (the "financial statements") of GLI Finance Limited (the "Company") for the year ended 31 December 2013 which 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 International Financial Reporting Standards (IFRSs) as adopted by the European Union.

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 auditors' 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.

Respective responsibilities of Directors and auditors

As explained more fully in the Statement of Directors' Responsibilities on pages 18 and 19, the Directors are responsible for the preparation of the financial statements which give a true and fair view.

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

Scope of the audit of the financial statements

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 material inconsistencies with the audited financial statements and 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.

Auditor commentary

An overview of the scope of our audit

Our audit approach was based on a thorough understanding of the Company's business and is risk-based. The day-to-day management of the Company's investment portfolio, the custody of its investments and the maintenance of the Company's accounting records is outsourced to third-party service providers. Accordingly, our audit work is focussed on obtaining an understanding of, and evaluating, internal controls at the Company and the third-party service providers, and inspecting records and documents held by the third-party service providers. We undertook 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.

The Group financial statements are a consolidation of 9 reporting units comprising the parent company, T2 CLO 1 Limited ("T2 CLO"), Asset Management Investment Company Limited ("AMIC"), Secured Loan Investments Limited ("SLI"), GLIF BMS Holdings Limited ("GLIF BMS") and its subsidiaries including BMS Finance AB Limited ("BMS Finance"), Noble Venture II Nominees Limited ("NV2N"), NVF Tech Limited ("NVF Tech") and Hiwave (Hong Kong) Limited ("Hiwave HK"). The overall approach to the group audit included performing a full audit of the parent company and the group consolidation, and the financial information of T2 CLO and GLIF BMS. Specified audit procedures were performed on certain material balances and transactions for BMS Finance, NV2N and NVF Tech.

In establishing the overall approach to the Group audit, we determined the work that needed to be performed at the subsidiary undertakings, as the Group engagement team, or component auditors operating under our instruction. Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work of those reporting units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF

GLI Finance Limited (continued)

Our application of materiality

We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements and in forming our opinion. For the purpose of determining whether the financial statements are free from material misstatement we define materiality as the magnitude of a misstatement or an omission from the financial statements or related disclosures that would make it probable that the judgement of a reasonable person relying on the information would have been changed or influenced by the misstatement or omission. We also determine a level of performance materiality which we use to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. For the group audit, we established a materiality for the Group financial statements taken as a whole to be GBP773,000, which is 1% of the Group's net asset value. For the financial information of the individual parent and subsidiary undertakings, we set our materiality based on a proportion of group materiality appropriate to the relative scales of each of the businesses.

We have determined the threshold at which we communicate misstatements to the Audit Committee to be GBP37,850. In addition, we communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.

Our assessment of risk

Without modifying our opinion, we highlight the following matters that are, in our judgement, likely to be most important to users' understanding of our audit. Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to express an opinion on individual transactions, account balances or disclosures.

Financial assets designated at fair value through profit or loss

The principal activity of the Group is the provision of secured lending to small and medium sized companies with the objective to produce a stable and predictable dividend yield, with long term provision of net asset value. Accordingly, the investment portfolio is the largest asset in the financial statements and is designated at fair value through profit or loss ("FVTPL") in accordance with IAS 32 "Financial Instruments: Recognition and Measurement". Measurement of the value of an unquoted investment includes significant assumptions and judgements and we have therefore identified the valuation of financial assets as a significant risk requiring special audit consideration.

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.

For broadly syndicated loans, we obtained confirmation of investments held at the year end directly from the independent custodian and reconciled these to the records maintained by the Group's Administrator, testing a selection of investment additions and disposals to supporting documentation, and agreeing the valuation of the broadly syndicated loans to an independent source of market prices specifically market quotes from agent banks and analysis from the Investment Manager of the portfolio company in cases wherein a significant change in the credit profile of the said portfolio company has been noted. In such instances, we obtained an external valuation report to support the carrying amount at the year end.

For unquoted investments, our audit work included reviewing share certificates held by the Group and reconciling these to the records maintained by the Group's Administrator, obtaining an understanding of how valuations are performed, assessment of whether the valuations were made in accordance with published guidance, discussions with the Administrator and Investment Manager and challenging the valuation in conjunction with inspection of supporting documentation.

The Group's accounting policy and other disclosures on financial assets designated at FVTPL are included in Notes 2 and 3 to the financial statements.

Financial liabilities designated at fair value through profit or loss ("FVTPL")

The Group obtains financing from third parties through the issuance of collateralised loan notes ("CLO"). The recognition and measurement of the CLO is accounted for in accordance with IAS 32 "Financial Instruments: Recognition and Measurement" and is based on significant judgements and assumptions. We therefore identified the measurement of the CLO as a significant risk that requires special audit consideration.

Our audit work included, but was not restricted to, obtaining confirmation of loan notes outstanding at the year end directly from the independent trustee of T2 CLO and reconciling these to the records maintained by the Group's Administrator, testing capital repayments to supporting documentation, and agreeing prices from independent valuation experts to the prices recorded in the books of the Group. We obtained the market value report provided by the independent broker-dealer which makes the market in the CLO notes.

The Group's accounting policy and other disclosures on financial liabilities designated at FVTPL are included in Notes 2 and 3 to the financial statements.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF

GLI Finance Limited (continued)

Revenue recognition

Under ISAs (UK & Ireland), there is a presumed risk that revenue may be misstated due to improper recognition of revenues. Due to the nature of this risk we are required to assess it as a significant risk requiring special audit considerations.

Our audit work included, but was not restricted to, assessing whether the Group's revenue recognition policies conform to IAS 18 Revenues 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.

Management override of internal control

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

Our audit work included, but was not restricted to, specific procedures relating to this risk that are required by ISA 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 and liabilities at FVTPL addressed key aspects of ISA 240.

Opinion on the financial statements

In our opinion the financial statements:

· give a true and fair view of the state of the Group's and Company's affairs as at 31 December 2013 and of the Group's and Company's profit for the year then ended;

· are in accordance with IFRSs as adopted by the European Union; and

· comply with The Companies (Guernsey) Law 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

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 Company acquired in the course of performing our audit; or

· otherwise misleading.

In particular, we are required to consider whether 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, and whether the Annual Report appropriately discloses those matters that were communicated to the audit committee which we consider should have been disclosed.

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 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.

Grant Thornton Limited

Chartered Accountants

St Peter Port, Guernsey, Channel Islands

Date: 25 March 2014

GLI Finance Limited

For the year ended 31 December 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

The accompanying notes on pages 38 to 73 form an integral part of these financial statements.

GLI Finance Limited

For the year ended 31 December 2013

COMPANY STATEMENT OF COMPREHENSIVE INCOME

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

The accompanying notes on pages 38 to 73 form an integral part of these financial statements.

GLI Finance Limited

As at 31 December 2013

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The financial statements were approved by the Board of Directors on 25 March 2014 and were signed on its behalf by:

Patrick Firth James Carthew

Director Director

The accompanying notes on pages 38 to 73 form an integral part of these financial statements.

GLI Finance Limited

As at 31 December 2013

COMPANY STATEMENT OF FINANCIAL POSITION

The financial statements were approved by the Board of Directors on 25 March 2014 and were signed on its behalf by:

Patrick Firth James Carthew

Director Director

The accompanying notes on pages 38 to 73 form an integral part of these financial statements.

GLI Finance Limited

For the year ended 31 December 2013

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY